Rippling accuses competitor Deel of corporate espionage

In recent years two HR tech firms have gone head-to-head competing for influence in the global hiring market. Now one of them is accusing the other of corporate espionage.

Rippling, a workforce management platform, filed a lawsuit on Mar. 17 that alleges its rival, Deel, stole confidential business information by using a spy to infiltrate company systems such as Slack. Such information gave Deel “an unfair and illegal advantage” to hold onto customers that were considering switching to Rippling, as well as poach Rippling employees, the lawsuit alleges.

The lawsuit is the latest escalation in a feud between the two companies, which both profited from pandemic-era hiring trends that fueled a demand for software geared toward employers seeking to hire workers anywhere in the world.

Rippling’s allegations against Deel. In 2023 “an affiliate of Rippling” hired an employee into a management role who ended up filtering confidential information about sales, marketing, and recruiting to top executives at Deel, the lawsuit alleges.

The mole searched for “Deel” in Rippling’s systems 23 times a day, on average, over a four-month period, and was able to access details about its sales pipeline competing with Deel, the lawsuit alleges. Among the files the alleged spy downloaded, for example, was a slide deck known as a “competitive intelligence card” where Rippling outlined its strategy to compete for Deel customers. They were also able to access a “churn risk list” where Rippling identified customers that were considering leaving.

Rippling also alleges Deel tried to poach its employees using contact information it funneled through the spy, as well as shared internal Slack messages with a reporter as part of an effort to reframe a story alleging that Deel violated Russian sanctions.

In a statement attributed to a Deel spokesperson, the company denied “all legal wrongdoing” and said it looked “forward to asserting our counterclaims.”

How this could affect the HR tech market. The Rippling-Deel rivalry highlights just how competitive the HR tech space has become in recent years, particularly as the market for human capital management software geared toward remote workforces grows.

Rippling reached a $13.5 billion valuation last year, while Deel is worth $12 billion. The companies saw their businesses boom during the pandemic, when the rise of remote work prompted more companies to hire talent outside the borders of their headquarters. Both Rippling and Deel offer software intended to help HR leaders deal with some of the complexities that arise with global hiring, offering tax compliance and employer-of-record services.

Today, the lawsuit claims, “Rippling and Deel often compete directly against each other for customers looking for global workforce management solutions, a subset of Rippling’s product offerings.” In 2022 Rippling dropped Deel as a customer over concerns “access and use” of their rival’s systems would inform their efforts to become a top global management platform.

The spying allegations haven’t necessarily spooked Deel investors, according to The Information, which reported its backers remained focused on the startup’s “strong revenue and profitability.”

Customers might be a different story. Melissa Bruno, chief people officer for inventory management firm Sortly, wrote on LinkedIn it was “disappointing to see two major HR platforms…entrusted with handling sensitive employee data” embroiled in this scandal.

Morgan Williams, a fractional people partner, echoed these concerns on LinkedIn. “There’s a severe breach of trust, how safe is our data?” she wrote.