Q-1-2020 For HR Tech Amol Pawar, April 26, 2020June 23, 2023 The JFM quarter in 2020 for HR Tech has been a great start. This is all of course before the world was gripped in the Coronavirus pandemic. I have used 2 data sources for this analysis. Both are credible sources and the stories they tell are similar yet different. The Starr Conspiracy Data This is one of my favorite resources when I read and soak up on the latest in HR technology. They have a fresh outlook and I just love the way they put their point across. The Starr Conspiracy team provides us numbers for work tech investments and not specifically HR tech. What’s the difference between the two you ask? Well, that’s not clearly defined by anyone yet. The work technology brandscape 2020 report broadly tells us work tech is bigger than HR tech. It hints at what could and could not be HR tech. But we feel this is an evolving space and the boundaries are not clear. The Work Tech weekly email on 10th April talks about USD 2.04 billion invested in work tech across 77 deals. It also claims this is up by 20% from Q1 2019 (USD 1.7 Billion with 69 deals in Q1 2019) The Forecasts The report is optimistic about the outcome for work tech companies especially SaaS companies in this space. It indicates that while the S&P index was down 11% over the last 2 years (through March), SaaS company stocks have surged by 11% over the same period. With more and more companies focusing on enabling remote work and rethinking their way of work, we also agree with this optimism about SaaS in general and work tech or Hr tech. One of the forecasts this report makes is for a significant shakeout in the talent acquisition market. We concur on this too. As companies’ would reduce or hold back hiring, Talent acquisition companies will struggle. As that happens, they would look to consolidate their gains. TA companies have been the hot favorites with investors for a very long time and this period is a perfect setting for consolidation and shakeout in this space. HR Wins Data If you want to focus only on HR Technology specific data and cut out the Work tech noise, for now, we recommend you look at HR Wins by George Larocque. He is one of the HR Tech analysts who has been tracking VC deals in this space for the past 13 quarters. According to his data, USD 867.3 Million were invested in HR tech deals in Q-1-2020. This is an almost 50% drop from USD 1.74 Billion invested in Q-1-2019. The number of deals has nearly halved from close to 90 in Q-1-2019 to 56 in Q-1-2020. HCM category received 60% of the total investment in this quarter. The report further elaborates these as Benefits, Wellness, Core HR, and Payroll. Talent Acquisition finds a place in the top 5 mainly due to Marketplace Job boards. This report indicates that based on conversations with the VC community, the impact of the Coronavirus on HR Tech investments will be visible in Q2. There is an expected slowdown in deal closing during this quarter. Interesting Deals We looked at the top 20 deals and details shared in this report and found the following as key interesting deals. Wellness Mantra At USD 93 Million, it is one of the biggest wellness deals. Headspace raised this Series C round, with participation from The Times Group of India global investment and partnership arm, Times Bridge. We found this interesting because firstly it has an Indian origin investor. Secondly, it’s a significant investment in the concept of “mindfulness” and its impact on individuals and the workplace. Especially in the current health crisis, this assumes a lot more significance. We believe individuals and organizations are more likely to focus on their mind and body health in times to come. Josh Bersin in one of his articles estimates the wellness industry to be worth USD 48 billion. This industry in our opinion got a shot in the arm in the current crisis. Email reimagined The email has not changed drastically since it entered our lives roughly 2 decades ago. Google has made some shifts in this space but nothing that really can be considered a fundamental shift. With workplace collaboration gaining momentum and now significance in the current crisis, this space is heating up. Front, which claims to be disturbing the inbox while being in the inbox, raised USD 59 million led by Atlassian. The other investors are co-founders of Qualtrics, Okta, and Zoom. Do you notice how a shared inbox company is surrounded by companies in collaboration, ticket management, analytics, authentication, and communication? We find this an extremely potent mix for a fundamentally integrated and differentiated offering to emerge from this alliance. The coming together of these guys could not have been well-timed than Q-1 of 2020. I hope internally they are now re-prioritizing and accelerating the development. Learning The Re-skilling of existing staff is going to hit a new high in the current scenario. Hence we find the investment of USD 20 million by Sequoia in Bangalore based InterviewBit interesting. The platform offers a 6-month intensive course to enhance the coding skills of professionals. Though the news of the investment focuses on students as the target of this platform, we believe the current crisis presents an excellent opportunity. This company can quickly move into corporate reskilling and enable this process in large Indian and global organizations, especially when everyone is working remotely. Conclusion Considering information and data in these 2 resources, we are very happy with the way Q-1-2020 has turned out for HR tech. We truly believe this crisis presents great opportunities for Worktech and HR tech players. Specific categories like Wellness, Learning, and Benefits are likely to witness accelerated adoption. These categories are likely to witness a surge in specific demands from customers for specific solutions to these times. We are hopeful and optimistic that Q-2-2020 of HR tech will be full of such stories of triumph. We are looking forward to these times when we will redefine the way we work. Featured HR Tech
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