Factorial bets on AI to reshape business management across the region

Factorial's Petros-Emmanouil Panagopoulos on AI, growth and business transformationFactorial has evolved rapidly from an HR software provider into a broader AI-driven business management platform, reflecting the growing demand from small and medium-sized enterprises for integrated digital tools that extend well beyond human resources. Fresh from securing Series D funding that values the company at $2.5 billion, the Barcelona-based firm is accelerating its investment in artificial intelligence, product development and international expansion, with South-Eastern Europe among its strategic priorities. In an interview with the Cyprus Mail, Petros-Emmanouil Panagopoulos, Partnership Market Lead at Factorial, discussed how businesses across Cyprus and the wider region are approaching AI adoption, why the company believes administrative automation can unlock greater productivity, and how its expanding platform aims to bring HR, finance and IT operations together. He also outlined the importance of local partnerships, regulatory compliance, cybersecurity and governance, while explaining how Factorial intends to help companies modernise without replacing their existing systems. CM: With the recent Series D funding bringing your valuation to $2.5 billion, how does this capital injection specifically sharpen Factorial’s competitive edge in the South-Eastern European market? The Series D investment is about much more than valuation; it’s about accelerating how businesses can work. As AI becomes part of everyday operations, companies need technology that removes administrative friction and helps people focus on higher-value work. This investment allows us to accelerate that vision by investing further in AI, product development and local market expansion. South-Eastern Europe is home to a growing number of ambitious small and mid-sized businesses looking to digitalise without adding complexity. The investment allows us to bring enterprise-grade AI capabilities in a way that’s intuitive, trusted and accessible, while continuing to invest in local teams and partnerships that understand the specific needs of businesses across the region. CM: You have transitioned from a traditional SaaS model to an “AI-first” company. How would you describe the shift in mindset required for businesses in Cyprus and surrounding regions to adopt this “AI workforce operations” approach? The biggest shift is moving from seeing software as a place where work happens to seeing it as a system that actively helps complete work. Both Cyprus and countries in the surrounding regions are one of the highest adopters of AI. They reflect the real value of generating a higher ROI per employee leveraging AI in their daily tasks. Traditionally, employees have had to navigate multiple systems, manually enter information and follow repetitive processes. AI changes that dynamic. Instead of simply providing tools, it becomes an intelligent assistant that understands context, automates routine work and helps employees make faster, better decisions. For many businesses in our region, adopting AI doesn’t require replacing people, it allows their teams to focus on higher-value work while reducing administrative burden. The goal is to help companies to get the most ROI of their employees, so they can scale, while removing the bureaucracy. CM: The “Factorial One” AI Agent utilises a two-agent model, one for the organisation and one for the individual employee. How does this architecture specifically address the unique pain points of mid-market enterprises in your region? Small to Mid-market companies don’t need more technology, they need technology that helps people spend less time navigating systems and more time making decisions. The challenge is finding AI that’s powerful enough to support growth while remaining secure, trustworthy and easy to manage. That’s exactly what Factorial One is designed to do. It combines organisational intelligence with personalised employee support, helping businesses connect people, processes and information in one place while ensuring every interaction operates within the rules already defined by the company. What makes this approach different is that both the organisational and individual agents operate under the same permission structure as the user. If an employee cannot access salary data, the AI cannot access it either. This isn’t a prompt or a recommendation layer, it’s built directly into the architecture. For mid-market businesses, where governance and compliance are critical but dedicated AI infrastructure teams are often limited, this provides enterprise-grade security without enterprise-grade complexity. The impact is practical and immediate. Managers spend less time on administrative work and more time leading their teams. Employees get instant answers to routine questions, access information faster and can complete tasks without waiting on multiple departments. HR teams spend less time responding to repetitive requests, while Finance and Operations benefit from more consistent processes and greater visibility across the business. One of the biggest challenges for growing companies is managing permissions and access at scale. As organisations expand, they need clear rules around who can access salary information, approve expenses, view sensitive documents or manage specific workflows. Factorial already manages hundreds of granular permissions, and Factorial One respects and applies those same controls automatically. Ultimately, this means companies of all sizes can adopt AI with confidence. They gain the efficiency and intelligence typically associated with large enterprises, while maintaining the simplicity, governance and trust needed to support sustainable growth. The result is not just better automation, but a more connected way of working where people and AI work together to help the business move faster. CM: How has your partnership with Microsoft and the integration of Azure Kubernetes Service influenced the speed at which you are able to deploy localised features for the South-Eastern European market? Our collaboration with Microsoft gives us the scale, security and reliability needed to innovate quickly while maintaining the trust our customers expect. More than two years ago, we made a strategic decision to build on Microsoft Azure and OpenAI’s infrastructure because we believe businesses should be able to adopt AI with confidence, knowing it’s built on enterprise-grade technology. For our customers in South-Eastern Europe, this partnership means they benefit from continuous innovation without added complexity. By building on Azure Kubernetes Service, our engineering teams can develop, test and deploy new capabilities more efficiently