The market for HR technology solutions is reportedly around USD 400 billion globally and the investor interest in this sector is steadily growing globally and in India. The Indian HR industry is estimated to be INR 40,000 Crore. In the year 2017 alone it is estimated that USD 2 billion was invested in HR technology companies globally. If we compare this number (and honestly the full picture on the 2017 numbers is not out yet), we see that the investments seem to be stagnating as compared to 2015 and 2016. 

The plausible reason for this apparent stagnation in the market could be attributed to the phase of cautious optimism in the market. The cautious outlook of investors in this space could be driven by multiple factors however we believe that following market trends could be major contributors to the same:

1. The SMAC (Social, Mobile, Analytics, and Cloud) changes are now beyond trends and are fast becoming the way business is done; however there is still head room in these technologies. With more than 50% companies making the transition to cloud, the market is still a mix of cloud and on-premise technologies. The adoption of social applications is still under 40% globally while adoption of mobile in workforce management applications is on the rise but still at 54%, thus presenting sufficient head room for growth in these areas. Analytics is still an emerging trend with about 40% organizations one or more tools to do BI/HR analytics, MS Excel still remains the most favoured tool to do any analytics. 
   
   
2. The companies that have already adopted SMAC are the ones that are likely to adopt or experiment with newer technology trends of Artificial Intelligence (AI), Virtual reality (VR), and blockchain. These technologies and their usage in the business of HR is still at a nascent stage though each of these hold a great deal of promise and can fundamentally change the way things get done; once they reach critical mass of adoption. 
   
   
3. As more and more companies look to alter their business models and the way they conduct business using digital technologies; HR technology is not an isolated conversation but part of a larger organization wide digital transformation efforts. This has made the purchase decision of HR technologies more complex with CEO, CFO, CTO, and CTO along with CHRO involved in the decision making process. This means longer sales cycles and slower adoption of newer technologies. This gets further complicated with the fact that only 19% companies5 are able to report a very successful deployment and adoption of HR technology initiatives especially in absence of a clear ROI metric

While all these factors are impacting the business environment in general and HR in particular, the fact remains that most investors and entrepreneurs including business and HR leaders remain optimistic about the possibilities of technology changing the way we work and thus improving organizational efficiency and effectiveness. The increasing interest in HR technology by various stakeholders of this space is evident when one looks at the number of articles published under the #HRTech over the last 3 years in People Matters. While in 2015 the total articles tagged under #HRTech are nearly 40 the very next year this number is approximately 160 and very close to that again in the year 2017. This clearly shows that interest and enthusiasm in HR technology is only on the rise.

This optimism coupled with technological innovations is fuelling innovative HR technology solutions being designed in various HR domains. With this in mind the idea here is to now look at some of the major events in this space in the year 2017 and interpret what it means for the industry in short & long term

The USD 90 billion dollar guerrilla’s in HR Technology business

When you combine the power of 100 million people using Office 365 with over 500 million people using Linkedin you get the world’s biggest HR technology company, in terms of the potential of what it could do to the world of work. In June 2016 when Microsoft announced it’s buying LinkedIn for USD 26.2 billion, Satya Nadella said “The LinkedIn team has grown a fantastic business centred on connecting the world’s professionals. Together we can accelerate the growth of LinkedIn, as well as Microsoft Office 365 and Dynamics as we seek to empower every person and organization on the planet”. 

Just days after receiving the regulatory nod and having completed the acquisition, came a list of possible integration scenarios between LinkedIn and various Microsoft technology solutions. The theme behind all these scenarios was simple, to help people develop new skills, find new jobs and easily connect and collaborate with colleagues. With its Dynamics 365 for Talent suite Microsoft further increased its presence in the HR Tech space as this suite enables various HR processes like employee attraction, engagement, development, and retention. 

At the inspire 2017 worldwide partner conference, CEO Satya Nadella outlined the vision to move from mobile first, cloud first world to intelligent edge and intelligent cloud. In this, he talked about 3 aspects of this evolution – Omni channel consistent user experience, digital transformation, and artificial intelligence.

A combination of these forces and the power of Office 365 + LinkedIn + Dynamics 365, he promised to deliver unique applications to its business customers. Some simple functionalities being talked about are: integration of LinkedIn recruiter with Dynamics 365, ability to create a consolidated HR profile available across these 3 platforms and manage LinkedIn company pages including responding to comments and posts. 

It’s very evident that Microsoft now has a very serious play in the HR technology market and is likely to compete with established players in the market with LinkedIn and Lynda as part of the mix, it is likely to create very unique solution set for its existing corporate clients while its customers will have to decide from moving to existing solutions to the Dynamics 365 environment for this vision to materialize. During the Future Decoded event in India, these factors were further emphasized the Microsoft leadership team. 

