Startups in the HR Space, such as Talview, PiQube, Zeta and Belong, are Bringing in Better Methods of Recruiting, Assessing Candidates and Managing Employee Payrolls, and are Either Profitable or Close to Profitability.
Hi Everyone Today We will Talk About, How Startups are Helping the Companies in Recruitment Space.
Recruitment was An In-House Business. Now, Companies are Outsourcing HR’s to Startups, which Use Everything from Videos to Artificial Intelligence (AI) to Find the Best Candidate and Pay Out Salaries On Time.
235 New Companies Entered the Recruitment Space in 2015
The Success of Mettl is Not a Shot in the Dark. Six years on, Delhi Based Online Assessment Company for Recruitment, Mettl, Works with Over 1,000 Companies, has 220 Employees in Six Offices and has Stopped Approaching Investors as it’s been Profitable since 2013.
This has Led to an Explosion in the HR Startup Space. According to Startup Tracking Firm Tracxn, almost 235 New Companies Entered the Space in 2015, and HR Startups Raised Close to $50 Million.
Bringing In Technology
It was Hard to Convince Companies to Outsource their HR Operations. There was Little to NO Technology Being Used. Now, as the War for Talent has Emerged, HR has Become An Important Function, says Utkarsh Joshi, Principal, HR Fund, which has Invested in Five Startups since its Inception in 2012.
The Change is Evident with Older Companies like Murugappa Group, HCL, Cognizant and CapGemini Trying Out these Services. Jayadev Mahalingam, Founder of PiQube, a Chennai Based Marketplace for Corporate and Recruitment Consultants which Raised Funds from HR Fund last year, Says the Sector was the last to Adopt Technology. His Company Uses its Data Analytics Platform to Shortlist Candidates for Recruitment within 3 Days.
Hiring was Considered a Subjective and Human Process. Now, Enterprises are Adopting Technology Quickly.
FMCG Giant Marico, which Owns Brands like Parachute, Saffola and Livon, is a New Convert. The Company Used to Face a Harrowing Time Recruiting for its Sales Team. “It was a Logistical Nightmare since Sales People were Always On the Go. We had to Block their Time and Block the Sales Manager’s Time, and Schedule a Face-to-Face or Skype Interview,” says Prateek Singh, Head of Talent Acquisition at Marico in Mumbai.
Marico Tried the Services of Talview, Set Up by Sanjoe Jose, Tom Jose, Jobin Jose and Subramanian K in 2013 to Provide Video Recruitment Services to Companies. It Allows a Company to Record a Candidate’s Interview in any Location and Review it later, and Uses Artificial Intelligence to Derive Insights from a Candidate’s Profile. “This was Earlier a Gut-based Decision. Our tools Recognise Emotions and Gather Behavioural Data of a Candidate,” Explains Sanjoe, Adding that the Earlier Processes were Laborious and Unscientific.
Way To Profitability
Like any Business-to-Business (B2B) Company, these Startups have Found a Way to Profitability Without Spending Too Much On Marketing. Mettl last Raised Funds in 2012, When Kalaari Invested $4 Million. “We Haven’t had to Raise Funds after that. We have Sufficient Capital. We Might Not Reach $100 Million in Revenues Quickly but We will Do Everything Profitably,” Mettl’s Kapoor says. Most HR Startups are in Good Financial Health since Most of their Clients are Corporates that Can Afford to Cough Up Money for Services. While Talview Charges an Annual Subscription Fee of Around Rs 2 lakh per Client, for PiCube, the Subscription Model Didn’t Work Out. “It is Tough to Get Indian Companies to Pay Rs 30,000 Every Month. After Switching to a Pay Per-Use Model, the Company has Started Getting a Repeat Rate of 84% Over the Past Six Months.” But the Company Still isn’t Profitable and is looking to Raise More Funds.
Future Growths In Space
While HR Fund had the First Mover Advantage when it Launched in 2012 with a Corpus of Rs 50 Crore, other Venture Capitalists are Entering the Space. The last two Investments Made by HR Fund were Co-invested by Inventus Capital (for PiQube) and Luminous Partners (for Sheroes).
According to Tracxn, Blume Ventures was the Most Active Investor in the HR Space Last Year, Having Placed Bets On Eight Companies, Including Recruitment Company Belong. Its Managing Partner Karthik Reddy says the Jobs Sector is Broken and Many Companies are Still Using Products from a Decade Ago, which Emphasizes the Opportunity in the Space. Serial Entrepreneur and Newly-Minted Billionaire Bhavin Turakhia Spotted the Opportunity Last Year. His Group Directi launched Zeta, an Enterprise Cloud Solutions Company that Manages Employee Tax Benefits and Rewards Digitally, and Invested $15 Million In It. He Plans to Put $25 Million More in Next Year to Tap the Market.
“This is a 90% Underserved Market because of the Paperwork Involved and it is Ripe for Disruption,” Turakhia says. He Estimates the Revenue Opportunity for Startups in the Space to be $500 Million.
Entrepreneurs say Poor Infrastructure is One of the Main Challenges to Growth. “Internet Penetration is Still Low. When We Started in 2012, we thought Everyone would have a Smartphone in 3 Years. That has Still Not Happened,” says Sanjoe of Talview. Mentorship was also Absent, but that’s Changing too.
Acquisitions On The Go
Entrepreneurs and Investors Say there is Likely to be More Collaboration in Future. Blume’s Reddy Expects Old Companies to Start Acquiring the Startups. “So far these Companies have Tried to Develop Products In-House but the Disruption will be Big and they Will Start Acquiring Startups in a Couple of Years,” he says.
First there was E-commerce, Then there was Food Tech, Now Fintech Seems to be the Trend. HR Technology is Going to Have its Moment Next.