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Business trends

India tech companies turn to AI-powered recruitment

Investors see opportunity in human resources startups as hunt for talent heats up

The skill-matching engine of Bangalore startup Belong can identify and communicate with potential recruits not actively looking for a job change. (Photo by Mahesh Bacham)

BANGALORE -- When Mumbai-based technology company Directi was looking to hire 25 staff proficient in Node.js, a computer program, it turned to a startup called Belong in Bangalore.

Belong was able to field 99 candidates for the role, eventually filling all 25 posts thanks to a software program using artificial intelligence that found the best candidates from 90 different professional communities, forums and networks, even if they were not actively looking for a job.

With each successful job placement, the software improved at filtering and sorting appropriate profiles. Combined with a smart platform that personalized each contact and follow-up communication, Belong was able to interest even passive job searchers in the opportunities at Directi.

Belong is one of several Indian startups that are bringing innovative recruiting methods to the human resources sector. They are finding strong demand, especially from tech companies, which sometimes struggle to match up candidates with the right background and skills with the appropriate positions.

Founded in 2014, Belong now counts Cisco, Accenture, Flipkart, Myntra, Uber and ThoughtWorks among its clients. It raised $10 million early in 2017 in a funding round led by the Indian arm of Sequoia Capital, a U.S. venture fund.

Last year, investors pumped a record $165 million into Indian startups developing cutting-edge solutions for the country's rapidly changing human resources landscape. In the first half of 2018, 14 deals collectively valued at $73 million were closed in the HR sector, according to Venture Intelligence, a Chennai-based investment data company.

"With faster customer adoption of HR tech solutions, investors have become more open to funding such ventures," said Samir Kumar, managing director of Inventus, a Bangalore-based venture capital fund.

Even with such backing, however, these startups face a challenge in optimally selecting, training and placing India's enormous workforce. "The most popular HR tech software in the world is still Microsoft Excel regardless of what anyone tells you," joked Rishabh Kaul, co-founder of Belong. Kaul said the nascent market was wide open for HR software adoption.

Param.ai, a Hyderabad-based startup, has built an AI-enabled software program that goes beyond simple keyword matching and parsing of job descriptions to look for inputs such as skills, work experience, academic qualifications and other parameters. The software has been developed to find links between certain skills. For example, it will link language proficiencies with particular platforms, even if candidates are not specific in their applications.

These parameters are used to match and rank candidates. For instance, a personal finance company found that many good candidates for open posts were already working within the organization in jobs that did not match their talents. Param.ai was able to identify more suitable jobs. This capability is particularly helpful in cases where applicants are not aware of job openings in the companies they work for.

The co-founders of Belong (from left) Sudheendra Chilappagari, Rishabh Kaul, Vijay Sharma and Saiteja Veera (Courtesy of Belong)

Another of Param.ai's clients, a travel-booking website, said the startup's software helped it to screen applications because its shortlists better matched the profiles of vacant jobs. Only 20-25% of applications received for jobs are relevant, on average, so quicker screening saves recruiters time. Param.ai's system also fine tunes screening processes by finding patterns in hiring decisions that allow it to identify recruiters' underlying preferences.

Both Belong and Param.ai screen data from social media as well as information offered by candidates. In December, Param.ai raised about $200,000 from Institutional Fund Core Financials, a U.S.-based angel investor.

As technology evolves, companies are constantly re-evaluating their HR requirements to stay competitive, leading to a broader view of the skills they need. "There is a convergence of skills," said Kaul, pointing to financial companies that are mining talent from internet businesses.

"Sometimes, companies might not be sure about what kind of person they are looking for exactly, but they can just say 'I want someone like XYZ' and we will be able to decode what that means by using factors such as affiliated universities, previous companies, growth patterns, common networks and shared skills," said Kaul.

The HR business has also evolved so that companies can provide lots of different solutions to hiring problems. "Some companies would choose to invest more on assessment, some on building the application-tracking system, some on background verification," said Hari Krishna Reddy, co-founder and CEO of Param.ai. Many companies are now willing to hire from outside their own business sectors, and from outside India, Reddy said.

Indian spending on HR technology products is slightly higher than $1 billion a year and is growing at 30% a year, according to Chaitanya Peddi, co-founder and product head at Darwinbox, an HR platform that raised $4 million in June 2017 and includes personal care company Nivea, logistics startup Delhivery and food delivery company Swiggy among its clients.

"A competitor can copy your product, your supply chain, your distribution model but they can't copy your culture and the kind of people it attracts," said Peddi, noting that Vibe, a social network developed by Darwinbox, can be integrated with clients' existing technology, allowing "live" employee-engagement surveys.

"This is how you really identify who are the actual contributors, what kind of people are successful in your organization," Peddi said. "This will have direct implications on your recruitment. It's all going to be very different from how we are doing it today, which is pretty much guesswork."

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