AI in HR Tech: Use Cases, Arising Startups and M&A Activity

The key drivers fueling the growth of HR tech market include increasing need for managing the widespread workforce.

Yuliya Sychikova
COO @ DataRoot Labs
07 Aug 2019
15 min read
AI in HR Tech: Use Cases, Arising Startups and M&A Activity

HR is one of those "human" jobs that will be hard to replace with AI. Akin to psychology, it requires a high level of EQ (quotient of emotional intelligence) and profound personal touch. The common preconception is that it’s very hard to augment, let alone automate. Over the last half-decade, this line of logic has come under fire, with data-driven approaches penetrating more and more human resource practices.

With the cost of AI adoption plummeting and the data science community growing by the minute, business leaders are starting to reach out to process automation and augmentation opportunities in the people operations realm. Gartner predicts that by 2022 (three years from now!) one in five workers engaged in non-routine tasks will rely on AI to do their jobs.

The key drivers fueling the growth of HR tech market include increasing need for managing the widespread workforce, growing demand for replacing the legacy systems, the increasing importance of candidate experience and technological proliferation in Big Data analytics, Machine Learning, Artificial Intelligence (AI), and Internet of Things (IoT). Thus, new report by Grand View Research, Inc. projects the global human resource management market to reach USD 30.01 billion by 2025, registering a CAGR of 11.0% from 2019 to 2025.

PwC forecasts that 20% of U.S. companies with AI initiatives will roll out AI across their business this year to both re-imagine jobs and work processes as well as grow profits and revenue.

A lot of AI use cases revolve around eliminating the tedious and routine tasks, while HR managers handle the most important side of the job - human interaction. We have identified the following key problems that AI can solve:

  • Efficiency improvement: automating repetitive tasks.
  • Recruitment and candidate assessment: more efficient and less biased hiring.
  • Employee development: coaching and engaging employees to enable personal growth.
  • Culture maintenance and HR management: identifying cultural issues and key areas for improvement.

Let's look at those cases one by one:

Efficiency improvement

Automating repetitive tasks.

AI in HR and recruiting gets people to move away from repetitive tasks not to waste their talents. As a result, they can target their energies on more high-level tasks, such as finding promising employees and working to keep them with the company. HR staff will focus on being a strategic partner to business divisions rather than crunching data as a task processor. AI will empower companies to make faster decisions by:

  • Accessing up-to-date information.
  • Spotting trends through pattern recognition.
  • Using machine learning to identify past mistakes to avoid and accelerating processes.

Recruitment and candidate assessment

More efficient and less biased hiring.

One of the major disruptors in candidate hiring is HireVue’s artificial intelligence platform. It identifies and analyzes the tone, word choice, body language, question context, and answers of candidates who have recorded video interviews to determine if they’re a good fit – by skillset and culture. Their quantifiable score compares all the candidates, ensuring HireVue makes the optimal unbiased hiring decisions – all thanks to AI and Machine Learning.

AI helps companies through the process of pre-hire assessments. While assessments are nothing new, in the era of AI, a company can predict which candidate will be a better hire in the future. Sample this, a candidate applies for a role in a company by entering his resume. An AI-powered system analyses the resume and compares it to the successful employees in the same role.

A chatbot reaches out to the candidate and asks some pre-screening questions. They collect candidate data, and AI uses it to score the candidate and present the result to a recruiter.

Pymetrics uses AI-based gamified assessment to screen candidates. One of their customer’s hiring success rate has gone up by over 30% while eliminating all the "educational pedigree bias" inherent to the recruitment process faced by almost all companies out there. AI in recruitment is already huge.

Another player in the HR assessment game, PredictiveHire, helps big brands to get the candidate experience right. They already have text data on 15% of the Australian population that helps identify with 85% accuracy the personality profile of applicants into all customer-facing roles (retail, sales, customer service, etc.). To reduce the hiring bias, the company doesn't use CV data, nor it builds data models off the existing employees. They only use the text data ensuring that everyone gets a fair go at the role. That allows their clients to hire for the right values and behaviors. In addition, Predicvehire provides personalized personality reports to every applicant for every role. Amid low unemployment and the rule of social media, this is particularly important to consumer brands who measure the impact of poor candidate experience on customer attrition.

Employee development

Coaching and engaging employees to enable personal growth.

Learning and development (L&D) is a young HR practice and yet the global L&D industry is worth over $200B. Nearly half of the L&D opportunities organization forget, inappropriately apply, or waste on people that don’t want or need it.

