What do you mean by Acqui Hiring?

Acqui hiring or Acquihire, also known as Talent Acquisition is an act or instance of buying out a company primarily for the skills and expertise of its staff, rather than for the products or services it supplies.

Companies that used Acqui Hiring

Tata Group-owned Titan Company, a traditional watch-making firm recently acqui-hired HUG Innovations to strengthen its smartwatches and wearables division. It plans to set up a development center in Hyderabad, India. Google recently acqui-hired Superpod, an app that allows users to post quick questions and receive answers from experts, to boost Google Assistant’s capabilities. There are numerous other companies that have used acquihiring as a go-to-market strategy to stay ahead in the competition.

 

Benefits of Acqui Hiring

Against the backdrop of a supply-demand gap for emerging skills, this strategy works well; making this one of the reasons why many companies have been resorting to an acqui-hiring strategy. However, this is not a new strategy as companies earlier have been using it for its multitudinous benefits. It improves operational efficiency and allows the company to bring in employees without negotiating salary the same way as a regular hire. It is one of the fastest ways of hiring good volume with cutting-edge skills. In fact, in many cases, acqui-hiring has proven to serve the greater good of removing competition and gaining access to a pool of customers of the acquired company. Moreover, this is also a bidding strategy for cash-strapped founders who do not have any choice but to sell their firm to the bidders and make an exit.

Acqui-hiring is presumed to be a smart way of enhancing the parent company’s talent pool. The bigger startups keep scouting for smaller ones to pick when they see an opportunity. Indeed, a quick and easier route of adding certain skill sets that match up to the end goal of the company.

Acquihire Transactions in India

In India, this strategy demonstrated its benefits when Facebook acqui-hired Little Eye Labs, a startup that pioneered creating software tools for analyzing the performance of Android apps. Practo Technologies too adopted this strategy in 2016 when it acquired a healthcare analytics Solutions Company called Enlightiks. With this acquisition, 50 engineers who were into machine learning and deep learning applications joined Practo at one go.

Myntra and Swiggy are other good cases that can be further studied for their strategy of strengthening supply chain capabilities. Plugging gaps on the supply side, Myntra and Swiggy adopted the strategy of ‘acqui-hiring’ in which Swiggy acqui-hired 48East, a Bengaluru-based Asian food ordering platform, and Myntra acqui-hired Bengaluru-based InLogg two years back.

 

Some Acqui-hiring deals in 2020 are KPMG India, LetsTransport, and Alphonic Network Solutions.

  • KPMG India acqui-hired Shivansh Solutions, an SAP consulting and implementation services provider, to augment its technology implementation practice, retaining Shivansh’s directors and the core team of SAP consultants.
  • Leading tech-enabled logistics marketplace, LetsTransport, recently acqui-hired and onboarded the team of a web and mobile app development startup, Pixlcoders, to strengthen its supply chain, technology, and applications divisions.
  • Alphonic Network Solutions, a leading mobile application development company, recently completed the strategic acqui-hire of Roaring Studios, a digital startup to augment its web and mobile app development.

These deals indicate how acqui-hiring has added a good value proposition for companies to access highly motivated fully trained talent, augment their existing offerings and develop new capabilities. It has also proven lucrative for startups, especially those that might be struggling with funding during an economic downturn.

However, to ensure acqui-hiring successful; companies must address critical factors beyond the usual legal and contractual due diligence. There have been instances where teams have found it difficult to accommodate the changes resulting in talent migration. Hence, Business and people Leaders need to be cognizant of the fact that they are dealing with a big change where the human psychological angle is equally important to address a part of the transition process. Some of the issues can be related to settling in the new team, or resentment in acceptance by existing employees of the parent company, or worries of relocation and culture changes. The leaders should not be in the oblivion of the emotional turbulence that many employees may go through and hence the complexity needs to be handled and managed well.

Change management is a pretty complex area to envision. And when it indulges all the three critical core areas i.e. people, process and system; leaders need to equip their managers and team with the right set of skill and resources to make the journey effective and pleasant.

For any change management initiatives that you are about to drive in your organization, feel free to consult our experienced advisors who have created a smooth transition with the right ROI for many companies.

Be proactive in your approach while handling any of these situations. We, at Knowledgetics, definitely will help you stay prepared!