The Emerging Trend of HR Technology

HRTech

or more formally known as Human Resources Technology is collectively used to denote software and associated hardware. Hence, HRTech automates the human resources activities in a business establishment. This broadly includes employee payroll, compensation, administration benefits, talent acquisition, management, workforce planning & analysis and performance management.  There has been a rapid development in HRTech in recent years. It is seen that Midsized and large employers are adapting to HRTech to better plan and manage their Human Resources. Companies such as SAP and Oracle among others are developing enterprise software. Not only new businesses but also many others are now entering the second generation of HRTech with advancements in cloud platforms. Businesses that do not have in-house HRTech prefer to outsource it to third-party providers.  

Why HRTech?

In any organization, Human Resources require careful evaluation and consideration. Moreover, with changing times, technology has paved the way for planning, managing and analysing the HR aspects of a business. The pandemic witnessed maximum challenges in retaining and managing employees. Here is what the segment analysis of HRTech looks like:

The “T” in HRTech 

Artificial Intelligence & Machine Learning are working deep in HRTech along with technologies like blockchain making their presence felt. Blockchain technology can help with data management and other human resource activities for businesses. Similarly, certain HR areas are already adopting blockchain-inspired solutions. Deel, Bitwage, Papaya Global, and Chrono Tech are some of the firms that provide adaptive technology. These help manage employees while diversifying income sources. Also, the rise of new HR Technology has created a $10 billion global demand for HR software by 2022. Blockchain is being implemented in the HR space mainly for employee data security & privacy, recruitment & payroll and compliance & regulations.  

HRTech - Funding Scenario 

Business management & execution has changed significantly following Covid'19. According to statistics, more than $11.5 billion of venture capital was injected into the HRTech market in 2021 alone. Markedly, HRTech is expected to grow from $23.32 billion to $38.36 billion by 2030. This opens various avenues for companies to provide extraordinary solutions. As per the trends, by June 2022, about 250 deals were tracked with an investment amount of over $9.3 billion. Out of this, about $5 billion was invested in Q1’22 & $4.3 billion in Q2’22. Even though there are indications that investors are being cautious. Looking at Q2’22 figures it is safe to say that cash has become scarce. The HRTech start-ups, however, continue to gain interest & investments by raising capital to meet the rising demands for employee-centric solutions. 

HRTech - Acquisition 

Furthermore, Ceridian HCM Inc. acquired Ascender, an HRTech company headquartered in Japan in February 2021. Through this acquisition, the company wishes to deliver complete HCM (human capital management) & payroll solutions to the APAC region. A cloud-based HR Technology startup, Darwinbox raised $72 million in a funding round in January 2022. Up till June 2022, North America had bagged the biggest share of the funding with $5471.5 million in investments. EMEA region among others followed suit.  Numerous talent categories are widely attracting investments. Nonetheless, talent acquisition has received the maximum amount of investments followed by talent engagement and talent operations. Although talent planning & analytics is the least explored segment, they have high scope for development as they will lay the basis for these HRTech companies in creating novel & new product offerings.  

The Way Forward

Today, HRTech is steadily gaining popularity worldwide. With changing preferences and behaviours it is important that the HR division of a company take the necessary steps to keep up with the technological advancements. Automation and cloud-based HRTech products will enable quicker and faster processes. However, with digital adoption, the concern for data security and privacy is undeniable. More and more HRTech companies are working on finding apt solutions to curb such issues. It is safe to say that HRTech is the next big thing that will change the face of how enterprises, irrespective of their business sizes, go about managing their human capital and the leaders of tomorrow. 

Authored by Richa

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