The HR technology market place is expected to be a $34 billion market by the year 2021. Almost $3.6 billion worth of that business is expected to come from Asia include ing India.
As the market for new products and solutions continues to grow, People Matters reached out to the investor community to understand how they are studying the market? How do they assess HR tech products for sustainability and scalability? Which solutions have the potential for long term success and what are some exciting innovations to look for?
Participating in this webcast discussion was Aniket Lila from Investment Team, Nexus Venture Partners and Nayrhit Bhattacharya from Investment Team, Chiratae Ventures (Formerly IDG Ventures India). And moderating this conversation was George Oommen, Sr. Director - HR, Technology & Process Consulting.
Classifying the HR tech market
Each discussant presented their version of the landscape of solutions. Nayrhit divided the solutions into three broad segments: Talent acquisition, employee lifecycle management and ancillary solutions. He noted that while there is a great push to digitize the talent acquisition segment, there are a growing number of products in the employee lifecycle management space. Aniket split the market into: Talent acquisition, management and development. George noted the rise in fitness and wellness as well as team management tools in the HR tech space which are being integrated into employee engagement metrics.
Assessing products and companies
From an investor’s standpoint, Aniket and Nayrhit pointed out that there a few key aspects that funds look at:
1) Team – Who are the team members? What is the composition of talent and are they capable of delivering on the promise of the product or service?
2) Market landscape – How does the product compare to other products in the same vertical?
3) Utility – This is a step of due diligence. At this point, investors reach out to senior business leaders and chief human resource officers to understand what they think of the product or service. And they ask critical questions: Does the product have a potential for long term? Would they use it in their own business context?
4) Scalability – Is the company able to create a template of the solution using technology? Or is it just a solution reaping high margins while not able to scale up?
5) Short term or long term – Is the technology only solving for a single use case over many years? Or is it able to offer a cross sell of different products that could have long term value?
Speaking about the characteristics to look for in HR tech, George used the acronym OPENES which stands for Omni-channel, productivity, efficiency, network of teams (can it support virtual workforce?), experience design, and simplifying processes.
While there is a need for a mature market and an increased spending potential in the marketplace for exciting new innovations, Aniket noted that the rise of gig workers has the potential for new tools in HR tech. Companies are already encountering challenges in managing this new set of talent – How do you manage this cohort of talent? How do you personalize rewards for them and how to assess their performance?
Another way to think about new innovations are “employer focused vs. employee focused” tools. Aniket noted that while a number of solutions have now become hygiene factors, the new innovations will tackle the motivating factors with the employee in mind. However, only a handful of companies in India are at the maturity level to invest in new innovations.
Watch the complete coversation here: