Disruptive tech is fueling investment and innovation in Indian HR Tech

As the pandemic pushed organizations to work remotely, the HR Tech space saw an influx of investments

The Indian HR (human resources) Tech industry has, in recent years, witnessed a wave of new investments. The sector has accrued considerable funding in the past two years, primarily driven by the Covid-19-induced lockdown.

As the pandemic pushed organisations to work remotely, the HR Tech space saw an influx of investments. Instead of slowing down, this trend has only picked up steam as the sector is now experiencing massive technological disruption, according to experts.

According to data from Tracxn, a market intelligence platform, HR Tech start-ups have raised $426 million in funding from 83 rounds (between January 1 and November 28) in 2022. Further, the whole of 2021 saw $796 million in funding across 123 rounds. At the beginning of this year, saas-based HR tech platform DarwinBox, hit the unicorn buzzer as it raised $72 million in its series D round of funding.

Another example of increasing investment in the sector is Keka, a SaaS-based HR Tech platform. The firm had, earlier this month, raised $57 million in series A funding. The company assists Indian SMEs with 20 to 5,000 employees and streamlines and automates payroll, recruiting, leave and attendance, performance management, and more.

“With a mission to create better employee experiences, Keka has moved on from clunky interfaces that had become antiques. We focus on transforming the HR function into a strategic one as opposed to an administrative one by streamlining workflows and automating administrative tasks,” said Vijay Yalamanchili, CEO of Keka.

Keka, which started with a team of five, now operates with a team of over 550 employees. The firm has modeled its platform using a cloud-based software system that revolves around employees, who Yalamanchili says are “the brick layers of any business.” 

“We use elements of gamification to drive desired behaviors among the employees, which helps us drive self-accountability,” he said.

Sekhar Garisa, CEO of job platform foundit.in, formerly known as Monster.com, attributes this new wave of innovation and investments in the HR Tech sector to the increasing integration of disruptive technologies.

“HR Tech is a sector that has not witnessed the impact of technology disruption over the last decade unlike sectors such as e-commerce. Companies have gotten incrementally better, but not disruptively better,” he said.

The revamped foundit.in has incorporated the use of artificial intelligence and machine learning (AI/ML) algorithms onto its platform to offer comprehensive solutions to recruiters and highly personalized and contextual services to job seekers.

With foundit.in’s customized search results feature, candidates will receive results and recommendations curated to their educational background, employment experience and validated skills, Garisa revealed.

According to Sachin Alug, CEO, NLB Services, a talent solutions firm, emerging technology tools are the driving force behind growth in the sector.

“With cutting-edge technologies taking the front seat, many emerging tech tools have become a key reason why people are deploying HR Tech applications in their business operations. For instance, handling payroll functions have become easier than it was in the past. Not to mention, there is no room for manual discrepancies. The power to integrate disruptive technologies while streamlining operations is something that is driving growth,” he said.

Alug believes that this continuous growth is also due to the ease of work HR platforms now offer. “From better employee tracking to enhanced talent acquisition to stronger privacy and security controls, HR tech has been a great technology partner to businesses whenever they need tech support in handling HR operations,” he added.

Some of this tech adoption is also because of pandemic and the sea-change it brought in working conditions. From Work from Home, Work from Office and Work from Anywhere to a hybrid setup the HR departments have traversed a lot. Mayur Taday, Chief Business Officer, TeamLease Services. “Companies feel the need to provide a uniform and standardised employment experience to all the employees and improve employee engagement and employee health.”

He further said that an effective and efficient Tech platform is being seen as an answer to address this complex need. “AI/ML is also helping understand trends, repetitive behaviours and proactively suggest solutions and prognosis. So, AI/ML is definitely one of the important vectors of growth in the sector,” he said.

Keka’s Yalamanchili also says that AI/ML is certainly going to add a lot of value in terms of streamlining and automating processes for the HR tech industry. However, humanization of the digital experiences will play a key role in driving adoption of these technologies.

“Gone are the days when we would focus on becoming merely digital, adopting a digital approach. Humanizing these technological processes is the new buzz word, which will help leverage AI/ML,” he said.

According to talent acquisition experts, there has also been a burgeoning emphasis on human capital in the last few years.

“Organisations have been witnessing a widening employee and employer gap. This stemmed from a lack of trust, both from the employee as well as the employer. Moonlighting too has come into the picture, distinctly proving that employees are not aligned with organisational values anymore. But solving this issue is what is helping companies grow rapidly,” said Yalamanchili

“The HR department has become more important than ever. HR professionals are moving towards a strategic role than merely an administrative one. Due to this, another HR transformation is in the cards soon,” he added.

foundit.in’s Garisa also echoed a similar opinion. “We had a phase where machines were more important than people. But the importance of people has gone up among businesses tremendously in the last few years. The success or failure of business is largely dependent on the quality of human capital you have and organisations are now becoming increasingly willing to pay more for top talent,” he said.  

Since deployment of disruptive technologies in the sector is still at a nascent stage, experts believe that growth in the sector will only accelerate.

TeamLease’s Taday says that HRTech has to touch every aspect of employee lifecycle including learning, productivity, engagement, talent supply chain development and give CHROs much more insights about the human capital assets they own.

“The emerging trends are Zero Touch employee search, screening, and onboarding as a seamless experience. This will identify right fit candidates and give them world class onboarding experience. Similarly, technologies like blockchain will help map the entire career journey of employees and help in background checks and help search for niche skills/experience,” he said, adding, “The growth of this sector will only accelerate in future since we are just scratching the surface in deployment of HR Tech technologies.”

Sachin Alug of NLB Services believes that HR Tech platforms now have the tech expertise, so they must leverage emerging technologies and look for ways where businesses can further simplify their HR processes.

“This growth is definitely going to continue in the near future, considering emerging technologies, such as blockchain, metaverse, and more, are gaining increased attention. Innovation is the driving force to be a step ahead in the market,” he said.