Our aim here is to decipher the global trends and juxtapose that with what’s happening within HR Tech space in India. Most numbers mentioned here are from the Tracxn report and other published information from Tracxn.
Enterprise applications space
In this space as per the report BI is getting a lot of traction in terms of deals and funding, the cumulative funding under various BI categories is USD 346 Million. Of this USD 136 Million, which is about a third of the total investment, is going in the enterprise BI.
Data discovery via self service which help build data visualization is the key theme here. This part of the BI would have a great deal of application for HR related applications particularly for manpower planning, employee behaviour and other such applications. The 2 companies mentioned in the report, Paxata and Trifacta, do talk about applications in Supply Chain, Security & Compliance and Consumer insights, while our assumption is all of these can be extended to HR. Specifically for companies who are looking to become more contextual with respect to employees and prospective employees, HR will look to increasingly draw from various sources of data & platforms like these will surely be handy.
Within this category, Tracxn has also categorised more HR specific applications like Recruitment marketing solutions, ATS Suite, Employee Wellness Solutions, Employee engagement, HRMS suite for SMB’s, Sourcing for Blue Collared Workforce, Freelance marketplace and Job boards. In these 8 sub categories within the enterprise space, the report mentions that a total of USD 955 Million have been invested. Of these the top 3 from investment perspective are – Job Boards with USD 221 Million, Sourcing for Blue Collared Workforce at USD 202 million and Employee Wellness at USD 145 million.
The India story
From an Indian context, another Traxcn report suggests that job boards in India are not attracting that much attention at this stage with just USD 7 Million invested in last year, while the blue collared workforce related hiring is receiving a higher interest at USD 22 million. BabaJob is the most funded Indian start-up in this space with USD 11.6 Million of funding received so far.
Employee wellness is another space which is under developed in the Indian context right now. There are just 10 players in the report while some players like Fullerlife and Healthifyme are not mentioned in the report. Players like TruWorthWellness, Zoojoo.BE and FeetApart are the funded start-ups in this space in India.
HRMS for SMB’s – The dark horse?
The HRMS suite for SMB space in India is poised for a lot of action in terms of start-up activity and even larger players making efforts to attract this segment, we expect to see a lot of action here. As per Sierra Cedar report – organizations classified as Mid size organizations which have employees between 2500 to 5000 is the space where most of the large enterprise players are getting some initial traction, while players like Workday and Namely are getting some attention here to. In Indian context GreytHR, Weballigator,Darwinbox,HRPlug, HR Mantra, Keka, PeopleWorks, ZingHR and SumHR are some of the players exclusively focused on this space. As per another Tracxn report there are about 108 players in this space which indicates the level start-up activity. However, only a handful of these start-ups have been able to attract funding. This clearly indicates the need for some of these players to build the scale and create a highly adoptable solution which attracts further investments. Given the potential in this market, this is definitely a space where a lot of attention and investment will happen in years to come.
Freelance marketplace – will they won’t they?
One of the global trend that we see in India is the rise of the “freelance” worker, in many organizations we now see people opting for part time work schedules either in pursuit of more balanced work & life or in order to pursue their interests or both.
While this trend is catching up, technology enabled solutions have also come up from a generic solution to a skill specific solution to help companies identify the right talent when they select the freelancers.
Freelance marketplaces like Hourly Nerd and Upwork are well known global platforms that companies use today to find relevant talent. As per another Tracxn report there are about 73 players in this space in India. However the investment activity in this space is yet to pick up, the reason could again be the maturity of the market itself, however if we take a 3 to 5 year outlook we expect a lot of investor interest will be generated in this space. The onus is once again on the start-ups in this space to create an engaging platform which is scalable and able to compete with the global players mentioned above.
Linkedin has already launched its “pro-finder” feature in the US and would soon make it live globally. This is going to be the biggest force in this space and how Indian start-ups tackle that would be interesting to see.
India produces 5.5 Million graduates every year so it’s no surprise that we see a lot of start-up and investment activity in the talent acquisition space. Once acquired the next challenge for most companies is to keep the talent engaged and that’s where this category of HR tech solutions comes into picture. While there are various ways for the same, this particular HR tech space is currently focusing on creating platforms for companies to measure employee commitment to company values and goals, seek regular feedback, and provide insights. There are currently about 16 companies in India who address this challenge and again just from a pure total number of players and investment activity this is one space that would see increased start-up action and investor interest. There are also HR tech players who provide these solutions under their Performance management or talent management solutions, thus we reckon in order to hold onto this niche the HR tech players in this space will have to create something very unique and scalable.
The white spaces
In the Tracxn 2016’s 100 Investment themes report while the above mentioned categories and sub categories have an obvious and direct connection with HR Tech, there are other sub categories in the report which we reckon CHRO’s should watch out for. These categories either have direct application of the solution in HR context or lessons learnt in implementation of these solutions would help the CHRO decide & implement HR tech solutions.
Employee expense tracking and reporting as a category has attracted USD 53Milion of investment. It’s interesting that this is categorized as Fintech and hence the decision making may not be within HR, while it does have a direct relation with the employee experience. These solutions fill an existing gap in ERP and other accounting software. It’s evident the entry point for most HR tech solutions is through the finance route so we expect more & more HRMS players to take up this subcategory & build solutions around the same along with payroll solutions.
EdTech is another category which would have a lot of “lessons learnt” for enterprise LMS solution providers and CHRO’s alike. With USD 768 Million of investment happening in this space, we reckon that many EdTech players will cross over to enterprise LMS solutions and vice-versa. It’s no surprise that Gamified learning is the biggest subcategory within Edtech attracting close to 40% of the total category funding. HR Tech players who provide similar solutions to CHRO’s will have to learn from successes & failures in this space to build easily adoptable solution suite.
The rise of machines
In the recent past we have heard a lot of talk about AI & bots and its application in HR. Well with a combined funding of USD 619 Million categories like – Enterprise Chatbots for Customer Support, BI Solutions through AI technologies, AI based customer service and AI enabled tech solution for enterprise marketing are some areas which we believe HR leaders can learn from.
How can we enable the chat bots who answer customer queries to also answer employee queries? Companies like Ramco & PeopleStrong & ICICI Bank have already created these HR bots, what do we learn from them?
If my organization is implementing a BI platform using AI capabilities to extract insights from structured and unstructured data including text and sentiment analytics, how can I leverage that in HR?
If I run HR shared service centre how can we leverage AI Based customer service solutions which help reduce costs and improve efficiency of client interactions?
What can I learn from my marketing colleagues for use of AI enabled tech solutions for enterprise marketing?
We reckon these are some of the questions that CHRO’s and HR tech solution providers need to ask. We reckon the convergence of Enterprise tech or more specifically MarTech with HR Tech is definitely on the cards. If you need proof, look at Salesforce’s integration with Workday and Successfactors. It has also acquired and invested in HR Tech companies like Rypple, ZenPayroll & Resumator. We all know about Microsoft’s acquisition of Linkedin and its subsequent announcement of integration with Silkroad solutions.
The HR Tech space is at an interesting juncture and the next 3 to 5 years would definitely see emergence of some winners from the plethora of start-ups. We could also see increased M&A activity in the space as we have already seen with AON acquiring Co-Cubes recently. The Indian HR tech space is closely following most of the global HR tech trends and that creates a lot of exciting possibilities and opportunities for HR Tech entrepreneurs and experimental CHRO’s in India.