How digital technologies are shaping the HR industry

A few years ago, when ‘digital’ entered the corporate lexicon and boardroom discussions, few knew or anticipated the far-reaching impact that it would create. Today, for organisations, it is no longer about preparing for digital or making a transition to a new of way of thinking and doing business and work.

It is now about harnessing the power of digital for competitive advantage, increasing market share, gaining share of the customer wallet, enhancing customer experience, improving an organisation’s processes and productivity. It is also about leveraging digital to hire, engage, retain the best talent and building their skills for tomorrow.

Now that is where the Human Resources function comes into the picture. Traditionally, this function was viewed as paper-intensive, non-innovative functional area. When hit with the digital avalanche, most HR functions in the organisation were slow to react.

Given that HR was deemed an internal function and that its systems and processes were separate from sales or operations, and their legacy systems had years of highly personal employee data, it wasn’t really a priority for the functional leadership or the organisational leadership to change in response to the advancement of digital technologies.

The Digital Transformation of HR

But this thinking and orientation changed very soon — when organisations realised that they can’t compete in the digital world — without their most important resource ‘the talent’ transforming. As the connected workforce started emerging and as the new technologies such as AI, big data, analytics, robotics, mobility started gaining prominence, the HR functions across organisations started envisaging the digital world of work.

The Future of Work was to change and the change had to occur at a rapid pace. Now the HR functions depend on the extended HR and recruitment services industry – for fulfilling their internal functional mandate – as not everything can be managed and delivered internally in a cost-effective and scalable way.

The HR and recruitment services industry, which comprises permanent and temporary staffing services providers, recruitment firms, hiring portals, out placement firms, learning and training providers, assessment services providers, compliance service providers, payroll and employee benefit service providers, human resource outsourcing (HRO) service providers, HRM consultants and solutions providers, among others, is an important part of the HR ecosystem.

The HR industry saw the impact and benefit of adopting digital much before the HR functions within the organisation did. The new thinking around HR — and the future of work in a digital era — was largely shaped and driven by them. They propagated the use of intelligent technologies, automation tools, use of design thinking, digital learning and assessment solutions to get an organisation’s workforce ready for the future.

Earlier, technology was about doing day-to-day tasks, but now the HR industry is acting as a change agent and catalyst to make technology a way of life in the workplace — their new focus is around finding right people, connecting people, engaging people, skilling people and replacing people — finding an answer about what to do when replacing people becomes imminent.

The Global HR and recruitment services industry, which is estimated to be a $600 billion industry, is just not playing the advocacy role today. They are becoming the cradle of innovation and making substantial investment in technology for improving their own functioning and service delivery for the clients as well as developing services and solutions for the HR functions within organisation.

Much of the innovations in products, processes, offerings and services come from their stable. Mobile-based gamified learning and assessment, online university education, HR analytics, cloud-based HR solutions and digital workforce solutions have all become a reality thanks to digital.

All this also means that spending on HR tools and technology continues to grow. Large companies spend the most on technology (almost 10% of their HR budget), and this increased growth has fueled a huge market growth in cloud-based HR technologies. The entire HR software market is estimated to be over $10 billion in size and many segments within this market are growing at double digit rates.

‘Techtonic’ Shift Underway

The Talent Management market is now radically changing and venture capital is rapidly flowing into new HR vendors that sell tools for employee engagement, recruitment, learning, and analytics. Analysts expect the HR technology market to grow significantly over the next few years with old/incumbent vendors, services and solutions providers getting replaced by agile, easy to use, mobile applications.

This explains the rapid growth of startups focused on tech and digital HR Solutions. These startups are creating disruptive products and services and challenging the established players, who are now looking at acquiring some of these start-ups to strengthen their digital proposition.

So all in all-interesting time and possibilities for the HR Services Industry – they are poised for growth and digital is giving them the much needed impetus for growth.


Rituparna Chakraborty

Co-Founder & EVP
TeamLease Services Ltd

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