“It was a good year.” That’s what most of the HR Tech startups we spoke to opined when they looked back at 2020. From the degree of adoption to the amount of funds flowing in, the startup space generally saw an increased awareness around technology in HR as the pandemic forced companies the world over to digitize overnight. With the talks of AI, automation, technology dominating the whole year around, HR Tech saw a definite uptake both in India and globally.

On this note, what does the year 2021 bode for HR Tech? What are some of the trends that will shape this space in the coming year? What are some of the opportunities that lie ahead in this year?

We talked to a number of startups in the HR Tech space such as HRIS provider Talbrum, online skills assessment platform TestGorilla, recruitment service provider Avsar, Engage Rocket-cloud-based software that helps leaders and organizations make better people decisions using real-time data, HR, payroll and benefits platform Swingvy, Joye.ai-a B2B SaaS startup in mental health space, and hiring startup Able Jobs, among others to understand which way the wind will blow.

Here’s what they had to say.

HR tech will evolve beyond the conventional world of recruiting

Ravish Agrawal, Co-founder, and CEO, Able Jobs shared that in 2021, HR tech will evolve beyond the conventional world of recruiting, talent management and will make inroads in the daily work routines. In recruiting and training companies will double down on the efficiency through technical products that can support their recruitment needs. While on the other hand, performance management and employee wellness products will see more adoption in the coming year. 

HR Tech to benefit from “The Great Rehiring”

Otto Verhage, Co-founder of Amsterdam-based online skills assessment platform TestGorilla shared that “The Great Rehiring” will come in 2021. After the accelerated digitization in 2020, many HR tech startups will benefit from the increasing demand that comes with the Great Rehiring.

The same thought are echoed by Navneet Singh, CEO & Founder of AVSAR HR Services who believes that the need of remote working will create ample job opportunities in cloud computing, automation and collaboration etc. which will benefit the staffing companies. 

2021 demand to boost HR Tech

Navneet also shared that HR policies have been revamped according to the new normal and employees have become accustomed to the same. It means more time and increased productivity in the coming year. HR industry would invest heavily in analytics which will provide relevant workforce insights. Sectors like FMCG, BFSI, Telecom, Manufacturing etc. are hoping to reach the pre-Covid demand level by March 2021. Hence, the business of HR startups is expected to increase many folds as compared to that in 2020. 

Opportunity for HR Tech startups to provide collaboration-based tools

Now that HR Tech is a hygiene factor, people would be prepared with cloud-based HR Tech SAAS requirements to work in new normal, believes Vinay Dalal, Co-founder, Talbrum. Many organizations till the mid of 2021 may have a start-stop approach including manufacturing units so the underlying opportunity is huge. For now, the opportunity is for HR tech startups to provide collaboration-based tools; earlier it was looked upon as providing control based tools.

Remote work means considerable investment in HR Tech products

Adit Jain, CEO, Leena AI, an artificial intelligence (AI)-powered employee experience platform, shared that the office has moved to our homes, and that trend is here to stay. From tech giants announcing permanent work from home or anywhere to statistics proving employees will expect work from home for at least a few days a week, remote work and flexibility are now basic needs that even traditional organizations must fulfil.

With remote work comes the need for a culture of trust and considerable investment in HR tech products. The work culture and workspace has undergone a massive change and that means there will be a need for collaboration tools, as well. This means demand for new-age tech products will keep rising across the globe and organizations will realize the investment in such products will not go waste.

Innovation in mental health solutions for remote work

Sanjeev Magotra, CEO and Co-founder of Joye.ai, a startup in the mental health space, shared that during 2020 the biggest shift has been the acceptance of remote work as the new normal. As per PWC UK, 9 in 10 CEOs expect this to be a permanent shift. To cater to this reality, in addition to digital solutions for video conferences and collaboration, employee engagement and wellbeing solutions need to transform as well. With growing isolation and stress, the time is ripe for innovation in mental health solutions for remote work.

The rise of hybrid workplace and HR

CheeTung Leong, CEO and Co-founder of EngageRocket shares that with the reopening of many offices, a hybrid workplace becomes popular with many organizations introducing rotating shifts, partial occupancy, and work-from-anywhere. Organizations will continue investing in new solutions to develop a sense of belonging and improve team collaboration. Talent management processes will be more and more supported by technology, artificial intelligence, and analytics. 

If there is one thing that the pandemic has highlighted, it is that the role of HR is critical in supporting business. HR practitioners must be able to see the “big picture” of where a business is heading, the threats and opportunities on the way, and how its workforce plays a role.

To do that, HR must leverage people analytics and other tools to continuously upgrade themselves, protect our workers and help them and the organization thrive. 

Opportunity for HR Tech to work more with SMEs

Jin Choeh, Co-founder and CEO of HR Tech startup Swingvy shared that since this year many companies had to abruptly move their HR operations online because of COVID-19 and we saw most of them (traditional small businesses in Malaysia) are struggling to cope with technology and some of them still prefer to use excel to manage payroll and WhatsApp to manage their staff’s leaves because they feel that it’s still manageable but what they don’t see in the long run is that their HR operations will get messier.  

So in 2021, we believe that these companies will come to the realization that the importance of having an integrated HR cloud-based solution is important for them to manage their business effectively and they will be ready to utilize an HR tool by then. We will start to see more companies automating their payroll with an integrated HR system in 2021. Certainly, there will be a continued demand for HR tech solutions for sure and most companies will resort to HR tech startups because of cost if compared to larger ERP companies and because remote working will continue into 2021, companies will move to a cloud-based HR platform rather than an on-premise HR system.

With more employees working from home, the need for a mobile HR app will be important and this is a great business opportunity for HR tech startups as most of their software is cloud-based, built for mobile users and it operates on a subscription model making it an easier and affordable alternative for businesses shifting into HR cloud. 

Similarly, HR tech startups can help to bridge the current learning gap in Southeast Asia and introduce a new virtual avenue for flexible and personalized HR learning when it comes to payroll, setting up company policies, understanding and staying up-to-date and complying to local tax regulations etc. 

Ananth Balaraju, Co-founder of HRTech platform called hrEntries seconded this and shared “

“The year 2021 could be the turning point for HR Tech startups as the demand for an end to end HR automation is rising significantly. The most important trend is, it is pushing a lot of fence-sitters who want to embrace digital HR but are still skeptical to finally take the plunge. This is especially true for SMEs for whom HR automation only meant payroll automation. Now they are thinking of embracing complete HR automation in order to manage and engage employees digitally. We are seeing significant traction for non-payroll related HR automation like project & timesheet tracking, Resource management, performance management, and learning & development. To summarize, there are significant opportunities which are emerging for HR tech startups in the SME space which were earlier just restricted to payroll automation.” 

Ultimately, this will then introduce a stronger HR community online, thus, will lead to more businesses adopting and demand for an HR cloud-based system naturally. In a nutshell, 2021 will likely be a good year for HR Tech startups as digitization and remote work continue to rule the roost in the second year of the pandemic.