It is estimated that the global HR technology marketplace is $400 billion. Many startups have sprouted up worldwide focusing on products that service all HR functions—recruitment, engagement, compliance, and learning and development (L&D). While the functional requirements of recruitment and L&D roles are quite straightforward, the workings of engagement function are subject to variable factors.
For Indian HR tech startups, 2018 began on a promising note with at least six firms notching about $50 million in investments. Investor interest in this sector is steadily growing as organizations are turning toward digitalized HR processes. HR tech startups attempt to address HR challenges with real-time data and insights-driven decision support system. The variable factors at play in the engagement function are reason enough to spur more competition and differentiation. For instance, Hyphen is a startup that provides an engagement platform to help management listen to their employees on a real-time basis. Similarly, another startup, Benepik, provides a mobile solution for employee engagement as part of its integrated offerings. Artificial intelligence, analytics and UI are emerging key differentiators for HR tech firms focusing on the engagement function.
Reports estimate that Indian firms can save at least $600 million annually with HR tech. Earlier most of the HR tech development was attuned towards recruitment, but things have changed. Today, HR is no longer an administrative support function; it is now a strategic business function. Startups have been focussing on building capabilities to help HR take strategic decisions that impact business.
Focus shifts from core HR to a more experiential HR
When it comes to the pace of development in the HR tech field, core HR functions have taken a back seat. Startups are reinventing tools for employee development, pulse surveys, culture, engagement, and real-time analytics. For instance, new tools for employee well-being are now strategic parts of the technology market. Companies are now able to understand how to diagnose their culture in a measurable way, courtesy of the new culture and engagement measurement tools.
The transition from web-based systems to mobile systems is largely customer driven. As more companies opt for an easy-to-use, integrated mobile experience, vendors are competing to fill the demand gap. Developments in mobile interfaces, AI, natural language processing, and integrated case management provide opportunities for employees to manage their life at work in a much easier way. This upsurge in HR tech has shaken up the marketplace: the fastest-growing companies in HR tech cater exclusively to small businesses.
With HR technology getting more flexible to implement, startups have to contend with comprehensive HCM platforms, such as PeopleWorks, that bring together employees, HR and management. It remains to be seen whether standalone HR systems can compete with integrated HR systems in the battle for workforce engagement, or whether the mergers and acquisitions phase will kick start again in the HR tech scene.