Is 2017 the year of HR Technology Startups?

As businesses strive for growth amidst increasing competition and greater consumer expectations this year, HR's responsibility of unleashing the potential of the workforce will increase leaps and bounds. Following suit of other business functions, HR has also been looking at technology to aid in this endeavour. According to People Matters-SAP HR Technology Study 2016, 98 percent surveyed said they have been leveraging some kind of HR technology and many of them plan to invest further in HR technology. This market need is what is driving HR technol- ogy companies to emerge in this space and solve the varied people problems that organizations face. The market demand is what drove the growth of other functional startups in the space of marketing, finance, business intelligence as well as legal and it is a similar market demand that is encouraging companies to emerge.

The number of companies that have been founded in the HR tech ecosystem and the investments they have received has only gone up since the trend kick-started in 2012 in India. What began with a $10 million cumulative investment in 2012; rose to almost 5 times to $50 million in 20151. The number of companies founded also tripled from 75 to 235. The number of startups, the number of funding rounds, and cumulative investments have been increasing steadily, if not exponentially.

2016 has been an anomaly with the cumulative funding (disclosed) being $16 million (till September 2016), but it is a year when the overall startup funding has also taken a hit (overall funding has gone down from $9 Billion in 2015 to $3.5 Billion in 2016). Globally though, HR technology companies have continued to attract a lot of attention from investors. Globally, $1.98 Billion funding has been received, according to a report by CB Insights2, a global analytics firm. The investments in HR technology have been projected to reach $2,395 Billion by the end of 2016 (In 2015, it was $2,472 Billion), alongside a projected 15 percent increase in deal activity. The maturity of markets may be cited as one of the reasons why Indian market has taken a slight hit in investments, but despite a country-wide slowdown, HR tech companies have continued to emerge, and investors have continued to trust HR technology companies with their money.

With a maturing market, investments flowing in steadily, and HR tech market being called “hot” by experts globally; this Cover Story asks the question if 2017 will be the year of HR technology start- ups? This Cover Story package captures opinions of founders of HR technology startups, investors and incumbent well- established players in the HR technology ecosystem.

• HR Tech Market India – The adolescent in the adult world!: Pankaj Bansal, Cofounder & CEO, PeopleStrong
  
  
• Why entrepreneurs are venturing into HR technology space? Bhavin Turakhia, CEO & Cofounder, Zeta
  
  
• Solving particular HR problems? 2017 may be the year: Harishankaran Karunanidhi, Cofounder, HackerRank
  
  
• Forward & Upward: HR Technology in 2017: Arjun Pratap, Founder & CEO, Edge Networks
  
  
• HR Technology Space – Then and Now: Sanjoe Tom Jose, CEO, Talview
  
  
• HR tech startups need to showcase scalability: Utkarsh Joshi, Principal, The HR Fund
  
  

References