"The silence is not empty, it is filled with answers."
The HR Tech Market seems to be cooling off, yet nothing is what it seems.
I skipped a month, there was not much to tell. Summer is passing away and HR Tech funding news is very rare. In Belgium we call this something like the “cucumber-period”, a period where there is not much news worthy of talking about.
Still, there were activities on the market and trends or observations to analyze, and it appears to be that the silence isn’t empty, but filled with answers.
Market dynamics & news
Market review
HR Tech Funding Falls To 3-Year Low After Flurry Of VC Interest
Funding wrap: $83M raised for data privacy, HR software, recruiting
Human Resource Technology Market to Reach $237.42 Billion by 2030: Report by Allied Market Research
Funding, Merger and Acquisition Alerts:
OneModel AI lands $41M to help employers make decisions about recruiting, hiring, promotions, layoffs and general workplace planning.
Disprz, an AI-powered learning and skilling suite established in 2015, has raised $30 million in its Series C funding round.
HR Startup Paismo Raises $1.3 Million in Seed Round for helping businesses with employee management, attendance tracking, performance evaluation, benefits provision, and payroll processing.
Danish HR Tech Startup Woba Secures $3.19 Million Funding to Expand Globally with their all-in-one HR platform that helps organizations evaluate and minimize employee turnover.
Belgian startup Play-it secured €1.2 Million in a second funding round to transform game-based learning to create corporate training.
Berlin-based HR tech Kenjo closes €8.8 million to bolster frontline workers in the digital era
Perceptyx Acquires Humu: HR Tech Is Harder Than It Seems - article by Josh Bersin.
ADP’s Acquisition of Sora Streamlines HR Processes for Small Businesses
Main Capital sells majority stake in Assessio to British investment group
Edit 19/9: as if HiBob had read this newsletter and decided to level up the game: HiBob Adds $150M in New Round of Funding to Support Continued Expansion
Trends & observations
Money in - Money in
The demand for new HRIS-HCM, or at least the need for a spreadsheet alternative for HR, is rising and market leaders as SAP Successfactors, Workday, Oracle, ADP, … feel the heat coming from their challengers: scalable HCM solutions with $+200 Million in funding to spend competing for the larger midmarket, like Personio, HiBob, BambooHR,… but also our Belgian unicorn Odoo has a magical HR suite in their ambition to compete with SAP.
All of the alternatives are rolling out their attractive all-in-one alternatives to complex HR systems, starting with the small & medium sized companies who do not have the budget, knowhow or the resources to implement complex HR systems.
Payroll holds the magic key
On a local market, payroll holds the magic key for a fluent HRIS implementation. They have the expertise and need to be open for a “connection” with any alternative to their own partnership-portfolio. Also, their system has to be able to make that connection without any manual work.
This often gives owned or local HRIS and HCM systems the unfair advantage of already having a connection to at least one local payroll provider. A challenge the challengers must overcome, but they are not affraid of it.
The new kids on the HCM-block
Enter the new kids on the HCM-block like Deel, Remote, Oyster and Belgian startup Paybix, a scalable all-in-one HCM & payroll system for remote/global hiring, teams and organisations, combining an all-in-one hcm package option with their global payroll integration(partners).
Also, for the small business section an HCM category is developing, “challenging the challengers”, like Officient, HoorayHR, KiwiHR, Homerun, Gusto, Namely, Humaans…
Some of these easy and flexible solutions for CoreHR, with an integration for a recruitment or HRIS solution, have already partnered with local payroll providers or accountancy software. Exclusively or not, which is a strategically important decision that a company will feel when determining the budget.
HR Tech Clans & Marketplaces
Companies want it all. Or at least, only all they need. By looking for that best of breed tech stack they often consider replacing that one module of their all-in-one solution by a stand alone improvement. When that happens, an integration of the data has to happen too, or the result will be more manual work.
These kind of requests, together with the payroll-integration as a condition, is a challenge where market leaders and challengers both responded to on the same way: by developing a marketplace with integrations for the cliënt to choose from.
Today ATS-systems with a marketplace like Carerix and Bullhorn are challenged by agile all-in-one recruitment solutions, also offering a marketplace of integrations like for instance TeamTailor. But also Recruitee has partnered with KiwiHR to form a collective called Tellent.
