Jul 07 2022

Indian HRTech Investments Boost Against Global Challenges With Over US$353 Million In Funding In H1 2022

“HRTech startups continue to raise capital with the first half of 2022 already seeing US$9.3 B pumped globally across 250+ deals. ”

by  Mehak Mahajan, Consultant - Digital HR, hrtech.sg

The spotlight on the HR function continues to grow steadily even after two years since the deadly pandemic hit the world. To tackle and overcome talent challenges, many organizations are prioritizing digital transformation which has led to the inevitable acceleration of the investment trend in the HRTech sector, which remains unshaken by the Europe war, impending recession fears as well as Fed rate hikes. HRTech startups continue to raise capital with the first half of 2022 already seeing US$9.3 B pumped globally across 250+ deals. Comparing this investment spree with the 2021 entire year (US$14+ B, 330 deals), it will be interesting to see how the second half of the year will shape up. Read more on our global HRTech Investment & Funding report here.

There are overall 5 unique significant themes visible in the list of Indian HRTech startups trying to help enterprises stand out as an Employer Brand of Choice. Indian HRtech themes are focused on:

  1. EWA platforms to give real-time access to earned wages
  2. Health & Wellness platforms to help employees mitigate health risks
  3. HRMS applications to manage the entire employee life-cycle
  4. Leveraging AI and Analytics to hire gig workforce, tech workforce, and other unique job roles
  5. Developing better job matching platforms

We list some of the key trends and deals in APAC and India below:

Key Trends Driving the HRTech Investments

HRTech market in APAC - Investments in the APAC region have expanded to US$900 M in H1 2022 from 49 deals as compared to US$638 M in H1 2021 coming from 19 deals. The region is witnessing an increasing demand with APAC growing not only in terms of the value of investments but also the number of deals. Read more here.

  • Top 3 HRTech Segments - As per our analysis globally, and across APAC & India, below are the top three HRTech segments to look for:

 

India saw an increase in many segments like Total Rewards, Talent Operations, HRMS, and Talent Engagement.

  • The investment market in APAC has become more distributive across countries. China’s share in the total HRTech valuations has decreased in 2022, and India (with 300% Y-o-Y growth) has emerged as the APAC leader in the HRTech investment space, followed by Australia.

 

 

 

Segment-wise Notable Deals

1. HRMS

HRMS is the biggest segment in India with US$89.2 M in funding. It also has the second-highest average deal size (US$22.3 M) after Total Rewards (US$27.3 M).

The SaaS adoption by HR teams in India is still at the dawning stage but promises to pick up quickly as the Indian market brings several complexities including multiple languages and hierarchical decision-making which need to be addressed. This calls for digital new-age Indian HRMS providers, which is also reflected in the investments bagged in H1 2022.

For instance, India-based HRMS, Darwinbox (US$72 M, Series D) rose to Unicorn Status in January this year. Darwinbox plans to deploy the fresh funds to expand its team, add more features to its product offering, and acquire other complementary start-ups.

Other Indian HRMS startups like Zimyo (US$2.2 M) and HONO HR (US$5 M) are focused on developing a go-to HR Platform for both SMBs and employees to meet their HR and employee benefits needs.

 2. Talent Acquisition

The Sourcing subcategory experienced the highest traction, where we saw the surfacing of niche job boards like CIEL HR (US$2.6 M) and Expertia AI (US$1.2 M).

Within the Screening subcategory, Singapore Headquartered X0PA AI which has large operations in India and is a leader in AI-powered objective hiring solutions raised US$4.2 M in the Series A round. This investment will help X0PA AI to revolutionize equitable hiring and selections by reducing unconscious bias and subjectivity leading to more diverse workplaces and better selection outcomes.

Other Indian  startups that got focus were PMaps (Assessments, US$0.6 M) and FlexC (Talent Marketplace, US$1 M).

 3. Talent Development

Growth in this segment is a clear indication that businesses have understood the importance of skills & the need for continuous upskilling to navigate through the times of The Great Employee Resignation. There was a clear focus on Coaching & Mentoring subcategory in Talent Development with early startups like PeakPerformer (US$3 M) and Courseplay (US$0.4 M) raising investments.

4. Talent Engagement 

The increasing priority of organization leaders towards employee wellbeing and enhanced employee experience has translated into traction in the Talent Engagement segment that was next to Talent Acquisition in terms of the number of deals. However, the average value of the deals was only US$16.6 M.

Rewards & Recognition, Health & Wellness emerged as the leading subcategories with 70% funding for deals with solutions like Xoxoday (Disruptor in the rewards, incentives & payout, US$30 M), InFeedo (Conversational AI for employee engagement, US$15 M) and Mesh (Continuous Performance Management, US$11 M).

5. Talent Operations

 Talent Operations is the second-highest growing segment in India (third globally) after Total Rewards. Within Talent Operations, Payroll solutions were seen to bag the maximum investments in subcategories in the APAC.

As highlighted in our 2022 HRTech Market Outlook Report, every 1 out of 5 companies (with only 25-99 employees) is currently struggling with compliance & regulatory issues. This has created an immediate need for a smart payroll solution that can automate complex and time-intensive HR processes, especially for countries like India with a complex legislative landscape that changes state-wise.

Besides Payroll, workforce management is another prominent subcategory where employee monitoring platform, we360.ai raised US$0.5 M in the seed round.

 6. Total Rewards

The emerging subcategory, as highlighted in our 2022 HRTech Trending toolsEarned Wage Access is the largest subcategory raising over $82M. India-based B2C on-demand pay startup, Refyne (US$82 M) was the top EWA startup that received funding.

 

Conclusion

With the above trends and segment-wise analysis, we strongly feel that India has a huge potential for HRTech growth in the coming years despite several global challenges. It will be interesting to see how the latter half of 2022 will shape up for India and the globe, which we will cover in our annual report.

Our team will continue to track the HRTech space closely and share updates relevant globally as well as specific to India. The latest copy of the HRTech Investments and Start-up funding can be downloaded from here.

Additional Resources

 

 

Mehak Mahajan is an ardent HR enthusiast who believes in the immense power that every HR holds to make a difference not just in the professional life of people around them, but rather transform their overall growth, learning, life goals, lifestyle, and achievements. Through her role as an HR Consultant at hrtech.sg, she aims to enable application of technology across organizations struggling with their HR functions. She is a certified Six-sigma green belt with an MBA in Human Resources from the Indian Institute of Management, Ranchi, and has over 3 years of experience in HR and technology.

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