Q&A: The Power of Automation in HR by Jiten Somani

Q: How did you end up in the place that you are right now, and how did you end up making products for HLS?

Throughout my career, I have actively worked with innovative technologies and hence, I understand the SaaS market and its potential in its scalable and flexible nature. While these systems were geared towards US businesses, around 2013–14, we noticed India's rapid progress in various technologies, including the feasibility of deploying cloud architecture.

Seeing this trend, we realized the need to adapt. While there were existing solutions for accounting, billing, and invoicing, we saw an opportunity to innovate. We decided to transform the billing process in our HRME (Human Resource Management and Enterprise) system into a cloud-based system, Pocket HRMS.

Currently, over 2000 organizations use Pocket HRMS, a product from the company I represent, and it has been around for about 20 years. We embarked on a project to transition it into a cloud-enabled platform. My role involved migrating the desktop-based application to the cloud. Throughout this journey, we encountered numerous challenges as well as gained valuable insights.

Unlike other entrepreneurs who focus solely on technology, our approach was more business-centric. Having experience running other businesses, I understand the challenges faced by business owners, particularly in areas like human resources, such as manpower planning and hiring. This perspective allowed us to simplify HR processes for businesses as much as possible.

Q: What is the difference between what can be automated and what should be automated?

Nikola Tesla’s belief that everything can be automated is one that I share. However, it is important to keep in mind that I am referring to human resources specifically.

1. Transformation of HR Department: This department has undergone significant transformations, starting as the industrial relationship department, then evolving into the human resource department, and finally being referred to as HCM, which stands for ‘human capital management’.

2. Hyper-Automation in HR: Due to advancements in technology, tasks like resume screening and leave approvals can now be automated. As a result, I believe HRM will transition into human relationship management. We are currently in a phase of hyper-automation, where machines can even select candidates and match them with job descriptions.

With this shift, the HR staff can concentrate on cultivating relationships with employees rather than solely managing them. They now have the opportunity to focus on strategy, leadership development, and business growth. We can already observe how human technology is transforming these areas.

Q: If HR gets much more automated, why would people still end up hiring HR?

Ultimately, HR is our go-to support system in the workplace. They bridge the gap between regular employees and their managers. When you face problems, require help, or feel upset with a coworker or boss, it's the HR department that steps up to provide empathy and assistance.

Relying on a creative AI for support at work isn't practical because it doesn't understand your unique situation, role, or duties. However, your company's HR team does. They're always there, understanding your feelings and lending a sympathetic ear.

Q: How does the current lack of automation in HR impact organizations, given that only 5% of highly advanced ones have automated most HR processes?

In the past, even small businesses with around 200, 500, or 1000 employees used to rely heavily on manual methods, such as employing accountants and product owners, to keep track of their operations. However, the landscape has shifted significantly with technological advancements.

Nowadays, even newly established businesses with just four workers are recognizing the value of HR software. Initially, as a new and small business, I suggested using Excel as a cost-effective solution to manage tasks. To my surprise, they showed keen interest in automating their processes entirely.

This shift isn't limited to large cities like Mumbai or Bangalore, either. It's spreading to smaller cities like Nagpur, Raipur, and Madurai as well. Companies across the board are acknowledging the importance of adopting software solutions to streamline their operations.

While it might not be feasible for every business to automate 95% of their workload, many Indian businesses are embracing automation to some extent. For instance, they're implementing biometric attendance systems or utilizing Microsoft Excel for payroll management. Automation comes in various forms, and these businesses are finding innovative ways to integrate it into their operations to enhance efficiency.

Q: How is automation expected to reshape HR as a human role in the coming years?

HR departments are experiencing big changes. Many companies are using simple automation methods like digitizing processes and employee records. We no longer rely on paper records for each employee. Instead, computer systems handle records, leaves, performance reviews, complaints, and awards.

The next big step in automation is using AI technologies. In our system, Pocket HRMS, we've integrated Open AI from Microsoft. For example, crafting a job description used to be a time-consuming task that took hours. However, with just a few keywords, AI can generate a draft that is 90% complete and can be customized to suit our specific requirements.

AI is also changing how we deal with resumes. It can scan and analyze them, making a list of candidates who meet our requirements. Plus, it can suggest interview questions based on a candidate's strengths, like interpersonal skills.

Q: Will the HR function be entirely automated if we achieve a certain level of automation, with AI handling 90% of tasks and the remaining human responsibilities taken up by the founder or manager?

In the late 1990s, when India started using computers, people worried about losing jobs. But it turned out differently. Instead of eliminating jobs, computers created many new ones. People shifted from manual work to learning computer skills like software development and project management.

Similarly, HR is changing. It's moving away from routine tasks and focusing more on people and the business. HR professionals now help businesses grow and stay competitive in the market.

So, even though jobs and tasks are changing, human resources remain crucial. It's evolving into building relationships between people. And you can't build relationships with machines.

Q: Which domains in HR are now ready to be fully automated, and should people think about automating this for specific domains?

Automation has made HR tasks easier by handling things like payroll, time tracking, and managing leave. While some aspects like hiring and performance management still need human input for complex decisions, technology is advancing rapidly.

1. Streamlining Routine Tasks: HR automation simplifies tasks such as payroll, time tracking, and leave management, freeing up time for more strategic activities.

2. AI in Hiring: AI is transforming hiring processes by quickly sifting through resumes, reducing the need for manual candidate searches. This enhances efficiency and accuracy in candidate selection.

3. Self-Onboarding: Similar to the streamlined processes in airports through Digi-Yatra, AI facilitates self-onboarding for recruits, easing the burden on HR teams and ensuring smoother transitions for new hires.

