Have you ever used ‘acqui-hiring’ as a strategy for your organization?

To begin with, the term ‘acqui-hiring’ refers to buying out a company or an entity primarily for the skills and expertise of its staff, rather than for its products or services.  And this is quite often being used my mid and large organizations in recent years. Acqui-hiring is a relatively new phenomenon in tech industry that had embarked its journey in 2014 in Silicon Valley. However, in India it began with Facebook which acqui-hired Little Eye Labs, a startup that pioneered in creating software tools for analysing the performance of Android apps. Following similar suit, Practo Technologies in 2016 acquired healthcare analytics Solutions Company called Enlightiks.  With this acquisition, 50 engineers who were into machine learning and deep learning applications joined Practo. Major players such as Google, Twitter, Airtel and many more are doing their best to snap up the tech talent while the product of the company becomes secondary when it comes to acqui-hiring. 

Let us see few recent examples of acqui-hiring and what benefits did it bring to the table.

Tech giants – Google and Apple

DeepMind and Api.ai was acquired by Google who reportedly spent $1 billion for the two companies. Halli Labs in India that worked in the area of AI and ML techniques to offer better solutions was also taken up by this tech giant. In another instance, a seven member team of a Hyderabad-based AI startup in the field of data mining named Tuplejump was acqui-hired by none other than Apple. And the inducted team is now working at various offices at Apple. 

Myntra and Swiggy

In an endeavor to strengthen supply chain capabilities and to plug in gaps on the supply side, companies like Myntra and Swiggy too have adopted the strategy of ‘acqui-hiring’. Swiggy acqui-hired 48East, a Bengaluru-based Asian food ordering platform and Myntra acqui-hired Bengaluru-based InLogg last year.

Walmart

Appsfly had built a system for micro apps to get hosted and streamed on various platforms with its six member team whom Walmart acqui-hired. Also, with the aim to further bolster Walmart’s machine learning team, they recently acquired Int.ai.

Madison Investment Advisors 

The existing Mid Cap and Large Cap Equity strategies of Madison Investment Advisors needed a boost that was achieved with the acqui-hiring of the team at Broadview Advisors. This added an excellent small cap equity team and strategy to the existing U.S. equity offerings of Madison proving a perfect complementary competitive benefit for the company. 

Why Acqui-hiring – The benefis!

It has many advantages which help solve some challenging issues with ease. It improves operational efficiency and enhances user experience. An acqui-hire allows the company to bring in employees without negotiating salary the same way as a regular hiring. It is one of the fastest ways of hiring good volume with cutting-edge skills by recruiting talent from other smaller firms and combining the expertise into one firm. And in some cases, acqui-hiring is a great way to remove competition for the firm that is buying out the smaller firm. This also sometimes provides access to a pool of customers of the acquired company. 

Nevertheless, this can also be a bidding strategy for cash-strapped founders who do not have any choice but to sell their firm to the bidders and make an exit. In short, acqui-hiring can be termed as a smart way of enhancing the parent company's talent pool. It is indeed a quick and comparatively easier route of adding certain skill sets which match up to the end goal of the company. And the bigger startups keep scouting for smaller ones to pick up when they see an opportunity.

What does the transition bring with it – the often neglected area!

Attention HR Leaders! You will need to be super sensitive while dealing with the transition part of the game. The entire human angle is extremely critical to address proactively. 

During the process of acqui-hiring, there are lot of aberrations in morale and feelings amongst employees. Relocation issues if the business is in a different city, the change of peers and bosses, time and office set up transformation and many other human issues are quite obvious to arise. Moreover, many a times working for a larger company comes with different rules that are more restrictive in nature. Also, bringing in a new team from an acqui-hire can cause resentment among current employees. This can also result in loyal employees quitting to create their own startup.

Hence, HR needs to be proactive in approach for handling any of these situations arising owing to the emotional turbulence of the employees. The complexity needs to be handled, integrated and managed well so that the acqui-hired firm continues to do business as usual and becomes more enriched. In short, never undermine the human element involved in all such types of strategies and innovative business models. So, stay prepared!