Deel Reaches a Valuation of About ¥2 Trillion Six Years After Its Founding: Why It Grew and How Japanese Companies Can Expand Overseas, with Deel Japan President Ryo Nishiura

Nishiura joined Deel in February of this year, about 10 months before the interview was recorded. After graduating from university, Nishiura first worked for a Japanese company, and then gained experience at foreign-owned companies in fields such as finance, travel and e-commerce.

According to Nishiura, Deel has about 7,000 employees and about 120 local entities overseas. Its services cover the full range of operations a company needs when setting up a presence around the world. It provides hiring, people management, payroll and payments, and even offboarding end to end on its platform, and is currently available in about 150 countries.

Iijima introduced Deel as having become "a decacorn in five years," but Nishiura corrected this, noting that the company was founded in 2019, so it has actually been six years. Nishiura then gave several reasons for its rapid growth.

The first is M&A. Deel has acquired 13 companies over these six years. It originally started with an employment outsourcing service known as EOR (Employer of Record). From there, it added the services it needed through both in-house development and M&A, arriving at its current end-to-end form. Nishiura explained that acquisitions physically expanded the number of countries Deel can serve and also broadened the range of services it can offer.

The second is an internal culture called "Deel Speed." It is the idea of doing everything "as soon as possible." Deel is a fully remote company that treats Slack as its office. On Slack, not only frontline staff but also the CEO join discussions, and when a problem arises, everyone works together to solve it. Nishiura said the pace is such that an enormous number of messages piles up overnight, and that this speed is likely what got the company to where it is.

Iijima asked whether this runs counter to the return-to-office rhetoric currently popular in Silicon Valley. Nishiura acknowledged that Slack is an asynchronous tool, making it difficult to communicate in real time with someone on the other side of the world. Even so, because everyone shares the sense that "going to the office = going to check Slack," a culture in which replies come back despite some time difference is already firmly established.

Iijima asked whether a business that could handle everything from hiring to labor management during overseas expansion was itself unusual. Nishiura's answer was "yes." There were players that handled only payroll or only HR management systems globally. But Nishiura believes there was no company offering HR, labor management, payroll and, more recently, even IT services as a one-stop shop. Because this was so distinctive, companies expanding globally quickly started using it.

Iijima checked the specifics using the example of setting up a base in India. According to Nishiura, this used to require complex work such as establishing a local entity and signing contracts locally, which could take as long as a year and a half to two years. With Deel, if a suitable candidate is in place, that person can be hired as a full-time local employee in as little as five days. Nishiura said that, to put it in extreme terms, overseas expansion goes from two years to one week, and that this efficiency will help Japanese companies that are about to go abroad.

People are what support this system. According to Nishiura, about one-third of the 7,000 employees handle back-office work on behalf of customers. These staff are located across the 120 locations, including India. Even in payroll, beyond the parts that can be run by the system, there are parts that require human involvement, such as dealing with local authorities. Also, even when Deel becomes the employer through EOR, the system cannot address everything employees need. A point of contact for HR-related questions is also necessary, and Deel's back-office staff fill that role as well. Iijima understood this to mean Deel takes on what in Japan would be called BPaaS or BPO.

Nishiura said there must have long been companies handling EOR or back-office BPO in, say, Indonesia alone. But companies doing this at such a scale are rare. Nishiura said this is one of the major reasons Deel has earned the fastest growth and a high valuation from investors. Iijima summed it up by saying Deel's strength lies in quickly assembling both the "horizontal" global reach and the "vertical" end-to-end integration through M&A.

Iijima asked how Deel could think on a global scale from the start, since a Japanese company would seem able to advance only one country at a time. Nishiura pointed to its investors. The most recent Series E raised about $300 million, or roughly ¥45 billion (depending on exchange rates). Deel also received substantial investment in earlier rounds, including from VCs well versed in AI and deep tech. Nishiura believes investor support was a very large factor in enabling growth at this speed, including through M&A.

Regarding founder Alex, Nishiura noted that, having joined only this February, this was secondhand, and then explained. Deel was launched by two people: Alex and the person who now serves as CRO (Chief Revenue Officer). The trigger was the rapid spread of remote work during the COVID-19 pandemic.

With remote work, working across borders is technically possible. However, the constraint that people must be employed in accordance with the laws of the country where they work could not be solved right away. For example, someone living in Japan who wants to work for an American company needs to be employed under Japanese law. Because that is difficult, they cannot work for the American company even though remote work is possible. Nishiura described this as a contradiction: the company wants them to work, the person wants to work, but the barrier is too high for it to happen. The two founders started EOR to address this, and if Deel becomes the employer in their place, such cases become possible.