Companies like Fuse are now building AI-based coaching tools that request feedback, read comments, and glean sentiment from employees and entire teams. They use data to match these individual and team issues against higher performing teams, giving managers and supervisors the requisite tools to do better.

As part of it, HR undertakes activities such as talent acquisition, employee management, performance management, succession management, etc.

For example, organizations like Greenhouse Software are integrating IBM-AI capabilities through the IBM Watson Candidate Assistant. It is a suite of AI-powered tools that matches jobs to the candidates and vice-versa based on their personalities, skills and interest areas. Greenhouse collects candidate data through various funnels including social media.

It observes minute details such as whether an employee submitted their work sample through LinkedIn or Glassdoor. It maintains scorecards for all the employees based on its own analysis with zero human intervention. This helps the interviewers sort through the applications ahead of time and keep the talent funnel ready.

Culture maintenance and HR management

Identifying cultural issues and key areas for improvement.

AI can look at organizational network data like email traffic, survey results and sentiment of comments to identify areas of stress, arising ethical dilemmas, and various forms of spreading toxicity within a company culture. This helps HR managers identify red flags faster and act in a preventive rather than reactive way.

Employee mental health is extremely important. People are the foundation of your company and they better be happy if management aims to achieve some lofty goals. To remedy some ongoing cultural issues, AI now identifies behaviors that cause poor work performance and disrupt the balance of your working environment. A new breed of intelligent chatbots can ease these situations by providing interactions in an intelligent and easy-going manner while alerting the HR department of any cases that go beyond the red line and need in person handling.

The above are some of the key cases that new technologies enable. For a deeper understanding of the innovation happening in HR tech, take a look at the following infographic by Will Saborio at Silicon Salsa.

Culture maintenance and HR management

Identifying cultural issues and key areas for improvement.

AI can look at organizational network data like email traffic, survey results and sentiment of comments to identify areas of stress, arising ethical dilemmas, and various forms of spreading toxicity within a company culture. This helps HR managers identify red flags faster and act in a preventive rather than reactive way.

Employee mental health is extremely important. People are the foundation of your company and they better be happy if management aims to achieve some lofty goals. To remedy some ongoing cultural issues, AI now identifies behaviors that cause poor work performance and disrupt the balance of your working environment. A new breed of intelligent chatbots can ease these situations by providing interactions in an intelligent and easy-going manner while alerting the HR department of any cases that go beyond the red line and need in person handling.

The above are some of the key cases that new technologies enable. For a deeper understanding of the innovation happening in HR tech, take a look at the following infographic by Will Saborio at Silicon Salsa.

CompanyHQ / year foundedAmount Raised, $Deal Amount, $AcquirerDeal Rationale
Aasaanjobs India / 20046.5MN/AOLXTo strengthen OLX position in the online job search segment by adding blue collar job vertical.
ePoise India / 20130.5MN/AZohoLikely, an acquihire of a hiring automation product startup's team.
Get BoxSuite Pty Australia / 2009N/A1.4MELMO SoftwareAcquiring cutting edge native SaaS, cloud-based technology which will disrupt the large and growing rostering and time & attendance market.
Glassdoor US / 2007204.5M1200MRecruiteAcquiring a leading job and recruiting company well known for providing greater workplace transparency.
Imaginatik US / 19942.6M1.7MPlanboxThe new combined company will expand Imaginatik’s UK and US operations.
Jibe US / 200941MN/AiCIMSiCIMS acquires Jibe to provide employers best-in-class candidate engagement and recruitment marketing capabilities. Jibe's talent and jobs matching capability is powered by Opening, a company later mentioned in this article.
Jobvite US / 2006256M135MK1 Investment ManagementJobvite, a provider of analytics-based recruitment management SaaS for businesses. K1 and Jobvite also announced the acquisition of Talemetry, RolePoint, and Canvas. The investment by K1 and acquisitions will enable Jobvite to create a comprehensive, end-to-end talent acquisition platform.
Le & Associates Vietnam / 2001N/AN/ATrust Tech44.42% stake in L&A investment corporation, which owns Vietnam HR company Le & Associates. The acquisition comes as part of Trust Tech’s plan of expanding its businesses in different countries which is part of its strategy in its medium-term management plan.
Rallyteam US / 20138.6MN/AWorkdayRallyteam, a talent mobility platform that uses machine learning to help companies better understand and optimise their workforces by matching a worker’s interests, skills, and connections with relevant jobs, projects, tasks, and people.
Scannel Solutions Ireland / 1998N/A4.5MIdeagenAcquiring a leader in Environmental Health, Safety and Quality solutions, which it offers via a SaaS platform, will enable Ideagen to grow both SaaS capabilities and accelerate EHSQ offering.
The Sage Group (Sage Payroll Solutions) US / 2016N/A94MiSolved HCM (Accel-KKR Company)Sage’s payroll processing SaaS solutions will accelerate iSolved’s growth in HCM industry, specifically targeted toward the midmarket, while increasing its licensee and partner network as well.
ThinkHR US / 200582.5MN/AMammothTo expand Mammoth product and service offerings, leverage complementary capabilities and expertise.
Ultimate Software US / 199019.1M11000MHellman & Friedman Capital PartnersPE deal. The acquisition will allow the company to utilize financial and strategic advice to bring new features and services to the market more quickly.
Workmarket US / 201066M400MADPTo add agile tool to convince enterprises to use it as part of a larger system of workforce products and compete with smaller companies.
Zugata US / 201410.2M N/ACulture AmpZugata's acquisition allows Culture Amp to bring an increasingly sophisticated use of data across the employee lifecycle.

