HR-Tech Spend by Enterprises and Growth/Decline: 2018 to 2019

Meeting with several TA and HR leaders at large enterprise accounts (Indian and MNC organizations) who are in the decision making positions; we categorically collected data around their HR Tech spends in 2018 and 2019. While we came across several point solutions (new category products) that solved a very specific / niche problem within the TA or HR function, we limited our data aggregation and analytics to the top 7 product categories. By far these constitute 80%+ spend in the HR-tech today.

Below are broad perspectives on how to spend on each HR-Tech category has grown or declined in the last 2 years broadly.

     1. Applicant Tracking Systems (ATS)

While ATS is largely an administrative process automation system, its need has been felt by almost all the large enterprises. Apart from just being able to track applicants; the greater need was to ensure compliance with regulatory requirements. Hence the number of ATS providers grew significantly in the last 3 years. Because the purchase was quite driven by compliance. While most legacy ATS systems primarily focused on process flow and compliance; little they innovate from AI perspective. Hence many purchases of ATS in 2018 were driven by the need to replace existing legacy ATSs by new age AI savvy ATSs. Significant HR-Tech spend in 2018 went in this domain and hence logically; 2019 is seeing a decline in ATS purchases

     2. Employee Management and Experience

This was almost a new category in late 2017 and early 2018. Need to ensure great employee experience primarily from a retention perspective, investments in this category grew rapidly in 2018. Further, most of these systems were implemented via a ChatBot based application, many AI Conversational drove, the adoption grew very fast; further enhancing the spend in this domain. However, while ChatBots did help employees to address their operational queries; the promise of enhanced engagement and hence retention has yet to be proven. From our initial studies at the beginning of 2019 on Chabot’s for Talent Management; it did not show a positive trend in terms of growth and investments.

     3. Sourcing Solutions

Sourcing has been a perennial problem for every TA function. While from 2013 to 2017 the Job boards ruled this space (Naukri, Monster, Shine, etc); there has been a general not-so-positive sentiment on the effectiveness of the job boards. 2018 saw a lot of activity on investments in Social Sourcing. Many startups emerged in the Social Sourcing domain, but very quickly retracted due to LinkedIn becoming a direct single source for hiring. Other social networks like Facebook, Twitter, Quora, Instagram have yet to show significant output. Interestingly investment in LinkedIn, Indeed, IIMjobs do show good promise (they have shown huge benefit in the mid to senior level hiring). We saw a general growth in spends in this category.

     4. AI CV Stack Ranking

AI Stack Ranking had become a huge rage in 2018. But towards early 2019, these solutions did not turn out to truly deliver what TA folks were looking from. The challenge of glorified/fake CV and vague Job Descriptions; ultimately disillusioned the recruiter when they based their screening based purely on stack ranking recommendations. Interestingly most heavily-funded AI Stack Ranking based startups have now started offering recruitment services to ensure delivery of the outcome. This is a regressive step for such highly capitalized startups. Their adopting recruitment service approach also endorses the fact that Recruitment Services companies will not go out of business anytime soon.

     5. Skills & Personality Assessments

 There has been a huge adoption of this category since 2017. With the growing un-employability; the ability to screen the right skills and personality was becoming a key approach to hiring for many mid-sized Indian enterprises and especially MNCs (Global In-house Centers or Global Shared Services Centers). This category is defined by tests administered on the candidates (mandated as part of the process). Apart from operational friction of getting candidates to do the tests; the value delivered to the enterprise has been of high caliber. Skills tests included Technology; Sales; Customer Services etc at one end and Personality tests, which was generally limited to testing leadership positions have started being mandated for mid-level categories. There has been steady growth in the category

     6. Candidate Screening Solutions

While many low to medium volume hiring companies bet on Skills & Personality assessment solutions; High volume hiring enterprises explored in Candidate Screening solutions that delivered quick throughput. Some of the Audio driven solutions implemented Speech AI within their screenings to do match based on what the candidates spoke. Since such screening does not require the candidate to specifically attend a test; the speed of outcome for the TA teams was significantly faster. This a relatively newer category with very few players. This is, however, a latent need currently (companies do not know yet they need this); but has high potential to become the most valuable investment for enterprises. We have seen the highest growth rate for this category with relatively lower investment spends between 2018 and 2019 so far.

    7. Video Interviewing

Interestingly Video Interviewing globally has not taken off for initial level screening. The failure is large because of the adoption by the candidates. It’s a human tendency to be conscious about how they will be perceived and judged based on their video. This intimidation causes them to delay doing their videos and requiring the TA teams to do multiple follow-ups to get them to do it. In the 2016-17 time frame Video for screening had huge hype and investments, but at the beginning of 2018, it tapered significantly. However, some of the new age startups position Video Interviewing as the third-round process and saw significant adoption. Here the candidate was already comfortable with the company they were interacting with and hence did not mind adhering to the request. With newer age Video Assessment solution that uses face recognition and sentiment analysis; investments in these type of video interviewing solutions in on the rise.