Nishiura understands that what the founders always keep in mind is, first and foremost, that employees using the platform can work happily, and said this shows in the founders' words here and there. The foundation is being able to work for the company you want to work for, from where you want to live. As an example of extending this idea, Nishiura introduced an earned wage access service that leverages Deel's payroll system. There is a fixed notion that pay comes once a month, and some people borrow from acquaintances or relatives when they run short. So Deel created a system that lets workers receive the wages they have already earned in advance. From a company's perspective, this would require recalculating pay every time an advance is made, which is extremely laborious. Deel made it possible with its payroll system. The service is already available.

Nishiura said that not every country has relatively high incomes like Japan, and many workers struggle to make ends meet day to day. If they can receive money they have earned in advance when they need it, they can manage their lives better and, as a result, be happier. Nishiura said the service probably carries that message as well. Iijima responded that Deel likely did not choose to go global in order to grow quickly; rather, the problem it wanted to solve was there, so being global and end to end became a given. Nishiura agreed that, as a result, this is the case.

Nishiura pointed out what makes Deel unique compared with the foreign-owned companies Nishiura had worked for previously. At those companies, when making requests to headquarters as the Japan representative, Nishiura's input was rarely adopted; requests were deprioritized or rejected for one reason or another. At Deel, Nishiura can take their voice directly to CEO Alex. If the CEO or executives judge that the proposal is logical and promises future growth, a "Go" comes back in under a minute. When Iijima asked in surprise, "By DM?", Nishiura replied that this had actually happened when they said they wanted to do something: a Go came back right away.

Communication mainly happens on Slack, with online calls when timing allows. There is almost none of the ringi-style approval process found at Japanese companies. Sometimes some materials are prepared, but if you explain the situation and say "I want to do this," the answer is "go ahead." Nishiura added that this means proceeding with a sense of responsibility. Since Nishiura feels this speed of decision-making, employees around the world probably feel the same way. Nishiura also makes a point of giving an immediate Go or No Go when Japan team members make proposals, and so far this cycle is working well.

Iijima asked whether Deel is successfully hiring people capable of making proposals that get a Go. Nishiura acknowledged that ability is part of it, but pointed to the fact that it is a problem-solving business. Unlike joining a famous foreign company, people don't even apply for a service in a new field unless they have a sense of purpose. As a result, people who share the same problems come together, and their basic direction is aligned. There are rarely discussions that are far off course; instead, discussions are about fine-tuning within the same direction, so conversations proceed smoothly.

Iijima, who is also involved in an M&A business, pointed out the difficulty of PMI in achieving cultural fit with acquired companies. Nishiura believes that, overall, Deel is doing well. But since companies with different cultures are coming together, there are misunderstandings, and standards differ from company to company. Nishiura also said that aligning them takes time.

That said, communication with employees who joined from acquired companies is very smooth. Noting that they did not have data on what percentage stayed and what percentage left, Nishiura believes those who remained did so because their direction is aligned with where Alex and the others are aiming. Even though they came from different companies, they share the same direction, so discussions never fail to mesh.

The conversation turned to the Japanese market. According to Nishiura, about 25,000 Japanese companies have expanded overseas. With about 4 million companies in Japan including small and medium-sized enterprises, that is less than 1%. Most large companies have gone abroad, but many mid-sized companies and SMEs have not been able to. Nishiura sees this as where Japan currently stands.

When speaking with executives at large companies and owners of SMEs, Nishiura finds common challenges. The most fundamental one is language, particularly the English barrier. Another is that because they assume they must establish a local entity, they hesitate, thinking it will take time, effort and money.

Companies already operating overseas have their own concerns. Nishiura gave the example of a Japan-based company that has expanded into 50 countries. Many such companies expanded one country at a time, so their HR systems and payroll methods are specific to each country. The result is a patchwork of systems for 50 countries, making it difficult both to connect the systems and to view information from headquarters. Many large companies are working on human capital disclosure, and that disclosure includes overseas locations. They are struggling considerably to gather that information. Many executives see this as a challenge, and Nishiura said Deel can help there.

For companies about to expand overseas, Nishiura recommended adopting Deel as a system from the very start. That way, whichever countries they expand into later, it can serve as a base, making expansion smoother. Another benefit is that employees become familiar with using it.

Iijima asked whether even a small company like Iijima's own, with about 10 employees, could use Deel. Nishiura replied that, if anything, the Japan team wants to work hard to support such companies. Purely in terms of efficiency, winning large contracts from big companies is clearly better. Nishiura gave several reasons for still wanting to support small companies. In the startup world, the "Go Global" context has become unavoidable. Foreign VCs that have come to Japan likely expect success not only in the Japanese market but in overseas markets as well. Many deep tech companies also aim for overseas markets from the start.

