What is HR Tech?
Human Resources Technology (HR Tech) is a software and sometimes with a pairing hardware to automate the human resources function in an organization. In this digital era, HR Tech has been widely used in enterprise management together with other tech tools like Artificial Intelligence (AI) and the Internet of Things (IoT) to streamline operating processes. According to Deloitte’s Human Resource Trends report, 71% of companies rate the application of technology in human resource management as one of their top priorities.
HR Tech is becoming the new trend in Vietnam too, especially when many businesses in Vietnam were affected by the pandemic heavily and faced the same challenge – lack of talents in the labor market. Furthermore, HR Tech is also proving its potential in the market to assist in the entire HR management system to help businesses to prevent issues like hiring the candidates with unfit skills and bad attitudes, and attracting, engaging and retaining employees more cost effectively.
The application of HR Tech can be mainly summarized into 3 areas:
- Automation. To automate some processes in HR management to replace repetitive tasks, so the HR managers can focus on other more important tasks like decision making and creativity.
- Optimization. To optimize operations processes and detect and reduce unnecessary cost, such as paperwork, storage, time and effort needed in certain tasks.
- Forecasting. Analyzing data to assist businesses to be ready to expand.
The 3 types of HR Tech in the Market:
- Human Resources Planning. Analyzation to assist businesses in HR planning, to ensure the companies always have enough manpower for operations.
- HR Information System. Analyze, integrate and synchronize data with other software for HR management, such as salary calculation, performance indicator, capacity assessment. etc.
- Recruitment Technology. The most commonly seen HR Tech in the market According to LinkedIn’s The Future of Recruiting 2019 report, 68% of HR professionals agreed that investing in new tools and technologies will be the best way to boost recruiting performance in the next 5 years.
A statistic has also shown that the human resources department spends nearly half of its working hours handling processes such as timekeeping (15.3%), personnel management (9%), work process management jobs (2.6%), administrative jobs (8.1%). With HR Tech, most of these processes could be automated which saves more time for the HR managers for other more important tasks that require decision making. According to a representative from L’Oreal, AI in a HR Tech helped them to process 12,000 applicants with only 80 spots available in the company quickly, which effectively saves up to 200 recruiting hours if they were to do it manually. Furthermore, Unilever also mentioned that up to 70,000 hours were saved to conduct screening of resumes and interviews manually with the help of a HR Tech’s AI which can automate the shortlisting process for their around 1.8 million job applications.
According to Fortune Business Insights, the Global HR Tech Market Size is expected to reach USD 39.9 billion in 2029, with a CAGR of 7.5% from 2022 – 2029.
With the rising need for people with advanced skills and expertise for different enterprises, the market for HR Tech is expanding dramatically too. More enterprises start to use HR Tech especially in their talent acquisition process, such as sourcing and analyzing suitable candidates, one-stop solutions for employment and filtering employees who are no longer qualified or performing.
According to consulting firm Mercer’s 2020 Global Talent Trends report, the application of AI in recruitment will become a prominent trend in the next three years. More than 88% of businesses globally have started adopting AI in their HR management, with around 44% of them using AI to assist in screening and shortlisting potential candidates. These businesses who adopted AI-powered HR Tech in recruiting processes have also observed a cutting of cost by up to 75%. According to a research by Linkedin, up to 66% of HR managers or recruiters have positive perceptions towards the effectiveness of AI-powered HR Tech.
HR Tech around the world has also started being used to solve a new problem like HR management with the new trend of remote working style to better monitor the performance of employees around the world. This is done through optimizing digital experiences through Virtual Reality (VR), Blockchain, Robotic Process Automation, IoT, Cloud Computing, Big Data, etc. Moreover, HR Tech also assists in digitizing businesses, to support them to better utilize their resources, automating HR processes and management systems.
HR Tech in Vietnam was valued at USD 27.49 million in 2021 and is estimated to reach USD 4 billion by 2045 with a CAGR of 22.81%.