4. Hyper-Automation in Interviews: The future of HR lies in hyper-automation, where AI conducts interviews focusing on specific questions relevant to candidates. This saves time and standardizes the interview process.

5. Machine Learning in Payroll: Machine learning is utilized in smHRt payroll systems to detect anomalies that could indicate errors or issues in payment cycles, ensuring accuracy and compliance.

6. Automated Background Checks: Companies like Spring Verify automate a significant portion of background checks, including verifying biometric data, academic records, and code records. This reduces manual effort and speeds up the hiring process.

From simplifying routine tasks to enhancing hiring processes and ensuring accuracy in payroll and background checks, technology is reshaping the HR landscape for the better.

Q: What certain skills, tools, or expertise is HR going to need to make this automation process smoother?

Learning with new tools and technology is getting easier. In the past, cell phones had complex buttons, but now we have iPhones and voice assistants like Siri, making things simpler.

Similarly, in HR, we use software for tasks like payroll management. Most HR pros know how to use these tools well. But using AI can be a challenge. Solution providers need to make it easier. For example, AI can quickly filter candidates based on criteria, showing information in an easy-to-understand way.

It's about how software companies present these tools. HR workers don't need to fully understand AI; they just need a basic idea. With a click, AI can start processes like background checks using blockchain and UPI identification, giving HR easy-to-understand results. Tech companies like UNI can handle the tough stuff.

Q: What challenges do software providers and HR professionals face due to the inherent human element causing minor blind spots in software? How does this human factor pose a challenge for HR, given that it can't fully account for human blind spots in development?

Legal requirements can be challenging to comprehend and adhere to, particularly for industries or small to medium-sized businesses not centred around office work. These sectors often encounter more intricate and time-consuming obligations compared to software or IT consulting firms.

1. Complexity of Compliance: Understanding and following the law necessitates significant manual effort, such as generating reports and maintaining records.

2. Compliance Schedule: The latest version incorporates a compliance schedule feature aimed at alleviating these burdens:

   • Helps organizations track the regulations they must adhere to.

   • Provides specific formats for tasks like uploading Provident Fund (PF), requiring a format known as challans.

Q: How does automation impact workforce planning and talent management?

It's really interesting how we can use employee information and analytics to automate tasks. Let's take rewards and recognition in HR as an example. Usually, suggestions might be biased, but my AI can evaluate an employee's work fairly using specific metrics without any bias. The system can also predict how long an employee might stick around by looking at patterns like absences or sickness reports.

With the help of generative AI and predictive analytics, we can figure out possibilities, like whether an employee might stay for two years or leave in six months. This helps us plan for staffing and even automate some parts of hiring new personnel.

Q: What is your expectation regarding the level of automation in the next five years?

In the next two to three years, and maybe within five years, there'll be a big change in how staff interacts with the company. Around 90 to 95 per cent of these interactions will happen through self-service. Instead of needing different apps, employees will be able to do things like check their leave balance, submit applications, or get pay stubs using our system.

This move towards self-service is similar to Digi-Yatra, where most airport tasks are self-service except for security checks. Likewise, in the next few years, about 95% of HR interactions will be self-service too.

Q: What happens if you lose your phone or if someone manages to hack into your phone and use your identity?

When you use your smartphone or any digital device, your data is shared, but there are rules to protect it. In India, there's a system called Personal Data Protection (PDP), kind of like GDPR in Europe but a bit more complex.

With PDP, you have more control over your information. For example, if you ask an old employer to delete your sensitive data, they have to do it. Employers also need your permission and must mention in your contract how long they'll keep your information.

Privacy matters, but it's okay to use services like Digi Yatra if your data is safe and used appropriately. Misuse of personal data can be prevented with the right protection and security measures. Ensuring data is used only for its intended purpose is crucial.

Q: How do you effectively address the risk of a former employee with malicious intent misusing your personal information, like sharing your mobile number with spam callers as a prank?

Adding your phone number to certain websites could result in receiving unwanted calls, illustrating the duality of technology — its benefits and drawbacks. It is up to you to decide whether to safeguard your personal information or let others use it.

Firstly, it is acceptable for your previous employer to retain your phone number for processing your provident fund claims. However, it is unethical for them to sell it to a credit card or phone company.

Secondly, most businesses refrain from monetizing employee information and instead concentrate on other endeavours. Fortunately, ethical practices are typically upheld in the handling of personal data by reputable organizations.

Q: In automation, I've noticed a pattern akin to the second stage of Moore's Law. Initially, there's rapid 18-month exponential growth, but then it slows significantly, possibly by a factor of 15 or 20. Any insights on why this happens and its implications?

Absolutely! Let me give you an example. There's a new version of a tool called ChatGPT, called ChatGPT 4.0. It's said to be much better than the older version, ChatGPT 3.0, which was already pretty good at doing tasks automatically.

1. Faster Results: Now, tasks that used to take four days can be done in less than half a day with ChatGPT 4.0.

2. More People Using It: Lots of people are starting to use this tool. Even people less inclined towards technology are using it to undertake their tasks.

3. New Uses: Some people are even using it to do their taxes, resulting in newer usage.

Q: How has automation progressed in the past five years, and what are your expectations for the next three years?

Over the last five years, many companies have modernized their core HR systems by going digital, including their payroll and employee databases. This shift reflects changing expectations for HR processes. Nowadays, just keeping records, processing payroll, and managing time off isn't enough. People also want automated performance reviews and resume checks.

Looking ahead, there's a growing expectation that AI and computers will be able to handle initial interviews and provide independent responses. This suggests that such systems will likely take on more of the early stages of hiring and job reviews. This trend fits with Moore's Law, which predicts rapid progress in computing power. As a result, we can expect significant advancements in HR technology in the next 18 months.