Google, another tech giant, has announced its arrival in the HR tech space by launching applications like Hire and Google for jobs in 2017. With its enterprise cloud solutions it aims to enter this space and seems to be more focused on the small and medium businesses. Just like Microsoft, Google also promises an integrated suite of various business applications including HR that help run the business. With the power of Google analytics and its legendary use of analytics to drive people decisions internally, this is a company which is driving its HR technology agenda by also sharing its internal best practices with the world. They have a unique opportunity to build on this best of breed internal practices and offer them as solutions to its 3 million strong G Suite customers.

With close to 2 Billion people using Facebook worldwide this is the 3rd technology giant that announced its offerings within the HR technology space. While from a revenue size perspective Facebook is about 10th of Microsoft and Google, its entry into the HR technology space is significant primarily for the number of users it engages on a daily basis. Reportedly 1.3 billion people use Facebook daily. This is 13 times bigger than the user base accessible to Microsoft and more than 400 times bigger than Gsuite users. The fact that companies have Facebook pages and now can post job advertisements which then get served to individuals based on various parameters, makes it an attractive proposition for sourcing talent. Many companies have also started using facebook data as part of their sourcing and hiring decisions while many other HR technology companies now integrate with social media platforms like Facebook and LinkedIn.  

The year 2017 also marked completion of 1 year of Workplace by Facebook, an application that competes with workplace collaboration solutions from Microsoft, Google, Cisco and a range of new age solutions like Slack. According to facebook, the application is currently being used by more than 14,000 organizations globally, up from 1,000 at the end of its private beta. Facebook application seems to have matured in this year with launch of a hose of updates in April 2017. As the market for collaboration software continues to grow, with some analyst even predicting the demise of email, the party has just started. 

Whose data is it anyway?

As these large organizations enter HR technology space, the question around who owns the data they generate has also been an important question raised by another smaller HR technology company, HiQLabs. In their ensuing legal battle with Linkedin, while the district judge has ordered in favour of HiQLabs, the debate & the battle are far from over. Many HR technology organizations which today use similar data generated by similar sites like GitHub and Quora are watching this development very closely as any federal intervention on how this social data is to be used and reused will have large scale implications on the HR technology industry in particular. 

The Indian Ecosystem

One of the biggest events in HR Tech space for India was the announcement of Multiples PE acquiring a majority stake in PeopleStrong for INR 400 Crore (Approx USD 63 million). This deal confirmed that HR industry is shifting from services to technology to address the evolving needs of client organizations. The realities for Indian organizations are not very different than their global counterparts and organizations like PeopleStrong which have anchored their services with strong technology solutions are winning in the Indian market. 

While the above deal showed the headroom available for an already successful player in the HR technology sector and indicated the ambitions of Indian entrepreneurs to build global HR technology and services company from India, the start-up ecosystem also received its fair share of positive news in 2017. 

The biggest news came from MindTickle, which bagged a series B round of USD 27 million from Canaan partners, thus making it one of the well funded HR tech start-up in the country. 

In another interesting hand shake, Zeta a fintech solution provider in digitized employee benefits solutions made an equity investment in ZingHR, cloud based HRMS, for an undisclosed amount. With these 2 players coming together the Indian HR tech space is getting ready to offer uniquely blended solutions to customers in Indian and potentially global markets. 

Cloud based HR tech start-up Darwinbox secured USD 4 million in series A funding. EdgeNetworks, an artificial intelligence driven HR tech solutions company; raised USD 4.5 million in their series A. Both companies plan to use the funds raised to further strengthen their technology offering while also looking at expanding customer base in Indian and International markets. 

If one looks at a list of HR tech start-ups in India, one is likely to see a diverse list of companies helping organizations of various types solve multiple business challenges. Many HR tech start-ups in India are also very adept at using the technology trends of SMAC, AI, VR and analytics which are prevalent in the global markets. 

The Indian HR technology buyer is thus spoilt for choice. The buyer has to choose from global and local solutions available via established and start-up organizations, thus making the process a bit more complex. As we progress to 2018, we expect that buyers will increasingly look to stitch together innovative solutions that solve their unique business challenges; while HR technology solution providers will continue to innovate as they evolve to help customers in the digital transformation journey. 

References:
10 Disruptions ahead
India HR Infographic
HR Tech Startup Funding
Annual Survey Research
People Matters HR Tech Study
HR Technology
Microsoft report 
Microsoft to acquire LinkedIn
MS-Linkedin begin journey: Satya Nadella
Nadella to partners: We have an unprecedented opportunity
MS dynamics 365 
Satya Nadella's new product 
What Google Hire can do for you 
More than 3M businesses to pay for Google G-suite
Facebook Q2 quarter earnings
Linkedin Judge
Multiples Acquires majority stake in PeopleStrong
MindTickle raises Series B funding
Zeta picks up stake in ZingHR
Darwinbox raises $4 million
List of 20 funded HR Tech Startups
HR Tech: Problem of plenty