The last month of the year is to look back and take stock-where did we start from and where have we reached after 12 long months. And when the startups in the HR Tech space look back, they will mostly say it has been a sunny year. From the degree of adoption to the amount of funds flowing in, the startup space has generally seen an increased awareness around technology in HR. With the talks of AI, automation, technology dominating the whole year around, HR Tech saw a definite uptake both in India and globally.
We talked to a number of startups in the HR Tech space such as HRIS provider Talbrum, sustainable credit provider SalaryFits, employee experience platform Dockabl, AI-based one-way video interview platform Talocity, AI-based recruitment startup CutShort, Beatest-AI Enabled hiring solution to provide growth potential of candidates for right hiring in an organization, and JobPin that aims to simplify hiring and skilling of the large, young, and ambitious blue and grey collared workforce among others.
Majority of the startups agreed that globally as well as in India, there has been a huge spike in interest and fund flow into the HR Tech space.
A sunny-side-up year for the HR tech startups
Vinay Dalal, co-founder of Talbrum, which provides a low cost yet complete feature HRIS and productivity tracker for MSME industry says that startups depend as much on the product as on the business network of the management team to get into a revenue stream and develop a customer base.
“So, depending on the product and the business network of the founder some of us had an excellent year. Personally we grew thrice over as we started at a lower base of users in 2018,” he reveals.
Guilherme Mota, Head of Operations for SalaryFits believes that year after year we are seeing more "Tech" industries bringing innovative solutions for any kind of need, which applies to the HR industry as well.
Similar thought are essayed by Sandeep Khomne, Co-founder of Pune based JobPin, who stated, “2019 has been an exceptional year for startups and especially for JobPin since we entered this space early this year.”
Khomne adds that prior focus, in any kind of HR initiatives, was primarily on white-collared workers. The last few years have seen a growing focus on the blue and grey collared workers, something which is also the need of the hour.
Samarth Masson, Co-founder of Dockabl, believes that 2019 was the year of specialization with more and more startups picking up a smaller deeper area to build specialized products, rather than building mammoth ERPs.
In addition, smart technology is fast becoming the new face of business, stated Ketan Dewan, Co-founder & CEO, Talocity. Companies and organizations are rapidly adopting AI for a stand in the ever-competitive industry. The impact of technology equally touches the department of Human Resource. 2019 has witnessed a striking shift from traditional HR methods to AI-automated methods in the HR tech world.
Aye for AI but adoption, hiring still a concern
Like last year, AI received big thumbs up from both organizations and individuals this year. AI/ML-based jobs were as hot as ever despite general industry hiring remaining a concern", says Vinay.
No wonder, tons of solutions for hiring, and again, solutions to solve an HR pain in the process remained a trend throughout the year as per Guilherme.
Similarly, adoption like hiring is still a concern.
“Most HR tech startups are struggling with end-user adoption. HR is buying products but the take up with the end-user or the employee is very low,” reveals Samarth.
Meanwhile, trends such as creative job descriptions, optimization of candidate profiles through AI, and lessening of the workforce bias also marked the year 2019 for HR Tech startups, points out Ketan.
“Organizations are using smart AI technologies for automated screening of resumes like never before. While this is also seen as too casual, and too machine-like that it may not give a traditional fair chance to applicants during the whole process, the fact remains that it is fast being adopted by many companies”, adds Ketan.
Further, he points out that the more we are aware of our biases the more likely we are to address them and try to have it in control. Many organizations are beginning to process the hiring process with the best effort to keep biases at bay.
The same is reiterated by Nikunj Verma, founder of CutShort who adds that while talent acquisition remained a tough challenge for small to midsize companies looking for pre-skilled talent, the good news is that after being on the fence for the last couple of years, more companies have started looking at upgrading their talent acquisition with AI tools.
Challenges Ahead: Education, adoption, investment
While the HR world is warming up to HR Tech startups like never before, yet educating the market still remains one of the biggest challenges for these startups.
Guilherme adds, “Sometimes I feel the wrong perception of the "Startup" concept from big corporates in India is a hindrance. Startups can indeed have scale with technology, but corporates tend to think that all these companies are at an early stage and not ready for the market.”
In the case of SalaryFits, educating the product about improving financial inclusion and financial wellbeing of their employees, a concept which counterparts in the west have been championing as an important part of HR spectrum, also took time.
Thus fast adoption of technology remains another challenge.
Sayantan Chatterjee, Founder of Beatest feels that the major conflict in the world of Human Resource is often the human element. While technological advancements have come in leaps and bounds, the perfect confluence of tech and human is yet to be achieved.
Also, low price points where a certain kind of product players have really ruined the market by offering really low rates to customers, is another challenge feels Samarth.
“Long sales cycles where the selling remains to be largely relationship-based, lack of excellent tech talent that leads to product capability issues in terms of security, scalability and bugs, and the fact that most VCs investment thesis is now focused on global SAAS where they look for out of India traction (mostly US-focused) to seriously consider investments into HR Tech are some of the other challenges,” adds Samarth.
The capital intensive nature of the B2B2C market is another challenge for HR Tech startups venturing out.
“There is always a chicken and egg problem that any startup needs to solve with regards to proving the right product-market fit and securing an investment. This challenge becomes more difficult to solve in a capital intensive domain,” adds Sandeep of JobPin.
Ketan believes that establishing a company culture and spelling out company policies is one challenge all startups face.
He says, “Starting a company means establishing the company everything from scratch, and amongst the most crucial is the company policies. Most startups swing with “if it isn’t broken there’s no need of fixing” which results in deeper damage in the future. This is why the proper laying down of policies and procedures for a sharp definition is very important. This eliminates the threat of business confusion and workforce panic or mess.”
Most of all, poor company culture will barricade the company from hitting its highest potential and efficiency.
And this ability to actually deliver on a tall promise is something all startups face as a challenge, feels Nikunj. Building and scaling, adoption issues due to changes needed in a set workflow are barriers in the way of HR Tech Startups. To add to it, while there is increasing investor interest but many investments are still waiting for more data points.
Hence, while all in all, it has been a good year for HR tech startups, with the need for advanced HR software and solutions to satisfy the new age demands leading to storming of new ideas, products, and solutions like never before, HR Tech startups are still pining for more adoption, more interest by organizations, more investor interest as they march into 2020. Will their wishes be realized, is something the approaching year will only unfold.