From a different angle, Nishiura also said there is no need for a company's team to be made up only of Japanese people. There is a shortage of IT and AI engineers. Instead of hiring only from Japan's 68 million, there are just under 4 billion people in the global workforce. More companies are thinking that bringing in talented people from there would increase their value, and Deel genuinely wants to help with that. Nishiura said that if this goes well, it will also benefit the Japanese economy.

Iijima cited the example of a Raksul group company that has embraced a global stance from the start and does not take the form of a Japanese headquarters, and suggested that such approaches may become more accessible.

At the same time, Nishiura said that despite wanting to support Go Global, they do not think every company or industry should go abroad. If customers are overseas and the product or service fits, then of course the answer is yes. In Japan, IP and entertainment businesses are examples. As an example Nishiura recently found interesting, Nishiura mentioned companies in Niigata and Fukui engaged in master craftsmanship. One company in Fukui supplies parts to a famous American manufacturer. Nishiura sees such businesses as fully viable and, in fact, a strength of Japan. In other fields, going to the U.S., Europe or Asia can be tough in terms of price or service quality. So it is also necessary to expand while identifying where one can win.

Iijima asked about other promising fields. Nishiura first mentioned tech companies. Under the Takaichi administration, the direction the government wants to promote has become clear. For deep tech startups whose direction aligns with those investment areas, Nishiura said a path of first building strength through government procurement and then taking on overseas markets is entirely viable.

Beyond IP and entertainment, the area Nishiura personally wants to support is "food." Nishiura believes food is one of the driving forces that will help Japan make a comeback. Overseas expansion is already underway, mainly by major chains, but Nishiura thinks small and mid-sized restaurants could also go out into the world more. That is an area where Deel can help, and perhaps one where it must help. Iijima responded that companies like Sushiro and Toridoll, which operate overseas, have already paved the way, so one approach would be for companies with just a few locations to use Deel when following them. Nishiura agreed that even small restaurants could do it if Deel provides hands-on support, and that this could become a strength for Japan.

Iijima also touched on the flow in the opposite direction. Deel also plays a role in making it easier for foreign companies to hire Japanese people. Nishiura acknowledged that Japanese companies may have mixed feelings about this. When Iijima asked, "You mean they'll have their talent taken away?", Nishiura replied, "Exactly." Workers tend to go where conditions are better. For Japanese workers, the options are not just Japanese companies, nor just foreign companies operating in Japan. Companies around the world that allow remote hiring, even without a base in Japan, may be targeting Japanese talent. Because Japanese wage levels have, for better or worse, been flat for a long time, they can look like a bargain from overseas in some cases. Nishiura described this as having two sides: a good side and one that may be a negative for Japanese companies.

Nishiura further believes that Japan's labor laws and membership-based employment are major underlying factors behind why Japanese companies cannot fully go global or fully adopt global systems. Labor is becoming subject to free competition, and workers are becoming borderless, no longer limited to Japanese companies or to Japan. Nishiura said that when that happens, it will be important for Japanese companies to ask whether their HR systems can stay as they are and change them as needed. Iijima added that the current administration has also been saying that rising wages will flow into consumption and keep the economy circulating.

Finally, Iijima asked what Nishiura wants to do as Japan's representative. Nishiura named two things.

The first is to lower the hurdles to overseas expansion and hiring overseas talent as much as possible for companies of all sizes, from startups to large enterprises. Nishiura said business opportunities expanding from the Japanese market to overseas is unquestionably a good thing. If talented people from overseas join organizations made up only of Japanese people, those organizations will also become stronger, so Nishiura believes there is "nothing but upside."

The second is the problem of fragmented HR systems. Having payroll on A, attendance on B and people management on C is "all too common," and when multiplied by the number of countries a company operates in, some companies end up using 200 to 300 tools. Nishiura said this is a genuine waste, not something they say because Deel wants to make money. It should be physically possible to have predictive AI crawl data across systems and understand who is high-performing around the world, whether pay levels are appropriate, and how performance looks. But this is hardly being done. At a time when per-person productivity must be raised, Nishiura thinks this situation is a problem.

Deel is currently focusing on AI and has begun offering a service called "AI Workforce." Because Deel provides its services end to end, it can have AI look across all the data and assist with work predictively. It plays a role like a partner or supporter to HR and payroll staff. Nishiura said they want to expand this service further. By looking closely at HR and payroll data, Nishiura believes Deel may be able to help uncover insights and courses of action that were not visible before.