Automating HR Functions and Digital Skilling: Top HR Tech Trends in India
As per a new research report, in the next year, over 27 million Indians or about seven percent of the Indian workforce will need digital skills training as technology impacts the way jobs are performed. This will accelerate ongoing changes to the way human resource (HR) functions are performed within the organization and to meet business deliverables. We briefly discuss the growth of the HR Tech market in this article and list some of the top HR Tech trends expected in India in 2022.
This article is based on insights from ‘Human Resources and Payroll in India 2022 Guide’, which discusses India’s laws and regulations and provides operational intelligence related to HR and payroll management. To secure a copy, click here.
With new work models emerging, such as work from home (WFH), work from anywhere (WFA), hybrid model (part office, part home), gig employment, and contingent employment, the human resource (HR) function has become highly dependent on augmented technology support.
As the new workplace becomes more agile, technology, such as software-enabled services and customized platforms, enable the HR department and line managers to respond promptly to rapidly changing needs. These range from enabling remote projects, virtual leadership, and digital training, to improving organizational collaboration and designing safe work environments, to daily HR and payroll management.
More practically, as the world navigates an uneasy transition to normal and multiple countries opt for a ‘living with COVID’ scenario, the HR department of any organization will need assistance with devising strategies for post pandemic work resumption. These include supporting the organization in its recovery from harsh business impacts, rethinking the employee experience, and boosting online and offline workforce productivity.
What is HR Tech?
HR Tech is a set of tools used by human capital professionals to automate routine operations, secure data storage, and augment analytical management of reports for improved decision making.
The past decade has seen enormous changes in HR systems:
- Human Resources Information Systems (HRIS)
- Human Capital Management Systems (HCMS)
- Applicant Tracking Systems (ATS)
- Benefits Administration (BA)
- Learning Management Systems (LMS)
- Employee Self-Service (ESS)
What HR processes have been automated?
HR process automation can be segmented into various categories based on organizational function, application of technology, and management priorities like efficiency, utility, consistency, data analytics, cost-saving, remote work, and facilitating collaboration.
There are six key segments where HR processes have benefited from automation:
- Talent management (TM) software: Facilitates onboarding, recruiting, performance, and learning. The primary functions of TM applications are to assist organizations in managing the acquisition, performance, development, rewards, progression, and succession of their workforce. These processes are often defined in terms of the employee lifecycle.
- Workforce management (WFM) software: Helps in data analysis for core business processes and supporting various HR activities. WFM applications are available in several buying options – they can be purchased as part of the enterprise resource planning (ERP) suite, HR suites, operations applications, workforce management suites, or as stand-alone applications.
- Payroll management software: Helps the organization define its payroll policy, gather inputs, validate inputs, payroll calculation, and statutory compliance, followed by payroll accounting, pay-out, and reporting. Compensation management solutions allow making payments to employees based on their performance. The workers’ basic salary comprising all variable salary components and establishing various payment differences, such as bonuses and share packages, are managed by the software’s intuitive user interface.
- Performance management software: This is a corporate management tool that helps managers supervise and evaluate employees’ work. Performance management’s goal is to create an environment where people can perform to the best of their abilities and produce the highest-quality work most efficiently and effectively.
- Learning and management systems (LMS) tools: In HR Tech, this refers to the software application for the administration, documentation, tracking, reporting, automation, and delivery of learning courses, training programs, and development programs
- HR analytics: This is a data-driven approach toward human resources management. Also referred to as people analytics, workforce analytics, or talent analytics, it involves collecting, analyzing, and reporting HR data. It enables the organization to measure the impact of a range of HR metrics on overall business performance and make decisions based on data.
Can all HR processes become automated?
A recent KPMG report found that virtually all HR functions can be fully or partially automated. Of 21 responsibilities, the KPMG study found only five HR processes that were relatively less receptive to automation. They include:
- People performance whole system architecture (building a high-performance work system)
- HR and business strategy
- Organizational effectiveness
- Change management
- Employee relations
A look at India’s HR Tech market
The Indian HR Tech market is primarily being driven by the widespread adoption of contactless hiring solutions in organizations. These solutions deliver enhanced flexibility, scalability, and reduce the risks of implicit biases.
Technological advancements, such as the integration of artificial intelligence (AI), big data, cloud computing, and augmented reality (AR) solutions for remote hiring and the management of employees, provide the thrust to market growth. Other factors, including rapid digitization and the adoption of flexible and hybrid policies, are projected to determine 2022 market trends.
Top HR Tech trends in India in 2022
Permanent switch to hybrid and remote teams
Hybrid work schedules, meaning a mix of work from home/anywhere and work from office, will likely become the norm. Around 79 percent of executives opine that they will permanently allow teams to split their time between remote work and the office. With respect to HR functions, this implies supporting the staff in a completely new environment. Applications, such as employee self-service (ESS) portals, will be more important than ever. Leaders will need advice on performance management techniques when leading a hybrid team.
This change in work model will also mean a greater reliance on cloud-based systems for day-to-day administration work. Remote candidate screening and onboarding will also become a routine part of the job. In-person learning and development may never return to normal, which means that organizations will depend a lot on their learning and management system tools.
HR to play a vital role in cybersecurity
With increased digitization and remote work, the threat of cybersecurity is ubiquitous. Around 55 percent of people working remotely have experienced a cybersecurity issue over the past year, with phishing and malware being the most common areas of concern. HR professionals working remotely, who are handling confidential employee data, are at a greater risk of hacking.
