AI fuels growth of India's HR Tech companies, GenAI preps for exciting 2024

With the rampant rise in mismatch of skills and job roles, fake degrees and virtual collaboration, India Inc is consistently looking for data-driven solutions.

India's HR technology or HR tech landscape is experiencing a revolution, fuelled by the strategic integration of Artificial Intelligence (AI).

By embedding AI across their product offerings, HR tech companies are witnessing a surge in market size, revenue, and client base, and they're gearing up for even more explosive growth in 2024, with the rise of Generative AI.

Paperwork? Poof! AI handles it. Performance reviews? Done. This ain't 1900s onboarding anymore. AI crunches employee data like a samosa, spitting out insights on engagement, retention, and compensation trends.

The Indian HR tech market size was $23.32 billion in 2021 and it is projected to reach $38.36 billion by 2030, growing at a CAGR of 5.7 percent from 2022 to 2030, according to Verified Market Research, a market intelligence firm. India is one of the key markets for the industry.

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To be sure, the offerings aren't just limited to filtering out candidates but actually conducting interviews, assessing the best fit and making suggestions whether the candidate is aligned with the job requirement or not. Companies are also tying up with colleges to benchmark this talent pool even in Tier 2 and 3 cities.

Rising client base

With the rampant rise in mismatch of skills and job roles, fake degrees and virtual collaboration, India Inc is consistently looking for data-driven solutions. From background verification to customised job recommendations, HR tech companies have all to offer on the table.

Moneycontrol spoke to at least eight HR tech companies and they have seen their client base rising in the 80-400 percent range. Though information technology (IT) holds most of the space among them, manufacturing and banking also have a substantial share.

The reason the IT sector outnumbers others is that it subscribes to almost all ranges of services – bulk hiring, specialised talent search, background verification, employee engagement, etc.

The number of colleges on GetWork, a fresher hiring platform, has grown by 400 percent in the last two years to hit a total of 677. In terms of employers, it has seen a 600 percent growth, reaching 2,251, as of November 30, 2023.

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Given that GetWork specifically focuses on Tier 2 and 3 college placements, AI helps the firm build a data-backed case for the immense talent in these colleges.

It tracks students on over 200 data points -- right from their second year of college. This data gives customised job recommendations to students, suggests new skills to improve their employability, and connects them with the right employers.

On the employer side, AI automates their candidate screening and shortlisting process, along with talent analytics. College placement cells also use GetWork to get data analytics and insights on their graduating students which they can present to potential employers, among other use cases.

“GetWork has unlocked a massive talent pool in Tier 2,3, & 4 Indian cities, which was often overlooked by big companies. In recent years, companies have also increased hiring from smaller cities giving a boost to our business,” Sumit Gupta, CTO and Co-founder of GetWork, told Moneycontrol.

Making it unique

With rising competition, business dealings too have gone a little non-conventional. This is fuelling the growth of new clients in some cases.

Advantage Club, one of the employee-engagement platforms, claims a high redemption rate of 90 percent as a significant achievement. This, it said, sharply differs from the “inefficient concept of breakage” that many of our competitors use.

In these breakage-led models, if an employee leaves his/her job, the platform often retains unused funds or expiry points, essentially claiming this money for itself.

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Advantage Club’s approach, however, is the opposite. It allows organisations to reallocate these funds to other employees, ensuring that the value remains within the company and benefits its workforce.

“This approach has set us apart from our competitors, who typically achieve only a 50- 60 percent redemption rate, whereas we consistently hit a mark of about 90 percent,” said Sourabh Deorah, CEO & Co-Founder of Advantage Club.

Before AI made strides in the HR tech industry, the background verification (BGV) business witnessed a little stagnant growth, companies say. However, the latest tech has energised the way work is done.

A lot of manpower at BGV firm TraqCheck has been replaced in the backend operations of our business with the help of AI. Besides, the tech has helped transform its criminal verification product due to the vast information it can process in seconds.

“When we have to find a criminal case, say an FIR or a court case on a candidate, our algorithms find all the data which is associated with the candidate's name and then the AI scans through tons of data and matches it exactly with the candidate,” said Jaibir Nihal Singh, co-founder of TraqCheck, adding that the AI can understand and make sense of unstructured data, just like a human can. However, AI can do this at 1,000x the pace a human can.

Tough road ahead

Almost every HR tech firm is eyeing expansion after incorporating Generative AI into their offerings including chatbots, customised learning paths, personalised interviews and behavioural assessments.

HR tech companies find themselves at the forefront of a rapidly expanding industry. The demand for innovative solutions to streamline HR processes, enhance employee experiences, and drive organisational success is propelling these companies into new territories.

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However, with the promise of growth comes a set of unique challenges. “In 2024, our primary challenge will be to manage exponential expansion while guaranteeing the scalability and quality of our services,” said Sarbojit Mallick, co-founder of Instahyre.

Similarly, TraqCheck is launching the products in England and the challenge will be navigating sales in a new market and building credibility in a foreign country.