These vendor-marketplaces can start from occasional collaborations to sustainable partnerships with decent integration and considered pricing model. The business models behind these marketplaces vary from upselling, reselling or even charging for data-traffic.
Unified layers for the ultimate experience
There is no tailored comprehensive guide to the unified HR solution in my opinion, the challenge is to provide the best experience for employees AND HR, delivering on the desired outcomes on both ends. With a bunch of integrations, all connected to each other to provide an outcome on one end is not enough anymore. Workers desire a satisfying digital work experience too.
And then I saw Applaud. A solution I recently discovered and that brands itself as a unified layer for hr technology, with features for employee engagement. As much as I expected this sort of proposition from current HR analytics platforms like Crunchr, Visier, Tableau or Qlik, it comes from a more unexpected corner. Nevertheless, the potential to offer a unified layer user experience for employees and HR, with the current (legacy) tech stack under the hood, reduces all HR Tech providers to features, “parts” or seperate, independent modules…but it solves the integration and marketplace challenge. When one thinks of the change management needed to streamline communication and engage all stakeholders in a colplex HR digitization projecr, it is not even a bad idea to start with a tool that thrives on feedback and engagement.
HR Knowledge & skills
It will all take some time to be rolled out in my opinion. The number of vacancies in HR in Belgium alone is growing exponentially, like the beanstalk in Jack and the beanstalk.
Remarkable is that most vacancies are open to HR & payroll consultants (still), who are being sent out by agencies to support businesses with hard or soft HR. Something where other companies hire their own HR Business Partner for. Are we moving towards a fractional HR function? Is that good or bad?
Of course the demand in Talent Acquisition, recruiters and assessors or Talent Acquisition Managers is also high. Which is quite logical considering the high workload (and stress) in those HR-processes (remember the talent shortage).
Vacancies for HR leaders and managers are also significantly present in the total offer of HR vacancies. An explanation could be found in the demographic evolution (HR leaders closing on retirement), or the shortage of skills to move forward in a digital HR world (HR leaders with years of experience in traditional HR, not digital HR).
Gartner Says Less Than 10% of HR Functions Are Achieving Functional Excellence at this point. They advize that HR functions must shift their role to focus on convene & catalyze approaches.
I’ve found these Essential Skills for HR Professionals in Saas-based IT Industry according to Avneesh Kumar Agarwal, Founder & CEO at SpeckyFox, it might be a good start:
Technical Proficiency: Strong understanding of software development, programming, and cloud computing.
Problem-solving: Ability to analyze complex issues and propose innovative solutions.
Adaptability: Willingness to learn and keep up with industry trends.
Collaboration: Effective teamwork and communication skills.
Project Management: Ability to organize and deliver projects efficiently.
Business Acumen: Understanding the business side of SaaS and its impact.
Customer Focus: Dedication to meeting customer needs and providing excellent experiences.
Continuous Learning: Commitment to ongoing personal and professional development.
Conclusion
In summary, the summer months have brought a lull in HR Tech funding news, a period often referred to as the "cucumber-period" in Belgium. However, beneath this surface of relative calm, the HR Tech landscape has seen notable developments. Funding is going slow. Yet, on the sales market, scale-ups who secured substantial investments in the past, particularly in the HRIS-HCM space, challenging established market leaders like SAP Successfactors, Workday, Oracle, and ADP.
Payroll integration remains a critical factor for successful HRIS implementations, giving local or owned systems an advantage. New players like Deel offer scalable all-in-one HCM and payroll solutions for global organizations, emphasizing the importance of seamless global payroll integration.
The demand for flexibility in HR tech solutions has led to the emergence of vendor marketplaces, enabling companies to select and integrate specific modules seamlessly. Additionally, unified layers for HR technology, exemplified by solutions like Applaud, aim to enhance both employee and HR experiences, bridging the gap between legacy systems and modern solutions.
In this evolving landscape, HR professionals must continue to cultivate essential skills, including technical proficiency, adaptability, problem-solving, and collaboration, to thrive in the dynamic SaaS-based IT industry.