What is HR Tech?
HR Tech stands for Human Resource Technology that plays an essential role in improving all aspects of employment within a business—ranging from recruitment to the retirement of your employees. The HR technologies help improve the human resources’ ability to utilize the gathered data more efficiently.
HR tech is a complementary feature to the operations of HR departments and a must for most businesses. The global HR market is expanding, with its current value now exceeding USD 400 billion. What drives the market, and why is it worth exploring this area? How important is it for your organization to implement HR Tech? All the answers to the above queries can be found in the following blog.
While HR tools seem to have been around for years, the era of “modern” HR technology dates back to the 90s. It was the time when recruitment apps and online job search portals came into existence. With keen observation, we may conclude that their main objective was to allow HR staff to do their job easily and efficiently. Along with tracking the applicants, payroll, and benefits, they aimed to move from manual to auto mode, ultimately transcending from paperwork to the digital world.
These platforms could not be termed as user-friendly back then as they could not be maintained or easily implemented. A personal touch and specific details were missing too, which further did not help the cause for HR technologies. When Cloud came rolling in the ’00s, using HR apps became smoother, and the modern apps that are being used today came into existence.
Today’s HR tech market works on many more dimensions than simple administrative issues—whether one is dealing with resumes, monitoring working hours, or supervising the well-being of your subordinates—there’s an app for that. The number of HR tech applications available on the market is nearly unfathomable.
The most significant change in the HR tech environment is, however, evident in how HR tech applications are used. HR Tech applications are no longer a resource specifically built only for HR managers, but it acts like a complete tool used by all HR process users, i.e., employees, employers, and job candidates.
The new HR software app accounts for people’s needs in the following four areas:
- Systems of record
- Talent management systems
- Systems of engagement
- Systems of productivity
However, with the increasing influx of available applications, every new app needs to be, not only business-oriented, but also convenient to use, UX/UI friendly, and designed to improve productivity at work.
HR tech in the developing phase
HR technology is a massive part of today’s businesses. All over the world, this sector is valued at USD 400 billion and about USD 250 billion in the US alone. About 12 million employers spend more than USD 5 trillion on payroll, insurance, and other workplace services. HR tech has also become appealing to major market players such as Twitter, Google, and Salesforce.
Facebook introduced Workplace, an online team collaboration tool in 2016. This online tool, in 2018, decided to invest its time, money, and energy in order to become a part of the HR tech landscape. Facebook reported that more than 100,000 active groups were active on this platform in many different organizations all around the globe. Witnessing major brands promoting these types of platforms gives a clear view of how vital HR Tech is.
HR Tech has become a point of interest for investors fueled by rapid development. Private equity firms and venture capital firms pump vast sums of money into this market. There was a noticeable increase in investment in HR-related apps, according to the global HR tech VC report for Q1 2019.
Global HR tech VC investments soared to new heights during Q1 2019, resulting in more dollars invested this quarter than any quarter. It was about USD 1.751 billion across 75 investments.
HR tech not only hooked on major investors but also businesses around the world. Expenditures on HR tools and technology are on the rise. Large companies spend nearly 10% of their HR budget, driving massive growth from the cloud-based HR technology.
Since 2018, the ratio of core talent applications has increased from 7 to 9.1 in many large companies, stated the HR Technology Market 2019 – Disruption Ahead. All these companies continue to spend USD 310 per employee per year, which is a 29% increase over last year.
‘People’ is the core entity of any organization. According to 91% of Small or Midsize Business (SMB) leaders, HR technology is beneficial for their business.
The following factors will brief you about HR Tech growth and why is it so important:
1. Workforce shift
Were you aware that 20–30% of the workforce consists of remote workers and freelancers contractors? This number is expected to grow in both the US and EU by the end of 2020. There is a need for investment in appropriate technologies to manage tax, communication, and administrative issues in this situation.
2. Rapid technical growth
Organizations are replacing the obsolete HR systems with the state-of-the-art dedicated or cloud-based solutions that meet the expectations of workers and the needs of HR departments. Old systems simply lacked to capture the candidate’s expertise and experience, which is a relatively new concept but one of the main drivers of organizational change at the same time. HR tech applications should provide users with a more compelling, consumer-like experience.
3. Boundless systems
Companies who began the HR tech revolution some time ago now find it hard to sustain the proliferation of systems within one company. An average organization uses four to five HR systems, which makes information workflow far more complicated and time-consuming and managing it. The “one-stop-shop” platforms developed individually according to business terms are in real high demand.
4. To reasonably deal with HR-based issues
The reason for companies spending on HR applications is wholly justified. Employers are continuously advertising, sourcing, recruiting, interviewing, assessing, and onboarding new hires. To manage these efficiently, HR tools prove very supportive. They look for ways to change their workforce and overcome their day-to-day problems. The most pressing issue today faced by businesses is the recruiting challenge.
According to the 2019 Deloitte Human Capital Trends, 70% of respondents considered recruiting to be an important issue, while 16% viewed recruitment to be one of the three most significant challenges companies faced in 2019.
On the other hand, companies are struggling to attract, employ, and grow their employees. Retaining workers is another worrying environment for the US-based businesses that found the highest attrition rate since 2011 (2.4%) in 2018. China, the UK, Germany, and many other advanced economies followed suit.
As it is said, ‘It is more to it than what you see,’ same can be termed for the HR Tech area. Stay tuned for our next post where you can find all the latest trends happening in the world of HR Tech.