HR tech companies laying people off: was it overdue? | Hacker News Reader

HR tech companies laying people off: was it overdue?

joshbersin.com

62 pointsFarbodkhz22 comments

HR Tech is where many VCs have invested in, with the hopes of selling big riding on the AI wave.

However, many HR Tech solutions (which claim to use AI/ML/DL under the hood) are now being forced to answer how they counter hard-coded biases in the AI models, how is explainability implemented, how they adhere to norms set for algorithmic accountability (ex. Ethica etc)

Most of them neither have answers nor the mindset to even bother about these.

https://web.archive.org/web/20200419230250/https://joshbersi...

I thought fintech companies had fluff until I worked at a HR tech company - boy it was overdue.

Is HR Tech a big industry in the US? Over here in the UK, it feels very much like it’s still emerging. There’s a few key players but no household names.

The companies I know who use some kind of HR software are typically paying ££££+ in expensive enterprise contracts for poor quality, old-fashioned software.

I guess I was just a little surprised at the tone of this article, which seemed to assume the market was totally saturated.

In the US, a lot of "HR tech companies" are in fact insurance brokers, selling both health benefits and workers comp. Those two lines are a massive source of revenues.

In most countries outside the US, healthcare is not privatized. Benefits brokers are virtually nonexistent outside the US.

"HR tech companies" provide free HR software and make money on selling benefits insurance and workers comp insurance mostly to other startups who are buying "nothing but the best" gold healthcare coverage (= more commissions).

Nothing new, the biggest companies are Paychex and ADP and they have been doing that for a long time. Not a surprise if I tell you that their software is horrible...

So if startups start to do layoffs or shut down, or even start to control their expenses (lower benefits, co-pays), I would expect the "tech HR companies" to not do so well.

HR has traditionally been viewed as a cost center and it seems like most companies still treat it that way. Its expenses are going to be cut earlier than other things when companies feel the squeeze.

In general, this must be a pretty bad time to be selling business software for use in cost centers.

HR mostly sucks anyways, and needs a ground up rethink, not just streamlining.

Yes. For instance, how can companies treat people like humans instead of just resources?

For companies, treating humans better is nothing but diminishing returns.. so you need to ask, "why would companies want to treat humans better?"

This problem is solved by government and societal rules that dictate what is appropriate.

We still live in a world with rampant child labor, corporate pollution, extreme tax avoidance, etc. These aren't entities that are known for their compassion, and are actively working to loosen their constraints on a daily basis.

For most the problem and necessary steps towards resolution are more or less obvious, with the primary problem being the corporations have a significant advantage in money and influence.

> people need to get from place to place, and it’s very hard to build and run an airline.

Why is it hard? Seems like the dumbest possible business. I mean I think a restaurant would be harder. There's more subtle unknowns in food than there is in carrying people from A to B.

Educate me because I don't get it.

Massive capital requirements. Which you can mitigate by leasing, but this increases your cost.

Massive unit operating costs, where the cost difference between it flying and sitting on the ground is not that different (for a commercial aircraft that's still in flyable condition, it needs to keep being maintained constantly)

Large numbers of staff - pilots, cabin crew, gate staff, baggage/cargo loaders, tug operators, ground crew, refuelling, operations (scheduling, route planning), customer service, maintenance crew, etc. Some of those can be outsourced, depending on the airport.

Some of those (like flight crew) have mandated maximum operating hours.

You need to have hotel rooms, meal allowances, and transport to/from the airport for flight crew when they're off-duty at an airport that isn't home-base.

Dealing with someone who calls in sick means you need stand-by crew ready to go in all the locations that you fly out of (or be prepared to fly replacement crew into those locations - and thus potentially sacrifice a seat that could've gone to a paying customer)

All these operating costs and we've not even sold a single seat. Depending on the airline, they might not be breaking even until the flight is nearly 70% full.

As of about 3 years ago, with a flight ticket that costs roughly 700 dollars (close to average), an airline made 3 dollars of profit per seat.

Source: Worked at a travel company

Airline companies operate at the edge.

Because an A380 costs $432 million and you need a bunch of them to run an airline, where as a restaurant fit out is ~$1M.

You also need to maintain those planes, employ staff across multiple countries and timezones, and comply with insane amounts of legislation for every country you fly into.

Are you seriously comparing that to ... serving food?

Not to mention that on top of everything else, airlines also serve food.

That's easy, contract Lufthansa LSG or Gategroup or one of the smaller (local) competitors.

You can lease airplanes, even with entire crews from pilots to stewardesses ("wet lease"). Legal compliance can be outsourced to dedicated law offices, local staff by local staff lease companies.

The biggest two issues when founding an airline are getting your hands on some money and finding a profitable set of routes. For what it's worth, it's possible to do this as a former formula1 racer (Niki Lauda / Lauda Air).

I'm curious; how much experience do you have in founding, managing or running an airline? You speak as if you have first-hand knowledge.

Most of the US "union-busting regional airlines" are as simple to start as described, since a major arranges the financing and marketing/ticket sales. Well, they existed until the "1,500 hour rule", and most ran out of pilots and are gone by now.

Or a one-plane vacation charter.

It becomes much more complicated as the number of bases and planes multiply.

And if you get sloppy or unlucky, one or two crashes is enough to end even national carriers like Malaysia Airlines, regardless of who is at fault.

There are clever airline founders who serially start multiple successful airlines, so there is some mgmt. talent involved.

Source: commercially-rated airplane pilot.

Aside from other relevant critique, I must point out that running a restaurant is quite hard, and most of them fail.

I'd say that running a successful business in general is hard.

But with restaurants specifically, I'm convinced that it's touted as really hard because they're run by people that aren't that savvy. You have people who are like, "I can cook". Just like people say "I can code". That doesn't make you an entrepreneur. Yet food service attracts a lot of wannabes and they sap up a lot of small biz funding.

What's amazing to me though, is restaurants have found a way to offload the bulk of their wages (via tips) and they still have an astounding rate of failure.

Be known for something. Keep your menu tight. Know your costs. And take care of your employees and customers and you'll get repeat business.

I have no sympathy for restaurants because of their sweetheart wage deal. They made their own bed and they don't even realize it. Eating out is a luxury and we'd be better off with way less of them but higher quality.

If your plane isn't full enough you lose money. You want to be able to predict when to cancel flights early enough you don't have to refund too many customers without wasting money on empty routes.

You also need to manage how much you're overbooked to allow for full flights when people miss their flights or cancel at the last minute.

You also need customer support for all sorts of actions.

These are just a few of the many hard problems they face.

Poe’s Law strikes again

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