Ava AbbottGusto is an online human resource management software (HRMS) that provides cloud-based payroll, benefits, and HR functions for SMBs. The service was launched in Dec 2012 by Joshua Reeves and Edward Kim as ZenPayroll, Inc. and renamed Gusto in Sep 2015.
Based in San Francisco, California, Gusto expanded its offering to include electronic paperwork for compliance with tax, labor, and immigration laws. The company has 1,400 employees and makes around $290 million in revenue annually.
In 2021, Gusto closed a $175 million funding round. With a $9.5 billion valuation, Gusto is one of the most valuable private companies in the HR and payroll software space. [1]
Gusto handles employee and contractor payments for thousands of businesses across 50 US states. The company’s platform offers user-friendly tools for report generation and automating the payroll taxation process.
In 2020, Gusto’s revenue declined as client companies deferred payments. The challenges thwarted the company’s efforts to sign up more partners and earn its People Advisory Certification. But Gusto bounced back and increased its revenue by over 50% from May 2020 to Apr 2021.
In Jun 2021, Gusto introduced Gusto Embedded Payroll to help SaaS companies provide payroll support to their customers. The company ranks 25th on the 2021 Forbes Cloud 100 list with over 200,000 customers and expects to IPO in 2022. While Gusto is on a path to success, it faces stiff competition from ADP, Paychex, Workday, Rippling, and Zenefits. [2]
Here are the top Gusto competitors and alternatives:
1. Automatic Data Processing (ADP)
Year founded: 1949
Headquarter: Roseland, New Jersey
ADP is a human resources management software and services company. It offers ADP Workforce Now, an integrated cloud-based hub for all HR functions. This solution competes with Gusto.
In fiscal 2021, ADP had 58,000 employees and generated $10.2 billion from employer services and $4.8 billion from its PEO segment. [3]
Both ADP Workforce Now and Gusto feature versatile API and automate benefits, compliance, and payroll management. But ADP also streamlines recruiting and onboarding, time tracking, and analytical reporting. ADP Workforce Now is the best Gusto alternative for human resource management services.
2. Paychex Flex
Year founded: 1971
Headquarter: Rochester, New York
Paychex is a leading human capital management solution for HR, payroll, benefits, and insurance services. The company serves more than 710,000 payroll clients across over 100 locations in the US and Europe.
In 2021, Paychex generated $4.06 billion in revenue, with $3.0 billion from management solutions and $974.1 million from PEO and insurance services. [4]
Paychex offers three plans: Go, Flex Select, and Flex Enterprise. Each option caters to the needs of SMBs and competes with Gusto’s products. The main competitive advantage for Paychex is its innovative SaaS technology and personalized service focused on business management.
One out of 12 American private-sector employees receives payments via the Paychex platform. Paychex is a formidable Gusto competitor and alternative.
3. Workday HCM
Year founded: 2005
Headquarter: Pleasanton, California
Workday is a human capital management software company. Its cloud-based HCM system helps businesses streamline financial management, payroll, recruiting, and planning. In 2021, Workday had 12,500 employees and generated $4.32 billion in revenue.
Its Workday Financial Management and Workday Payroll solutions compete against Gusto’s HRMS. But Workday has an advantage because it also offers other HR services, such as Workday Recruiting, Workday Learning, and Workday Planning.
Businesses can access all these solutions on a single platform. In 2021, Workday recorded a surge in demand as more companies adopted flexible work management models. Workday HCM is one of the top Gusto competitors. [5]
4. QuickBooks
Year founded: 1983
Headquarter: Mountain View, California
QuickBooks is one of the most recognized accounting firms for SMBs globally. The company is a subsidiary of Intuit Inc. and provides three products: QuickBooks Online, QuickBooks Self-Employed, and QuickBooks Capital. In 2021, Intuit’s annual revenue increased by 25.4% to $9.6 billion. [6]
The main competitive advantage for QuickBooks is its comprehensive offering. QuickBooks Self-Employed is an on-prem accounting app with 1 million subscribers, while QuickBooks Online caters to over 4.5 million freelancers and SMBs.
Both offer online payments, payroll, and tax services. SMBs can also rely on QuickBooks Capital to access business loans. Gusto cannot match QuickBooks’ offering. The company has a significant competitive advantage over Gusto.
5. Zenefits
Year founded: 2013
Headquarter: San Francisco, California
Zenefits is an HR company founded by serial entrepreneur Parker Conrad. The company’s worth soared to $4.5 billion within three years, becoming one of the fast-growing firms in Silicon Valley. But Zenefits lost half of its valuation and more than 60% of its employees after Conrad resigned in 2016.
Zenefits simplifies payroll, benefits, and the onboarding process. In 2021, private-equity firm Francisco Partners took control of Zenefits in a financing deal.
This deal can restore Zenefits to its former glory and increase its competitive advantage. With the backing of Francisco Partners, Zenefits can challenge Gusto in the HR software market. [7]
6. Rippling
Year founded: 2016
Headquarter: San Francisco, California
Rippling is an HR platform founded by former Zenefits CEO Parker Conrad. The company started as an employee onboarding service and expanded to manage payroll, benefits, and employee data.