across markets, allowing us to respond faster to local business needs while maintaining the highest standards of security, compliance and performance. More importantly, it allows us to focus on what creates the greatest value for customers: delivering AI that understands how their business works and helps people spend less time on administrative tasks and more time making decisions that move the business forward. Whether they’re in HR, Finance or IT, customers benefit from a platform that continuously evolves alongside their organisation while remaining secure, reliable and easy to use. Ultimately, our partnership with Microsoft isn’t just about infrastructure, it’s about giving businesses the confidence to embrace AI as a trusted part of their day-to-day operations, knowing they have a platform that can scale with them as they grow. CM: With the European Commission’s new Code of Practice on marking and labelling AI-generated content coming into force, how is Factorial proactively ensuring that your agentic workflows remain transparent and compliant for your customers? The European Commission published the final Code of Practice on marking and labelling AI-generated content. The Code is voluntary and sets out practical steps for providers and deployers of generative AI systems to meet the AI Act transparency obligations that will apply from 2 August 2026.Factorial is fully aligned with the current requirements of the EU AI Act. The use of AI is considered low-risk, as it’s focused on administrative support tasks. Factorial is not designed to make decisions on its own,it assists users, not replacing human judgment. For example, it can help draft job descriptions, generate review questions, or summarise meetings, but the final decisions are always made by people. Factorial does not automate high-impact or sensitive decisionsFrom the beginning, our approach has been to build AI that supports people rather than replacing decision-making. We prioritise transparency by ensuring users understand when AI is assisting them, while maintaining human oversight for important business decisions. At the same time, we continue aligning our development with evolving European regulatory frameworks so customers can confidently adopt AI within a compliant and responsible environment. CM: Beyond HR, you are expanding into finance and IT operations. How do you envision this “horizontality” changing the role of a Partnership Market Manager when engaging with prospective clients who are used to siloed software? We started as an employee management platform, but as our customers grew, so did their needs. Today, businesses are looking for more than individual software solutions, they want a connected platform that brings together HR, Finance and IT so every team can work from the same information and make better decisions. That changes the role of our Partnership Market Managers. Conversations are no longer centred on solving a single departmental challenge; they’re about understanding how work flows across the entire organisation and identifying opportunities to remove friction between teams. Whether it’s onboarding a new employee, managing expenses or coordinating workforce planning, these processes involve multiple functions that need to stay connected. Rather than asking customers to replace everything they already use, we help them modernise at their own pace. They can start with the areas where they feel the greatest operational pain and expand as their business evolves, always within one connected platform that grows with them. For our partners, this creates the opportunity to have more strategic conversations with customers. Instead of discussing isolated features, they’re helping organisations rethink how work gets done, bringing people, processes and AI together so teams spend less time navigating disconnected systems and more time focusing on the work that drives the business forward. CM: You are hiring at a velocity of up to 50 team members per week globally. What specific qualities are you looking for when building out the local teams needed to support this expansion in South-Eastern Europe? Scaling fast, and hiring globally is not easy. Therefore, we look for people who can commit and share our corporate values. As we grow, we need individuals who are customer-focused, comfortable working in fast-changing environments and excited about helping businesses embrace new technology. One of the most important values is ‘’We own’’ as we want people to take responsibility, move mountains and it is better to ask for forgiveness rather than permission. We move fast, and this is the way that we learn but also share the knowledge with the team. Equally important is local market knowledge. Understanding the business culture, regulatory landscape and customer expectations helps us deliver solutions that genuinely create value. Our culture is crucial, and we want to ensure, especially in Partners, that we are all aligned to our mission, get things done and we are committed to succeed! CM: Many businesses in this region still rely on legacy systems or manual processes. What is the most effective “hook” or entry point for introducing these companies to the benefits of an AI-ready business management platform? The “hook” is not about features but about solving real pain points without requiring companies to replace everything they already use, while remaining industry agnostic and bringing knowledge, experience and data from similar businesses across different markets. For SMBs and MSEs in southern and eastern Europe still relying on legacy systems, the typical entry point is time tracking combined with core HR, where manual errors tend to be most costly, as a single payroll mistake can cascade into compliance issues, audits and employee relations problems, and this can be addressed through a time-to-payroll flow without interfering with existing ERP systems. Expense management is another key area, as many smaller businesses lose significant time and money through manual approval workflows, with finance teams often spending more than 10 hours per week on these processes, making it possible to deliver a quick and measurable return on investment within 60 days. Document automation also offers immediate relief, particularly for companies still relying on printing, scanning and filing contracts, offer letters and payslips, while embedded e-signature functionality allows employees to share documents digitally. The positioning for southern and eastern Europe focuses on complementing rather than replacing existing systems, allowing businesses to start with essential functions and expand gradually into areas such as recruitment, performance and finance when ready. In most cases, the sales cycle remains short, implementation through