One of the reasons that has contributed to such a high growth of HR Tech in Vietnam is because of increasing demands. With more than 3,800 startups in Vietnam, 90% of them who failed within the first year were mainly because of personnel crisis. This high amount of failure is signaling the importance of adapting HR Tech to other enterprises even if they are a startup. Thus, contributing to the high growth of HR Tech Market Size.
According to a report done by TopCV about Recruitment Market Trend in Vietnam, more than 41.8% of their respondents are applying HR Tech in recruitment, and 36.1% are using HR Tech in Information systems.
Some examples of HR Tech in Vietnam
- Recruitery develops an innovative recruitment website through employing the help of headhunters with incentives to find the right candidates for companies. They are now well known as a go-to-platform for IT-related jobs especially.
- Viec Lam Tot
- Viec Lam Tot is a job posting platform that connects blue-collar workers to employers in Vietnam. This platform allows employers to share job openings and interested employees can apply for the positions through calling the employers directly.
- TopCV applies technology like AI, Hardware and Software to optimize the efficiency of HR management activities for corporations and SMEs.
- According to the CEO & Founder of TopCV – Mr. Tran Trung Hieu, TopCV is not just a recruitment company, but a HR Tech that aims to solve the whole HR processes, from recruitment to employee engagement.
- With more than 7 years of establishment with an average growth rate of 300% per year, with 130,000 corporate customers and more than 5 million candidate data, TopCV has become a “phenomenon” in the field of HR Tech in Vietnam.
Some examples of HR Tech Startups in Vietnam:
- Freecracy Việt Nam
- Established in 2018.
- Last Funding Round – Seed: US$ 364,200
- Freecracy Việt Nam is the Recruitment AI Platform that leverages Artificial Intelligence (AI)-powered smart matching technology to actively connect millions of employers and job seekers.
- Tribee Vietnam
- Established in 2020.
- Last Funding Round – Pre-seed: US$150,000, from 500 Startups
- Tribee is an application that helps promote positive employee behaviors to increase sales and help management teams instantly capture important metrics and analysis to come up with smart strategies throughout campaigns.
- Established in 2019.
- Last Funding Round – Seed: Undisclosed amount, from 1005 Ventures and Zone Startups Vietnam
- BravoHR provides digital solutions for staffing, employee benefits and rewards.
- Their application allows management to recognize, evaluate and give feedback to employees to promote a healthy and fair work environment, encourage employees to contribute, and shape core values for employees.
According to to a report and survey done by VietnamWorks in 2021, a job website under Navigos Group in Vietnam with more than 5 millions registered profiles and provide recruitment solutions to more than 17,000 companies, 32% of their respondents said that HR Tech is essential for their companies while 68% of them mentioned applying technology is necessary to optimize their HR processes. Furthermore, 36% of the businesses listed are willing to invest up to USD 500 million in technology development, 27% have a USD 50 – 200 million budget and about 23% only set below USD 50 million budget.
Similarly, in another report conducted by TopCV in the Vietnam market in 2022, 76% of their respondents found that HR Tech is necessary for their businesses while 8.8% of the enterprises feel HR Tech is absolutely important. For businesses in Vietnam who haven’t started using HR Tech, 55.7% of them do have a plan to apply for HR Tech by 2022.
Increasing demand of Blue-Collar Workers
According to the General Statistics Office of Vietnam, blue-collar workers will account for 80% of the total workforce in Vietnam by 2025, reaching around 43 million people. This shows a huge potential for the recruitment of the blue-collar segment in Vietnam. Furthermore, many companies in Vietnam have been facing labour shortages since the outbreak of COVID-19. After social distancing measures are lifted in 2022, there is an increasing number of job seekers who want to return to work.
In addition, according to a survey by People Matters Global, the number of businesses that have been investing in transforming HR management digitally has doubled since the pre-pandemic period, and is expected to continue to rise when the pandemic is over.
Hence, this shows a high potential in the job recruitment segment for HR Tech.