It is imperative that HR teams follow strict security protocols when working from home. For instance, HR teams should work directly with IT and local managers to develop role-based access controls, which ensure that each employee can only access data relevant to their duties. Thus, HR also plays a key role in educating staff on security best practices.
AI’s role in recruitment
For HR professionals, one of the main applications of AI is in candidate screening. Application tracking system (ATS) platforms use AI to screen resumes, and automated chatbots can handle routine questions from applicants.
In 2022, it is expected that the AI functionality will become more sophisticated, but HR professionals still need to exercise discretion in this process as computer automated processes are subject to systemic discrimination. AI-power ATS platforms will still work best when overseen by a human HR expert with experience in talent acquisition.
Augmented analytics in HR
HR professionals are increasingly resorting to augmented analytics trends to deal with HR data. HR analytics provides data-driven insights on workforce analytics and talent analytics to enhance business performance and make strategic business decisions based on these metrics. With businesses facing waves of disruption, augmented analytics can help optimize business processes by producing easier, faster, and more powerful data insights.
Inclusive and accessible work culture
Technology can enable the organization to provide a more inclusive workplace. Accessibility driven tools provide opportunities for businesses to focus on larger markets and help enhance the employee work experience. For example, voice assistants for accessibility, such as Cortana, Siri, Alexa, Google Assistant, and Bixby, allow users to dictate emails, text messages, or issue commands that produce a virtual identity that users can interact with. These hands-free features provide users with mobility challenges an easier option to access technology. By eliminating barriers in technology, organizations could render an all-inclusive employee experience across all their products and solutions.
Associated with the ongoing shift to a flexible work culture is the growth of the gig economy where freelance staff work for organizations but enjoy relative mobility, independence, and are not required to follow the nine-to-five traditional work hour systems. This is enabled by technology solutions that ensure round-the-clock accessibility and performance assessment based on outcomes and project management deadlines.
Employee wellness is as essential as employee performance for high productivity. HR leaders are increasingly focusing on employee wellness, mental health, and finance education to facilitate high engagement, quality, and productivity. This is particularly relevant in the post-COVID era where employees have had to contend with multiple uncertainties and challenges, such as communication gaps, lack of motivation, training, and more.
Global HR Tech market
Given how our hyperconnected world is more visibly confronting a highly volatile and unpredictable future, the ability of organizations to be future ready has become a vital strategic concern. As a result, the HR tech market has evolved to become one of the most lucrative and rapidly growing sectors.
It is speculated that the global HR Tech market will reach US$35.68 billion by 2028, growing at a rate of 5.8 percent from US$24.04 billion in 2021. Reports also suggest that the HR Tech industry will see start-ups growing faster than legacy firms. It is unsurprising then that in 2019, Indian HR Tech start-ups reportedly received about US$119 million in funding.
Payroll products are expected to remain the top seller as more organizations opt for fewer complexities around compliances and calculations. As of 2019, the personnel management and payroll segment accounted for the largest share in the HR tech market size.
The market share of the engagement and connectivity sector is predicted to increase by 14.5 percentage points by 2025. Much of this increase will be driven by the advancements in remote work, accelerated by the prolonged COVID-19 pandemic and restrictions to mobility.
Rapidly growing market demand for digital skilling in India
A recent research report, “Building Digital Skills for the Changing Workforce”, commissioned by Amazon Web Services (AWS) and produced by strategy and economics consulting firm AlphaBeta, states that cloud, cybersecurity, and machine learning technologies will be among the most sought digital skills by 2025.
The COVID-19 pandemic made the skills gap more evident as an overwhelming share of professionals admitted they required more digital skills to cope with changes in their work.
Within the next year, about 27.3 million Indian professionals, comprising seven percent of the total workforce, will need digital skills for the performance of their jobs. Such skills will be in high demand across most businesses – from healthcare to agriculture, fintech to media and entertainment. – Building Digital Skills for the Changing Workforce, AlphaBeta
The projections were made based on survey insights from 1,012 digitally skilled workers in technology and non-technology roles and 303 employers in India.
The most in-demand skills required by employers in India by 2025 include:
- Ability to use cloud-based tools, such as cloud developer tools
- Ability to use online collaboration, accounting, and customer relationship management (CRM) software
- Technical support skills
- Cybersecurity skills
- Machine learning
- Cloud architecture design
Opportunities for education-focused investors
The existing gap in digital skills education will create manifold opportunities for education start-ups, development of new learning platforms, and collaboration between technology firms and institutes of research and digital excellence within universities. Directly related to this would be addressing the urban-rural divide in terms of technology literacy and access to devices, which will require among other things, policy interventions. Various surveys by leading consultancy firms already predict that the digital economy could unlock 60 million to 65 million jobs by 2025. Digital skilling and re-skilling initiatives will thus necessitate close engagement between academia, market, and the government. This endeavor should be helped by the government’s support for improving India’s digital infrastructure and skills development programs.
India Briefing is produced by Dezan Shira & Associates. The firm assists foreign investors throughout Asia from offices across the world, including in Delhi and Mumbai. Readers may write to firstname.lastname@example.org for more support on doing business in in India.
We also maintain offices or have alliance partners assisting foreign investors in Indonesia, Singapore, Vietnam, Philippines, Malaysia, Thailand, Italy, Germany, and the United States, in addition to practices in Bangladesh and Russia.