Startups and investments

In Q2 2019 alone, VCs have poured $1.448B of VC investment into HR tech. The categories that saw a spike in investments are Wellness (Gympass, $300M round ), Benefits (Collective Health, $205M), and Core HR (HR Path, $112.5M, Payfit $78.6M). When it comes to AI-focused startups, the results are also impressive. In the table below we summarize the biggest rounds and most interesting deals around companies using AI in HR:

CompanyHQ / year foundedAmount Raised, $InvestorsWhat they are doing
AmazingHiring US / 2012800KAltaIR Capital, SMRK, Starta VenturesAmazingHiring is a web application for technical talent acquisition. It automatically searches for the right candidates across 50+ sources. AI-based technology helps to save time on candidate pre-screening. Powered by AI technology, trusted by 6000+ recruiters. Clients already include VMware, Nvidia, Dell, Intercom, Capgemini, and ThoughtWorks.
Ambit Analytics US / 20171.1M SeedRomulus CapitalAmbit Analytics helps leaders build collaborative teams through insights on how they talk and listen.
Astound US / 201611.5M APelion Venture Partners, Vertex Ventures USThe future of AI for employee service: support automation using NLP and machine learning.
Beaconforce US / 2017800K Pre-seedN/ABeaconforce has developed a methodology and SaaS platform that combines Artificial and Emotional Intelligence to create challenging, motivating, and productive work environments.
Botbot.AI Singapore / 2017to watch N/ABotbot.AI is an enterprise productivity solution that uses chat as an interface to automate business processes and workflows in order to move people away from low-value, menial and transactional work and refocusing them on high-cognition, high-value tasks, driving enterprise productivity and elevating the level of engagement.
Censia US / 20177.6M SeedStreamlined Ventures, Plug&Play, X Factor VenturesCensia empowers talent acquisition by equipping recruiters with the power of artificial intelligence to eliminate low-value work, error, and bias. The result is substantially better, faster hiring decisions that ultimately drive revenue with every hire.
dotin US / 20121.2M SeedAmar Chokhawala, Bishop Ranch Intelligence Innovation Accelerator, Net One System, Ganesh Iyer.dotin.us is dedicated to understanding the art of decisions made by the subconscious mind to yield powerful business outcomes. By using the science of psychological, structured/unstructured social or enterprise data and machine learning, the company taps into the subconscious mind of humans enabling to capture the true digital personality fingerprint of every user.
Enboarder Australia / 201212M AGreycroft, Next Coast Ventures, Stage 2 Capital, Thrive Global, Venmo, othersEnboarder is an onboarding and engagement platform that focuses on new hire experience and engagement rather than just tasks, forms and paperwork.
Entelo US / 201140.7M CU.S. Venture Partners (USVP)Entelo identifies those candidates who are most likely to be open to new opportunities, removing the pre-qualification layer from recruiters’ responsibilities. Additionally, the Entelo platform includes a robust candidate search database; recruiter email tracking, management, and analytics; algorithm and search filters built specifically for diversity initiatives, and more.
Hackajob UK / 20148M AAXA Venture Partners, Downing Ventures Hackajob is a data-driven and engaging recruitment platform that matches top digital talent with exciting companies.
Harver US / 201314M AInsight Venture PartnersThe company’s TalentPitch predicts which applicant performs the best. The experience is tailor-made for organizations that give a realistic preview of the job while collecting success-predicting data. Harver algorithms calculate the likeliness of success for each applicant.
Headstart UK / 20161.6M SeedPlug & Play, Momentum, FoundersX, Tenaya Capital, othersHeadstart is diversity recruiting software focused on breaking the cycle of exclusion.
Helena by Woo US + Israel / 20157M ALord David Alliance, Acecap, Microsoft Scaleup TelAviv, othersWoo, the marketplace for matching employers and ‘passive’ job seekers, has launched Helena, an AI-driven headhunter that automatically scouts, approaches and sources the best candidates on behalf of employers.
Hire Abby US / 2018to watch N/AHire Abby helps companies gather applicant intel and predict a candidate’s potential fit for the company. majorly improves the candidate experience, while also helping the business make better and faster hiring decisions.
HireVue US / 200493M ESequoia CapitalCombining predictive, validated industrial/organizational science with artificial intelligence allows recruiting professionals to augment human decision-making in the hiring process, delivering higher quality talent, faster. HireVue has hosted over six million interviews for more than 700 customers worldwide.