Support from the Government
According to the director of the Ministry’s Higher Education Department – Dr. Nguyen Thi Thu Thuy, the ministry has been assigned to develop projects to constantly improve the HR Training for Hi-Tech Development. The Ministry of Education and Training has also unveiled a plan to improve the current training of high-quality HR management in the Technology sector to enhance the competitiveness in the region and the world.
Harder for Local HR Tech
According to the same report by Vietnamworks, about 66% of enterprises in Vietnam are using HR Tech from foreign companies and only 34% of them chose local HR Tech.
Furthermore, according to the same report and survey done by VietnamWorks, employers / respondents in Vietnam have mentioned that they understand the importance of HR Tech especially since COVID 19, but only 42% of them are subscribing or paying for a HR tech for their companies. This shows that despite more companies having begun to appreciate HR Tech, it is still not widely used for Vietnamese Enterprises.
According to the general director of T&A Ogilvy – Nguyen Dieu Cam, the use of AI on HR Tech in Vietnam is still in its initial stage. More attention and efforts will be needed to build a more comprehensive HR strategy and integration of technology solutions to optimize the candidate experience when recruiting the top talents.
Hence, when HR Tech is not widely used and most enterprises chose to use software from foreign companies, it might be difficult for local Vietnamese startups who are developing a HR Tech to serve the local enterprises.
Insufficient of Talents
According to Navigos Group’s report on human resources of Vietnamese start-ups, the demand for highly skilled talents and specialized employees is increasing in Vietnam. For example, Cisco projected that by 2020 the Vietnamese information technology (IT) sector would face a shortage of over 500,000 information & communication technology (ICT) workers while in 2019, only 400,000 engineers were working in IT and only 50,000 IT students just graduated. Furthermore, according to the Ministry of Information and Communications in Vietnam, more than 1.2 million of talents with IT skills will be required in Vietnam by 2025, while talents in the current market can only supply around half of that demand.
Although Higher education institutions in Vietnam have established new digital related majors and degrees such as data science and artificial intelligence, these new courses only started in 2019 which still require a few more years to meet the demand of the fast growing tech ecosystem.
Furthermore, it is not easy for enterprises in Vietnam to hire talents from other countries too. Foreign talents will have to apply for a Business Visa which will expire in 3 months to enter Vietnam with other entry restrictions. Foreign talents also can only have a maximum of two years of work contract with local companies, which poses a risk to lose the talent after 2 years and vice versa.
Without sufficient talents available in the job market, it will limit the potential and efficiency of HR Tech too.
The Future of HR Tech
With the improving technologies in this digital era, many analysts predicted that these might be the next new trends of HR Tech to help enterprises in different aspects:
- Remote Working Style
- Since COVID-19 pandemic, remote working has become the new norm, which also provides an opportunity for enterprises to hire talents from other countries at a cheaper cost.
- However, it is hard for enterprises to measure the performances of remote workers and due to different locations and time zones, scheduling seems to be an inevitable problem.
- Hence, this shows a potential and new trend for the HR Tech, to assist in hiring talents from other countries and also assist in managing the remote workers in terms of performing, scheduling and communicating.
- Blockchain Integration
- With more digital transformation, data security starts to become an increasing concern for many enterprises, especially to protect the personal details of their employees.
- Via Blockchain, it helps to improve the collaboration between HR Managers and Software Providers (HR Tech), to create a unified practices and data storing standard, to improve the quality of HR Tech systems.
- Furthermore, the decentralization and security of Blockchain can ensure that only authorized people can get access to the data and eliminate any potential hackers.
- For more information of Blockchain in Vietnam, can find through:
- Employee Wellness Management
- Constantly working for long hours with lack of sleep, which is a common scenario in many startups, has been a serious issue that is affecting the mental wellness of employees.
- Employee Wellness Management in HR Tech is one of the newest trends in HR software that aims to track and improve the mental health of employees, and also assists the companies to set a more realistic expectation and Key Performance Indicator (KPI) for each employee.
- Another way of this new HR Tech is the use of gamification to create a sense of accomplishment for the employees to constantly stay motivated and engaged.
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