HR Tech – November 2018 – News  Analysis

The month of November has recharged the HR Tech space yet again, with an estimated USD 1.5 Billion dollars exchanging hands in various deals. Acquisitions, partnerships and heavy duty funding rounds continue to keep this space active. Read for more details.

The Blockbusters

Paychex decided to acquire Oasis Outsourcing in USD 1.2 Billion deal, indicating that the interest and action in the basic services are far from over. We reckon that such deals will continue as service providers continue to augment their offerings via technology solutions. In today’s world of work, technology is no longer an afterthought but an essential component of how you would do business, hence building and leveraging technology capabilities becomes integral to the survival and growth of all HR service provider, primarily the ones providing payroll and benefits services.

Workforce management software, Deputy, raised USD 81 million to continue its expansion. This deal indicates that the gig-economy based applications are only increasing in prominence. Certain typical businesses are dependent on hourly workers; certain other businesses are increasingly looking at fulfilling their business peaks via such hourly workers thus giving rise to solutions in this category. We reckon this category will be a default in most staffing solutions in near future.

The Brass tacks

Continuing this trend of heavy investments in addressing the basics is Workable. With its latest round of USD 50 million funding, this company looks at solving recruitment challenges for global SMB customers. The recruiting services market is estimated to be around USD 270 billion and we see solutions approaching this market in two different ways. The first type of solutions is focusing on improving efficiency and effectiveness of the recruitment service providers while the second type of solutions is looking to completely replace these agencies by giving more control to SMB owners and managers. It’s an interesting space within HR Tech and we believe both approaches will thrive and survive in the market.

The gig-worker story gets further strengthened firstly by USD 32 million raised by Wonolo, an app that helps companies find temporary workers and contractors. Secondly, Zenjob from Berlin raised Euro 15 million (Approximately USD 17 Million) to help companies find temporary staff quickly, they intend to use the funding for expansion within and beyond Germany

It’s not all about money or is it?

LinkedIn learning announced that it will now integrate with third-party content and will also enable learners and teachers to collaborate by sharing questions, answers, and feedback. This is an interesting development in the enterprise learning solutions space and we firmly believe this further entrenches LinkedIn learning as a viable solution in this market competing with category-specific solutions like CornerStoneOnDemand and other enterprise solutions.

Microsoft, the parent company of LinkedIn, announced that it has launched Disco, an app that helps companies build a stronger culture and recognize right employee behaviors from within Microsoft Teams. This is a perfect example of multiple categories within HR tech, collaboration, recognition, and continuous feedback, merging together to create a unique offering.

With these 2 announcements in 1 month, the landscape of HR technology solutions providers has Microsoft as a very serious player. Earlier Josh Bersin also commented on how Microsoft has been building its HR Technology play. We concur that with its enterprise solutions, Microsoft is in a very unique position to create innovative and disruptive solutions for HR

Mercer earlier this year acquired Mettl and this month announced its incubating 6 HR technology companies. In its first such effort, it claims to have received 200 applications and selected 6 companies primarily within learning and HR operations to help them build relevant products. This is great news for the industry where more and more consulting companies are taking interest and creating eco-systems for technological innovation to thrive. One of the biggest challenges for an HR tech start-up is to get the right test bed to perfect the idea, Mercer’s initiative is hence laudable.

News From Asia

We saw USD 23 million invested in Series B in China’s HR Tech player, WorkTrans. This is said to be one of the biggest investment in Chinese HR tech. The solution here once again focuses on managing hourly or daily rate workers and augments the gig-economy. The company aims to use this funding to improve its offering in scheduling, forecasting and performance management, indicating Asian HR Tech players are at par with their global counterparts in terms of creating relevant offerings and the whole HR Tech story globally consistent.

Another major global trend which is visible in Asia is the rise of collaboration software and with its USD 20 million Series B funding Eko communications from Bangkok is now looking to take up competition in Europe. With Slack, MS Teams and FB for Workplace looking to target enterprise customers in this space, the stand-alone collaboration platform solutions would need to innovate. We have already seen earlier in this report how MS Teams is looking to merge multiple categories within its collaboration platform thus heralding a very interesting time for this category in particular and HR Tech in general.

In Conclusion

Overall the month of November further consolidated trends visible at the beginning of the year and gives us confidence that the momentum for this industry is only likely to grow from here. Artificial intelligence is truly out from the experimental phase to the implementation phase, we expect that to drive buyer interest and vendor innovation in the coming year.