In 2021, Rippling raised $250 million in funding with a valuation of $6.5 billion. This round takes its total to $450 million. [8]
Rippling integrates with several third-party apps, allowing users to set up payrolls, health insurance plans, and emails quickly and easily. The company also offers a device management platform that helps HR retrieve data in employees’ computers.
HR can also wipe or clean employee devices after they are terminated or resign. Rippling’s platform protects clients’ data with robust encryption and ensures compliance with ACA and COBRA. These functionalities and features increase Rippling’s competitive advantage over Gusto.
7. Monday.com
Year founded: 2012
Headquarter: Tel Aviv, Israel
Monday.com is a cloud-based platform that offers work management software for HR, PMOs, PPMs, and other business functions. Its HR management software provides unparalleled versatility and customizable features and templates. In 2021, Monday.com had around 1,000 employees and was valued at $7.5 billion.
Both Monday.com and Gusto automate HR processes. But Monday.com also helps companies manage their projects, talent acquisition, and employee onboarding more efficiently.
The company went public in Jun 2021 and raised $574 million from 3.7 million shares. Monday.com now has the resources to compete and grab Gusto’s market share. [9]
8. Namely
Year founded: 2012
Headquarter: New York, N.Y.
Namely is a subscription software company that offers payroll, talent management, and other HR services. The company manages compliance and streamlines HR functions for SMBs, from payroll to benefits and onboarding.
In 2020, Namely laid off 40% of its roughly 400 employees. The HR specialist makes around $40 million in revenue annually. [10]
Namely combines the capabilities of Gusto and Monday.com in a single platform. It simplifies payroll and benefits administration like Gusto. Like Monday.com, Namely customizes solutions to users’ needs.
The platform serves around 1,000 customers and provides analytics tools for time tracking, reports, payroll taxes, and documentation. Users can also track employee performance. Namely is a worthy Gusto competitor.
9. BambooHR
Year founded: 2008
Headquarter: Lindon, Utah
BambooHR is a technology company that offers HR software as a service. Its cloud-based HRMS solution helps SMBs streamline benefits administration, payroll and performance management, and onboarding.
At the start of 2021, BambooHR had around 700 employees. But the company hired more than 500 new employees in mid-2021, increasing its workforce to over 1,200. [11]
Although BambooHR offers payroll and benefits management, it is better suited for recruiting and onboarding functions. Its robust data analytics and time tracking features allow SMBs to manage the entire employment lifecycle, from recruiting to retirement.
This HR platform serves 20,000 customers and over a million users globally, including Asana, Foursquare, Stance, and Reddit. In 2021, the company’s HR Virtual Summit hosted more than 30,000 HR professionals. BambooHR is one of the top Gusto competitors and alternatives for HR in the SMB market.
10. Sage People
Year founded: 1918
Headquarter: Newcastle, UK
Sage is a software company that offers business solutions, including Sage People. This product simplifies core HR functions, such as benefits, payroll, time tracking, and talent acquisition. In 2021, Sage had around 12,000 employees stationed in 24 countries and accumulated $2.32 billion in revenue.
Both Sage People and Gusto empower organizations by automating mission-critical processes. But Sage offers more value for money than Gusto. Sage is one of the top 20 CRM companies globally, with over 6.1 million customers.
Sage CRM provides end-to-end business management solutions, from invoicing to accounting, HR, supply chain management, and BI. Over 15,000 businesses use Sage CRM daily to optimize their workflows. Sage People can give Gusto a run for its money. [12]
References & more information
- Jeans, D. (2021, Aug 10). Gusto Secures a $10 Billion Valuation Tailwind as its HR Software Sails Toward IPO. Forbes
- Turner, M. (2021, Aug 10). HR software firm Gusto hits $10bn valuations and mulls IPO. City A.M.
- SRD (2022, Jan 11). ADP’s global revenue by segment 2010-2021. Statista
- Paychex Inc (2021, Jun 25). Paychex Reports Fourth Quarter and Full Year 2021 Results. Business Wire
- Great Speculations (2021, Jul 15). Rising Demand Could Help Workday Inc. Stock Regain Recent Highs. Forbes
- Intuit, Inc. (2021, Aug 24). Intuit Reports Strong Full Year Results and Sets Fiscal 2022 Guidance. Bloomberg
- Feldman, A. (2021, Mar 18). Zenefits does deal with a Private Equity Firm that gives it control. Forbes
- Loizos, C. (2021, Oct 21). Parker Conrad’s Rippling is now valued at $6.5 billion. TechCrunch
- Crystal, T. (2021, Jun 10). com Jumps in Debut After Raising $574 Million in US IPO. Bloomberg
- Loizos, C. (2021, May 2). Namely, former highflier slashes staff as demand for HR software dries up. TechCrunch
- Bamboo HR LLC (2021, Apr 26). BambooHR to Hire 500 New Employees in 2021. PRNewswire
- Eggspert (2022, Jan 18). Sage CRM Review. Crazy Egg
- Featured image by Corinne Kutz
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Kevin Johnson
Brianna Parker
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