By 2021, Indian firms can save at least $600 mn annually with HR tech, say experts
Human resources (HR) technology can help the Indian corporations save significantly, according to experts. PeopleStrong, an HR outsourcing and technology firm, estimates that India Inc. can save at least $600 million annually by 2021 using HR Technology.
According to the survey data shared exclusively with Mint, PeopleStrong estimates Indian companies spend nearly $500 million towards managing full-time employees in the organized sector. The cost of managing employees does not include the cost of managing open talent, including part time staff.
“With the movement of more people from unorganized to organized segment, the number of employees working in organized setup would double by 2021 and the cost of managing employees would rise to about $2 billion. By 2021, HR Technology can help companies save at least 30% of $2 billion annually, which would amount to $600 million approximately,” PeopleStrong said in an interaction with Mint.
Industry veterans agree that HR technologies can help companies cut people management expenses in the coming years. IT industry veteran T.V. Mohandas Pai pegged the annual cost reduction of people management at 25-30%.
“Clearly there is movement amongst startups. Big enterprises are slower but there is movement. Start ups have a clean slate…with no legacy, look for the latest and cheapest technology on subscription basis,” Pai said.
In fact, one of the biggest hurdles in HR tech market has been its adoption.
“Mid-market and startups overcame that hurdle by configuring new age product, rather than demanding tweaks in technology like large firms did with Enterprise Resources Planning (ERPs). That is the reason why mid-sized companies and startups have been able to provide better employee experience and ease,” said Pankaj Bansal, chief executive and founder, PeopleStrong.
Currently, functions such as talent acquisition, learning and development and performance measurement are being done using HR tech across companies. Mint reported in February that machines are 25% more efficient than humans in hiring the right talent.
However, HR technology at the workplace is not new.
Back in the 1990s, ERPs seamlessly integrated HR processes such as payroll, attendance and training among others, thus reducing transactional burden on professionals, said Sameer Khanna, human resources head at Ericsson India.
“Over the next five years, I dare say, we might even see online HR assistants addressing day-to-day employee queries. Though HR tech might eliminate and reduce several rule-based HR jobs, it will take time before it can replace the essence of human interactions at work,” said Khanna.
PeopleStrong’s research shows that traditional HR jobs focusing around data collation, approvals and process flows have been replaced by HR Tech. New HR jobs which focus around analytics, program management, vendor management and employee experience and productivity management are replacing existing roles.
If we peg the average salary per full time employee in the organized sector at Rs 3 lakh per annum, India at present pays approximately $250 billion to its organized workforce and the organized sector accounts for an approx $2 trillion market, PeopleStrong said.