Jobiak US / 2018to watch N/AJobiak provides the industry’s first AI-based recruitment marketing platform that is designed to quickly and directly publish job postings to Google for Jobs, maximize their visibility and accelerate the flow of qualified candidates.
JobRocker Austria / 20151.83 ASurplus InvestOnline job search portal that connects applicants’ CVs with job openings using a proprietary algorithm and further human-driven consulting.
Leena AI India / 20152M SeedY Combinator, angelsLeena is a smart AI-powered HR companion dedicated to engaging employees. Leena is powered by ChatterOn, a cutting-edge AI chatbot development platform with self- learning cognitive capabilities, which leverages 10 Mn+ conversational data points from over 12,000 businesses.
Lumity US / 201333M BSocial Capital, True Ventures, Threshold, Rock HealthLumity simplifies the pain of company health plan decisions with data-driven recommendations that drive cost savings and improve outcomes.
MeetFrank Estonia / 20171M EHummingbird VC, Karma VC, and Change Ventures Сhatbot that interacts directly with applicants, using AI and machine learning. The app analyzes the needs of users and proposes job advertisements that match the candidates’ profile and abilities, from the jobs pool. If the user is interested in one of the suggested positions, he or she can start a private and anonymous chat with the company.
MoBerries Germany / 20151.8M EHigh-Tech GründerfondsAutomated ranking system that matches applicants with companies searching for new hires. The goal now is to build a screening bot for selecting candidates before interviews, as the founders deeply believe the candidates' pre-filtering phase can be fully automated.
Mya Systems US / 2011 32.4M BFoundation CapitalA conversational AI equipped with both natural language understanding and natural language generation. Mya aims to automate sourcing, screening, and scheduling for recruiters, initiating conversation with candidates right after they apply and assess them for baseline requirements with real dialogue.
Opening Ireland / 2015$600K SeedNDRCOpening builds cognitive talent and jobs matching solutions and helps HR technology vendors, enterprises and staffing agencies leverage the power of natural language understanding to create smarter talent solutions in days, not months. Opening's core technology, Baikal AI, is the world’s deepest and clearest data lake for talent and jobs data. Baikal AI, combines the key innovations in deep learning and natural language understanding, and simplifies the deployment of talent and job matching models.
Paradox US / 201613.3M AN/AParadox’s AI recruiting assistant, Olivia, takes the focus on candidate experience to a new level. She uses advanced natural language processing to answer all your applicants’ questions; she has real, one-to-one conversations with them through the channel of their choosing — web.
PredictiveHire Australia / 20133M ACapital Zed, RampersandPredictiveHire is an online platform which takes a data-first approach to help businesses hire the right people. By leveraging the power of technology, PredictiveHire helps quickly evaluate a large number of applications and narrow down the list to those with suitable profiles and ensuring quality candidate experience along the way.
PredictiveHire Australia / 20133M ACapital Zed, RampersandPredictiveHire is an online platform that takes a data-first approach to help businesses hire the right people. By leveraging the power of technology, PredictiveHire helps quickly evaluate a large number of applications and narrow down the list to those with suitable profiles and ensuring quality candidate experience along the way.
Productive Mobile Germany / 20143.4M EHV Holtzbrinck VenturesHuman Process Augmentation (HPA). Their software disrupts the way enterprise software workflows are built, optimized and automated because of its fast implementation and lower costs, making humans more productive.
Pymetrics US / 201356M BGeneral AtlanticPymetrics develops neuroscience-based assessment and prediction technology to transform the way companies hire, retain, and develop their employees. It offers cognitive and emotional assessment solutions; and a personalized and dynamic recommendation engine for recruiting/hiring, retaining, and developing talent.
Remesh US / 201413.8M AGeneral Catalyst, others Remesh empowers researchers and executives to have a dynamic conversation with up to 1,000 participants- online and in real-time. The Remesh platform uses AI to understand, analyze, and segment the vast amount of open-ended responses pouring in- in a matter of minutes.
