Indian HR has finally arrived. After a delayed and much anticipated debut on the world HRO stage awaited for the past 5 years, India’s HR and HRO story is turning out to be nothing but spectacular. And if the last year is any indication; this is just a beginning.
According to the Everest Group, a global research firm, while mature markets globally are expecting a growth rate of ~5%, the APAC market would see a growth of ~12%. More so, within APAC, emerging markets like India and China are estimated to grow at a much faster pace of ~25%.
This is an amazing news for India, as it moves ahead in its journey in becoming the HR capitol of the world. As a large part of the world’s manpower comes from this part of globe; it is not unexpected that the face of how HR is managed, structured and experienced in India is changing and evolving rapidly.
With a rapid growth forecast, which gets further pushed by a vast untapped potential of the APAC HRO market. Currently at US$2 billion, it has a potential worth US$28 billion expected in growth. Of this entire pool, India is growing at a CAGR of about 23-28% ; and an addressable potential which is 35X of the current market size (which amounts to only 2.8% penetrated market). In fact, as per our own estimation, the India market has a potential to be a US$16 billion on its own.
Looking at such an exciting growth and potential story, the question that arises is what is driving this growth and more importantly, are these estimations valid enough?!
Here are a few such drivers that we feel are the basis of the optimism that the Indian HR story is creating:
New Age Talent: Their Perception of what HR should do
Today, the employees in corporate India are informed “customers”. Be it food, clothes, medicines or anything else they want – they want it here, now, in perfect quality and at the tap of a finger on their pocket device. So when it comes to HR, the days when employees could wait for weeks and months to get their leaves approved, queries answered or even view a pay slip, are long gone. The employees carry the experience of interacting with the HR teams with them; and create “Employer Brand” perceptions, which off late, has a huge impact on overall organization. This new web of employee and stakeholder expectations is pushing businesses in India to up their HR games, leave “HR Operations” as it is called, with an expert who can do the job in a better way through technology; while their HR teams interact with the employees and deliver a better employee experience.
Interoperable Cloud Based “Latch On” Technologies
HR technology in India has evolved to focus on the “end-user”. There is thus a clear shift from “Compliance” or functionality/utility driven HR systems, which have been at the center stage for past few decades, to interoperable cloud based latch on technologies, which are not only easy to use, but can also talk to any other system. While this has been a global trend, the Indian HR market is experiencing another trend of its own. Here, organizations are increasingly looking for not just cloud based HR products; instead they prefer Cloud based HR solutions – for example cloud based Recruitment (which essentially means a combined offering of technology and recruitment as a service); or cloud based HR Shared Services (a typical HCM coupled with HR Shared Services Setup). This is an interesting trend, which will truly up the game further for Indian HR Outsourcing in the global market.
APPification of HR: Agile Communication and Intuitive Transactions
In addition to the above trends, the mobile wave has hit HR in India big time. According to a recent report, 8 out of 10 people aged between 15-60 look at their smart phones in every ten minutes. If that is the case, why would an employee want to log in to a desktop for applying a leave, viewing a pay slip? And even if he does, he would surely not be happy about it. With this is in mind, APPification of HR, like APPification of everything else, is quickly picking up pace.
Having the HR “services” of the organization on mobile, solves the eternal chronic disease of the HR system – adoption. With interesting employee solutions like “Deal a day”, which make it lucrative for an employee to log in to the HR mobile APP, cloud based HR solution providers are pushing companies to adopt already existing HR solutions, rather than creating their own, powering the growth of HRO and HR Tech industry further.
SMEs choose Smart HR: New Age Start Ups make a head start
India, with its 1.2 billion citizens, is seeing a rapid rise in business startups. India, once considered a third-world economy, is now the hub of many billion-dollar businesses and a hot investment destination. With the kind of efforts that the India Government spearheading; the day is not far when India will be “the startup nation of the world” too.
Startups, especially the SMEs which are in their growth phase, have HR challenges of their own. But the good thing is, as most of these startups are setup by young tech savvy Indians, adoption of new age solutions like cloud based HR solutions which make business sense to the new age Indian entrepreneur, is not a challenge. In fact, in all our conversations in the past 12-18 months; 2 in every 3 deals signed are from such organizations.
This easy adoption from the segment, which is going to be a significant part of the economy, takes India’s HR growth opportunity to the next level.
The Indian Last Mile: Global HROs tie up with Home Grown Indian Players
While the above factors are mostly internal drivers poised to strengthen the growth of the India HRO market; the external factors are equally encouraging. The most significant is the interest of global players in the India geography. There has been a lot of activity in terms of M&A, or strategic partnerships. Whether it is Cielo, the world’s largest RPO, that has renewed its strategic partnership with PeopleStrong, or RiseSmart, which was acquired by global player Randstad, or Hewitt’s payroll business, which was bought out by Everstsone, a SE Asia based private equity firm; APAC, and India in particular, have become an exciting market to be. Yet another reason why we feel that it is just the dawn of the HR revolution in India.
The Next Decade: India’s HR all set for the highest growth ever
From where we are today, Indian HRO looks comfortability positioned on the “Leap frog Launchpad” – ready to take off. The most interesting part is that this leap will bring India to an equivalent positioning with mature economies like the US and Europe, which have always been ahead of us because of the Industrial Revolution they experienced.
We therefore have no doubts, that Indian HR in 2020 will be the epicenter of the HR revolution that will take place in the new world of work!