At the moment, HR Tech is a booming market ripe with investment opportunities. According to Josh Bersin’s 2019 report, the global HR Technology market is over $400 billion in size, with the United States market volume growing to over $250 billion.
The growth of the market in the US means opportunities for Ukrainian products. Being a part of the CNA International IT team and a founder of the CleverStaff applicant tracking system, I’ve had extensive experience working with numerous HR Tech solutions, including testing products from emerging start-ups. This experience, combined with my IT recruitment practice, gave me a unique perspective from the point of view of market development.
Here are some observations about the Ukrainian HR Tech Market.
The State of The Ukrainian HR Tech Market
Ukrainian HR Tech companies (both with already existing products and those in development) often bite off more than they can chew.
1. They either overhype the product with marketing campaigns.
2. Or they put too much effort into development while neglecting the benefits of gradual exposure.
The other significant trend is that courage is preferred to professionalism. The companies, which introduce new features (even if they fail) and new approaches are more likely to stay afloat and grow, rather than those with established work methods, but a lack of time and money invested in risky projects.
I want to point out several things regarding the prospects of expanding Ukrainian HR Tech companies to foreign markets.
- There is a need to work out the product’s unique selling points to a tee and to fine-tune its presentation before competing with big foreign players.
- There is a competitive advantage for Ukrainian companies because they can test their products in post-Soviet markets before rolling out the product in English-speaking and other developing markets.
Sidenote: this approach is beneficial for the users in Ukraine and globally as there are more tools to choose from.
Now let’s take a look at major developments in the Ukrainian HR Tech market.
1 Job boards are at a crossroads
Job boards are competing with Telegram bots over their target audience’s attention. Telegram bots have an advantage due to their functionality of delivering information requiring less effort from the user.
There are two possible outcomes – job boards in their current form will either die out or adopt automated solutions. Some companies are already trying out such solutions. A good example of this trend is Blablawork (FYI: the website has no English).
At least four other companies are also working on similar projects. However, it is too early to identify a clear leader on the market. The winning strategy is to get the biggest reach both in terms of the number of vacancies offered, as well as in terms of the candidates, who engage with the vacancies.
On the other hand, IT recruitment on mobile platforms is booming. More and more people are looking for job opportunities using their smartphones. Popular Ukrainian job boards are launching their apps to keep up with the competition.
2 The growing influence of predictive analytics
With the growing availability of sentiment analysis tools, predictive analytics will play a more significant role in the recruitment process. This is a good thing as the extent of related guesswork is taken out.
These solutions either integrate with existing ATS and CRM software or try to establish themselves as standalone products. However, it is too early to point out any company in particular. Things might change in a year or so.
Then there are companies that are working on solutions inspired by Core HR and Payroll, Employee Self-Service or Employee Experience, Pay and Rewards, Workforce Management, Integrated Talent Management, Talent Acquisition, Performance Management, Corporate Learning, Workplace Productivity. Jobla is a good example, but it is too small (around 60k profiles) to compete. If it gets around 600k profile anytime soon, then it would be really interesting within the niche.
3 Opportunities with data scraping and data mining
The thing is – there is always room for alternative tools for data scraping and data mining. Companies should leverage that opportunity and dive into user-friendly design and competitive pricing.
4 HR process automation
There are many aspects of the IT recruitment process that take advantage of HR Tech automation. There are three significant trends.
- Automated algorithms may take over initial screening and candidate evaluation. Initial screening is the most significant of the two because of the sheer scope of work associated. A recruiter needs to find a proper candidate by looking through a sea of CVs. A simple algorithm can do just that in a couple of seconds without breaking a sweat. As a result, the overall efficiency of the screening process will probably go up because of automation.
- Because of how efficient modern chatbot technologies are, chatbot can handle the initial interviews. At the moment, the process is more or less an elaborate Q&A session, but things are moving towards more fluid conversations. The implementation of deepfake tech will probably help to make dialogues even more smooth by making chatbots act more human. I would guess that passing such interviews will become a separate skill for candidates.
- Then there is the general trend towards HR process automation. One way emerging ATS solutions will try to stand out from their competitors will be a combination of price-lowering strategies and combining numerous HR features (bots and sourcing tools in particular). Ukrainian companies are very active in such practices, but they are a long way towards a blue ocean strategy and still have to spend a lot of time fine-tuning their unique selling points. Let’s list some of the companies:
d. Ahundred – Performance Management Software
5 Recruitment agency killers
There is a segment of companies that are trying to be “killers” of regular recruitment agencies. Companies like WeelWork are trying to leverage HR Tech solutions to be a kind of automated middleman between the client and the recruiter.
These solutions are basing their business models on those of such freelance services as Upwork, Freelance.net, etc. However, even in the best-case scenario, such services would only be able to cover fundamental recruitment needs (such as those usually covered by freelance recruiters).
The majority of tasks handled by agencies (especially in industries dealing with executive search services) are beyond what the aforementioned solutions are able to offer. The reason is simple – these aspects require delicacy in considering numerous factors, which any type of algorithms can’t cover.
I think the success of such solutions relies heavily on how much companies are ready to invest in their promotion. A guesstimate would be around $500,000 to start with. The critical factor is to attract high-value clients, who would believe in the product’s promise, and then to deliver on such promise, followed by generating momentum with success stories.
By 2025, the recruitment market will have a wide variety of solutions that will make work for HR professionals and recruiters much easier. In the meantime, emerging solutions from Ukraine will probably follow one of these routes:
- A buy-out by the big players and absorbed into their products.
- Focusing on a couple of features that provide the most value out of their products and establishing themselves in niche markets.
- Some of the products will stagnate due to various reasons (financial troubles, change of priorities, etc.) Some of these solutions will remain in internal use within companies before being gradually replaced by other options.
I want to believe that the percentage of successful attempts at making valuable solutions for the HR Tech market will grow bigger compared with the overall number of products in development. If anything, it is an opportunity for us to provide our domain expertise in finding the right technological fit for the benefit of a business