Restless Bandit US / 201410M AToba CapitalAn artificial intelligence tool that finds both passive and active qualified talent from a candidate pool of over 100 million, and engages them and only them. Using discovery and rediscovery algorithms, Restless Bandit searches for candidates externally and within your ATS, respectively. It also intelligently and automatically retargets top prospects.
Scoutible US / 20156.5M SeedLearn Capital, Mark CubanScoutible is a game-based hiring platform, using immersive mobile games to pinpoint perfect-fit candidates for jobs. Scoutible’s patent-pending technology identifies players’ unique cognitive and personality traits through gameplay, then spots opportunities where players’ attributes match those of companies’ proven top performers.
SmartDreamers Romania / 2014 2.1M SeedGapminder VC, Catalyst Romania, 3TS Capital PartnersSmartDreamers is a Recruitment Marketing Automation platform that empowers recruitment teams to smartly advertise jobs across the web. Integrated with Facebook, Google Ads, YouTube, Snap, Instagram, publishers, and niche websites, SmartDreamers streamlines the recruitment marketing processes. SmartDreamers helps companies such as Uber, Vodafone, Siemens, Orange, IBM, and many others to smartly recruit talent.
Stella.ai US / 2016N/A Seed Pete FlintStella is an online recruitment agency that focuses on reducing time to hire with the use of artificial intelligence. The company helps to speed up hiring by 80% for any position using artificial intelligence to pre-qualify talent.
Talespin US / 20155.6M AN/ATalespin is disrupting the future of work through a radical change in enterprise tools. By leveraging the power of artificial intelligence (AI), virtual reality (VR), and augmented reality (AR) Talespin is changing the way people engage, educate, and empower the next generation of the workforce.
Textio US / 201429.5M BScale Venture PartnersTextio’s ‘augmented writing platform’ helps companies create better, more effective job listings. Textio’s predictive engine analyzes global hiring data from over 10 million jobs and their associated hiring outcomes every month, to uncover the language patterns that lead to successful job postings. It then uses this intelligence to make real-time recommendations as you craft your listing, predicting its performance and guiding you to an ultimately solid job post.
Uncommon US / 201518M ASpark Capital, Zeev Ventures, Canaan Partners Uncommon Co. uses artificial intelligence to identify the requirements for job postings and matching those jobs to qualified applicant.
Visier Canada / 201091.5M DSorenson Capital, Adams Street Partners, Summit PartnersVisier People™, the leading people analytics and workforce planning solution, provides with answers to hundreds of pre-built, best practice questions about workforce, across HR and business topics to strategically manage a complex workforce.
Wrkit Ireland / 2016N/AEnterprise IrelandWrkit is a one stop shop to inspire better, healthier, working environments. With the help of AI and automation, wrkit specialises in the creation of better, healthier working environments using our online suite of data driven Employee Engagement & Retention tools.

Final thoughts

The human-AI collaboration model is essential for a people-oriented domain like HR. It’s unlikely that AI will replicate the nature of human relationships and its nuance. That said, the advantages of AI in HR can help us attune to people operations and make better decisions supported by solid data.

Since AI is developing and new opportunities are opening up, the ways companies use AI and the impact of AI in HR and recruiting will also change. The future of AI in HR processes is clear - AI will affect every organization. The question is how companies adapt and which processes they choose to reinvent or improve.

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Yuliya Sychikova
Yuliya Sychikova
COO @ DataRoot Labs
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Author

Yuliya Sychikova
COO @ DataRoot Labs
Yuliya is a co-founder and COO of DataRoot Labs, where she oversees operations, sales, communication, and Startup Venture Services. She brings onboard business and venture capital experience that she gained at a leading tech investment company in CEE, where she oversaw numerous deals and managed a portfolio across various tech niches including AI and IT service companies.

Co-Authors

Ivan Didur
CTO @ DataRoot Labs
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Kyiv (HQ)
Max Frolov
CEO @ DataRoot Labs
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Ivan Didur
CTO @ DataRoot Labs
builds and implement AI-powered systems across different verticals to help our clients operate effectively.
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