Mapping the HR-Tech landscape | Citec

HR has always been a major focus area for both small and large companies. Thanks to the technological innovation and the huge investment in space, new tools and solutions have created a new category; A sector that has been garnering headlines in recent years is HR-Tech.

HR-Tech provides solutions across the entire employee life cycle from recruiting and hiring, training, development to ultimate retirement. This disruption of traditional HR is driven by both management teams seeing HR as a competitive advantage rather than a cost center, and enabling technologies like AI/ML and analytics to push the field forward.

The HR technology space has changed dramatically over the past few decades. Tracing its beginnings to system of record platforms focused on automating and documenting paper transactions, the HR-Tech stack has since expanded to include platforms such as Applicant Tracking Systems (ATS), Workforce Planning (ERP Systems), Systems of Engagement (HCM Systems), Talent management and employee experience tools. More recently, leading companies have delved into tools called Talent Science, designed to use analytics to assess employee behavior and performance.

Given the ongoing market turmoil, recruiting, developing and retaining talent remains a top priority for global enterprises with C-level professionals focusing on deploying resources, testing and making HR-enabling technologies an integral part of their operations. However, in the current environment, we see enterprise software increasingly focused on solutions that directly reduce costs or increase revenue, and HR is no exception.

Driven in part by the pandemic, investment in HR-Tech peaked at a total of $12.5 billion in 2021 and grew to $7.5 billion in the first half of 2022 alone, reflecting strong investor appetite. Before Covid-19, the sector produced only 10 unicorns HR SaaS platform Workday (current value), increased demand from investors has resulted in 15 new unicorns in 2021 alone. Today, the largest incumbents in the space (ie Oracle, Workday, SAP, ADP) compete with hundreds of agile and innovative players in every market segment.

As investors, we see the constant struggles our portfolio companies face when it comes to workforce. So it’s no surprise that these companies are innovative on the product front, and innovative in the way they think about their employees. This, combined with significant advances in the cloud, big data and AI/ML, are enabling the development of new technologies, which are driving several key trends in artificial intelligence.

1. Emphasize skills and experience – Recent recruitment trends have proven that traditional CVs are no longer the ‘one source of truth’ for ensuring the right employee-company fit. Talent acquisition processes are being revolutionized; New technologies introduced by Skillset, Unboxable, Retrain.ai, Canditech and MyInterview dramatically increase the time and effort spent on qualifying the right candidates, allowing enterprises to improve their talent acquisition capabilities by streamlining the entire hiring process.

2. Using data and analytics for HR – Consistent across industries, organizations are increasingly moving towards data-driven decision making, and HR is no different. A new set of entrants, such as HiredScore, DreamTeam and Compete, are building tools to help solve big data needs for insights and exchange data-driven decisions to boost growth.

3. Prioritize Diversity, Equity and Inclusion (DEI) – Along with mass layoffs, Covid-19 and social movements like #MeToo have been a driving force for DEI, in turn fostering a strong organizational culture. Solutions developed by Israeli startups like Junco enable organizations to better fulfill these key obligations.