Ayswarya Murthy | Jan 25, 2021 | 6 min read
Technology helps manage India’s vast human resources
Ayswara Murthy, Contributing writer
BANGALORE, India --- Human resources departments have been late adopters of technology, but now they seem to be in a hurry to make up for lost time. Last year, investors pumped a record $165 million into Indian startups developing cutting-edge solutions for a rapidly changing HR landscape. In the first half of 2018, 13 deals collectively valued at $71 million have been closed, says Venture Intelligence, a Chennai-based investment database. But these bets just scratch the surface of the challenge of optimally selecting, training and placing India’s enormous workforce.
Despite being a data-rich segment best positioned to take advantage of the progress in artificial intelligence (AI) and machine learning, HR has been slow to innovate. “The most popular HR tech software in the world is still Microsoft Excel, regardless of what anyone tells you,” laughs Rishabh Kaul, co-founder of Belong, a data-driven hiring tech startup.
But Kaul says a growing number of companies have started to use sophisticated tools for recruitment, on-boarding, sentiment analysis and so on. Investment are flowing into the areas being transformed as companies ponder what digital transformation means to them.
A report last year by Sierra Cedar on the HR Tech Landscape Study for Asia said that 50% of India-based organisations surveyed were looking at improving or developing a new enterprise HR systems strategy in 2017. One of the many reasons driving this trend was because organisations now desired to adopt emerging technologies like embedded analytics, mobile capabilities and integration with social platforms, it said.
Industry publication, People Matters, has been running an HRTech Start-up Program for the past four years where early-stage startups in the HR technology space are invited to interact with investors, mentors and buyers while showcasing their products. Their fifth and upcoming one in Gurgaon in August has generated a lot of interest. "Last year, we had shortlisted about 27 companies who had pitched their platforms at the event. This time we have planned to showcase 50 startups that have been in operation between 3-5 years, across domains like recruitment, employee benefits, talent management and more," according to Nikhil Bhardwaj, Sales and Partnerships Manager at People Matters.
Samir Kumar, managing director of venture capital fund Inventus, says enterprise software in general has seen good funding interest. “With faster customer adoption of HR tech solutions, investors have become more open to funding such ventures,” he says. Inventus has invested in the learning and assessment platform designer Knolskape.
Early last year, Belong raised $10 million from Sequoia Capital India. In 2017, the largest investment in Indian HR tech was the $62 million bagged by cloud-solution provider PeopleStrong. “The market for technology products is slightly over $1 billion and it’s growing at 30% a year. Considering the size of the Indian workforce, the investment hasn’t been proportional but it’s increasing,” says Chaitanya Peddi, co-founder and product head at Darwinbox, a comprehensive HR solutions provider that raised $4 million last June.
“No one solution would work in isolation for one company,” says Hari Krishna Reddy, co-founder and CEO of Param.ai, a recruitment-software developer. “Some companies would choose to invest more on assessment, some on building the application-tracking system, some on background verification. As long as you are only selling a technology product (and not a database, for example) you are not restricted to India either. You are geo-agnostic and domain-agnostic.”
Today, companies are constantly revaluating their purpose, rethinking what they are doing and how they can be competitive, says Kaul of Belong. “There is a convergence of skills happening.” Banking jobs, for example, are no longer limited to the banking sector, but also in internet companies that are moving into the payments space. So, people with certain skills have many more options today and companies are keen to stand out.
While creating a job posting on a database service using skills as keywords, an AI system understands how the different skills are connected. Because skills are being added at a high rate, if you fail to mention one of these, you miss out of the very people are you looking for, says Kaul. Also, with a lot of the ‘new-age skills’, it’s still a challenge for HR to set benchmarks. How do you know how competent your potential new recruit is in these sorts of skills?
Then there is the universal struggle of engaging and retaining employees. How do you get people excited enough to stay when they have so many job options? “My dad spent his entire life working in one company and that was common,” says Kaul. “But millennials will have at least 7-10 jobs in their lifetime, with average tenure of 2-4 years. These are big changes and we will be able to solve them using analytics and data, because there are a lot of insights that can come from publicly available data, both about people and companies.”
Beyond recruitment, larger themes have become important around HR. “One is the future of work. No one was talking about that even five years back. Today, we are thinking deeply about the different kinds of people who are going to be working and in what sort of jobs. Whole aspects of HR, right from the time someone thinks of a new opportunity till he retires, all are being disrupted by technology,” says Kaul.
There is also a lot of potential in using technology to improve the level of engagement and the culture within the company. “A competitor can copy your product, your supply chain, your distribution model but they can’t copy your culture and the kind of people it attracts,” says Peddi of Darwinbox. “And currently the way many companies are accessing engagement is by running an annual survey. You draw your conclusions based on that and design interventions for the rest of the year. This is not going to work. It has to be more continuous; I’d rather know the daily pulse of my employees.”
“To know that, you need a system in place that will evaluate employee performances objectively and in real time,” Peddi explains. “And whatever data is already getting generated, you can assess it yourself rather than asking your employees directly how engaged they are. This is how you really identify who are the actual contributors, what kind of people are successful in your organisation. This will have direct implications on your recruitment. It’s all going to be very different from how we are doing it today, which is pretty much guesswork,” he says.
1. PE/VC investments in HR tech startups in India
<iframe src="//datawrapper.dwcdn.net/jo9oK/1/" scrolling="no" frameborder="0" allowtransparency="true" width="600" height="400"></iframe>
2. Top PE/VC investments in HR tech (2017-YTD)
<iframe src="//datawrapper.dwcdn.net/ZfqZw/4/" scrolling="no" frameborder="0" allowtransparency="true" width="600" height="352"></iframe>
More stories published under