local partners is fast, and the return on investment can be measured from the very first day. CM: Given that you focus on “fewer and smarter agents” rather than deploying hundreds of specialised ones, how does this philosophy help in maintaining data accuracy and accountability for your clients? The main risk with using many agents is that each one becomes a potential hallucination point, so with 20 specialised agents handling areas like recruiting, payroll or performance, you effectively create 20 times more opportunities for the system to generate incorrect data or flawed connections. The approach instead is to rely on a single unified agent that understands the full Factorial data model and permission structure, allowing it to operate consistently across all functions. This creates a single source of truth, where one agent learns the organisational structure once and applies it everywhere, avoiding conflicting information that can emerge across separate agent silos. It also ensures decisions remain traceable, meaning that when the agent recommends an approval or generates a report, it is possible to audit exactly which data was used, rather than dealing with fragmented audit trails across multiple agents. Another advantage is that permission enforcement happens at scale, since controls are applied once at the architectural level rather than repeated across numerous agents, reducing complexity and limiting potential vulnerabilities. Moreover, customer confidence is strengthened because the agent operates strictly within the permissions of the logged-in employee, with raw data never exposed, and this separation enforced at the architectural level rather than relying on prompts, making it a fundamental design choice that is difficult for competitors to replicate. CM: Can you share an example of how a client in a region similar to South-Eastern Europe significantly reduced their administrative overhead after migrating to Factorial? Across Europe, we’ve seen many Small and Mid-sized organisations significantly reduce the time spent on routine administrative tasks after digitising processes such as leave management, document workflows, onboarding and expense management. Rather than HR teams spending hours on manual administration, they can focus on employee development, workforce planning and strategic initiatives. That’s a common outcome we consistently see across businesses that replace spreadsheets and disconnected systems with a unified platform. One of the most famous case studies that we share is with Microsoft. Factorial reduces admin time by 65 per cent, scaling its solution globally with Azure. One client has been able to reduce their weekly administrative time by 65 per cent, increased participation in climate surveys by 34 per cent, and decreased vacation approval times by two days. In addition, they also reduced involuntary turnover by 22 per cent, which is an impact they said they can truly feel. If you look at a typical small or medium-sized enterprise in South-Eastern Europe, you’re often talking about a business with 200 to 500 employees operating across one or two countries, where HR processes still rely on email approvals and spreadsheets, finance and HR systems are not integrated, and administrative friction contributes to high staff turnover. That’s where we see the biggest opportunity. With Factorial One, businesses can typically save 15 to 20 hours per week across HR and finance by automating approvals, reporting and document management, while reducing overheads by approximately €8,000 to €12,000 per month, assuming a blended labour cost of €40 per hour. We’ve also seen companies reduce time-to-hire by around 30 per cent, cut expense approval times from five days to the same day, and become audit-ready in minutes rather than days. CM: How does the “Customer Value Fund” structure from General Catalyst change the way you approach long-term customer success and partnerships in your target markets? Additionally to the $150mil of the Series D, we have a commitment of $540mil for Sales & Marketing.The Customer Value Fund reflects a long-term approach to growth. Rather than focusing only on acquiring customers, it reinforces the importance of helping businesses realise measurable value from the platform over time. For us, that aligns perfectly with how we work with partners. Success isn’t measured simply by implementation,it’s measured by customer adoption, long-term business impact and building relationships that continue to grow as customers expand their use of the platform. CM: Looking ahead 12 months, what are the primary benchmarks of success for the regional expansion efforts that you are most focused on hitting? Success for us isn’t about hitting a revenue target. It’s about proving that businesses across South-Eastern Europe can grow by working in a more connected, efficient way, with AI helping people spend less time on administration and more time creating value. First, customer growth and retention. While we are aiming for meaningful customer expansion, retaining customers is ultimately more important than simply acquiring new ones. The goal is to work with businesses that begin with solutions such as time tracking, then expand into areas like recruitment, and are actively using Factorial One within 12 months because it helps them simplify processes, automate routine tasks and make better decisions. Reaching 200 customers would not represent success if 30 per cent of them were lost due to challenges with implementation or adoption. Second, we are focused on developing strong local partnerships. We already have two local partners in Cyprus, Synthesis and Xenatus Global, and we are continuing to expand our network of referral and reseller partners who understand local compliance requirements, business culture and customer needs. Success means creating long-term partnerships that deliver value for customers, encourage successful adoption and grow together with the businesses we support. Third, we are looking at AI adoption. Not every customer will need AI from the first day, but within 12 months we want 60–70 per cent of our customers to be actively using Factorial One for at least one workflow, whether that involves answering policy questions, generating reports or automating documents. This will show that AI is helping businesses work more effectively rather than simply introducing another layer of technology. Ultimately, the real measure of success will be whether we have helped more than 100 companies across South-Eastern Europe reduce administrative workload by 20–30 per cent, give managers more time to focus on strategic priorities and grow without a proportional increase in complexity. When we consistently deliver that level of value for customers, revenue naturally follows.