Artificial Intelligence in Human Resource (HR) Market

The global artificial intelligence in human resource (HR) market size was nearly USD 3.91 Bn in 2022 and is likely to reach USD 14.83 Bn by 2031, expanding at a CAGR of 16.21% during, 2023–2031. Growing demand for automation in HR operations is expected to fuel the market.

AI in HR technology (HRTech) automated collection and analysis of data to eliminate biases and guesswork. It has the ability to make decisions more precisely than people based on historical data and behavioral patterns. HRTech is a broad term that refers to software and is associated with hardware, which helps to maintain human resource (HR) responsibilities in organizations. It supports and automates a wide range of HR functions including candidate recruitment and onboarding, payroll, employee communications, performance management, and talent management.

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HR plays a crucial role in managing employees in a company or organization. It is a practice of planning, directing, recruiting, hiring, deploying, controlling, and managing employees of the organizations. The main objective of HR is to maximize staff performance in support of a company’s strategic goals.

AI-based HR tools effectively build future communications, delivers better employee experience, and help HR managers to work more effectively by developing a two-way communication strategy, which further boosts HRs productivity. It also ensures that all the employees are treated properly by keeping track of employee behaviors.

The creation and maintenance of a good workplace are highly dependent on HRTech, as it reduces manual work with the help of digital tools. HRTech stores organizations’ data in a complete and secure manner, provides analytics to create management reports, and automates routine processes.

The market report finds that the COVID-19 pandemic outbreak positively impacted the market. The demand for HRTech increased during the critical time of COVID-19, as many businesses shifted to work from home, which created a challenge for HR professionals to manage activities from home.

Artificial Intelligence in Human Resource (HR) Market Dynamics

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Major Drivers

Rising implementation of virtual reality (VR) and augmented reality (AR) is a major factor driving the market. VR and AR enhance the flexibility of the workforce. It allows HR to train employees from remote locations. It further improves learning outcomes and processes in hiring, recruitment, and onboarding.

Growing adoption of machine learning algorithms in HRTech software is likely to boost the market. Machine learning helps in answering basic questions, interview scheduling, and interview performance analysis, which optimizes and automates the recruitment process. It enhanced decision-making and improves accuracy. Moreover, the rising demand for automation of HR operations is likely to fuel the market.

Existing Restraints

AI cannot work on insufficient data, which hampers market growth. AI is great for analyzing data and presenting useful conclusions for decision-making. It works only when you feed accurate and detailed data. If you feed insufficient data, it may not work properly.  However, some decision requires human involvement and AI cannot consider the company’s values and culture when evaluating job candidates, which limit their use in some processes.

Emerging Opportunities

Increasing trends of remote and hybrid work settings are expected to create immense growth opportunities in the market. HR departments are focusing on updating the company’s policy, due to the rising practice of working from home. Moreover, the growing requirement to replace outdated systems with cutting-edge HR solutions accelerates the market.

Scope of Artificial Intelligence in Human Resource (HR) Market Report

The market report includes an assessment of the market, trends, segments, and regional markets. Overview and dynamics have also been included in the report.

Artificial Intelligence in Human Resource (HR) Market Segment Insights

Technology Segment Analysis

Based on technology, the artificial intelligence in human resource (HR) market is segregated into virtual assistants, metaverse, AI chatbot, people analytics, machine learning, computer vision, natural language processing, and others. The AI chatbot segment is estimated to generate a major revenue share of the market during the projected period, as it offers an interactive one-on-one experience. It helps to track employee engagement at work and perform other important tasks.

Moreover, AI chatbot assists HR in making informed decisions and automates HRs essential tasks including interview scheduling, answering queries, and candidate screening.

The metaverse segment is anticipated to expand at a considerable CAGR in the coming years, owing to the ability to bridge the gap between physical and virtual offices. Through metaverse, employees can take advantage of both virtual reality and augmented reality at the same time to collaborate efficiently from remote locations. The growing requirement for managing employees in remote work environments is further likely to boost the segment.

The people analytics segment is expected to grow at a rapid pace during the projected period, due to its ability to generate and capture a huge amount of data. It plays a major role in workforce planning and management, performance measurement, promoting employee development, employee engagement analysis, and promotion and salary decision-making.

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Application Segment Analysis

On the basis of application, the market is divided into workforce management, talent management, payroll management, performance management, recruitment, hiring, and others. The talent management segment is expected to register a robust growth rate during the forecast period, owing to the increasing adoption of AI tools in managing employee performance, progression, development, and rewards.

AI automates internal mobility programs and matches employees with specific training programs and projects that most interest them. It provides features, such as inviting, retaining, and recruiting efficient employees. It allows HRs to create micro-learning content quickly, revise content based on analytical insights, and enables them to track learner progress.

The payroll management segment is projected to grow at a significant pace during the assessment period, owing to the growing requirement to reduce errors in payroll processing. AI-powered payroll systems detect anomalies and inconsistencies in data and automate repetitive and time-consuming tasks, such as calculations and data entry, which further increased efficiency. It allows HR leaders to manage all the financial records of employees including salaries, bonuses, deductions, and incentives.

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Enterprise Size Segment Analysis

In terms of enterprise size, the artificial intelligence in human resource (HR) market is bifurcated into small & medium enterprises and large enterprises. The large enterprises segment is anticipated to hold a large share of the market in the coming years, due to the rising adoption of advanced HR technology to handle large databases of employees and to make data centralized across the organization. On the other hand, the small & medium enterprises segment is projected to grow at a significant growth rate, due to the growing requirement to lower the number of activities that are involved in administrative tasks.

End-user Segment Analysis

Based on end-user, the market is segmented into IT & telecommunication, BFSI, manufacturing, retail, healthcare, government, and others. The IT & telecommunication segment is expected to grow at a high CAGR during the projection period, owing to the rapid expansion of IT industries across the globe. The rapid growth of the IT industry has encouraged large-scale recruiting at all levels, which highly demands for HR software and services to streamline the recruiting process. The segment growth is further attributed to the rising need to overcome obstacles in employee retention processes.

Regional Analysis

On the basis of region, the global artificial intelligence in human resource (HR) market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. North America is anticipated to dominate the market in the coming years, due to the increasing adoption of machine learning and AI among businesses. The market growth is further attributed to the rising employment opportunities in the region, which further boosts the demand for recruitment, talent management, and performance management HR solutions.

The market in Asia Pacific is expected to grow quickly during the forecast period, owing to the growing requirement among small & mid-scale businesses to navigate complex HR tasks. The rapid expansion of small & medium size enterprises in developing countries and the increasing adoption of new technology solutions are likely to fuel the market in the region.

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Segments

The global artificial intelligence in human resource (HR) market has been segmented on the basis of

Technology

• Virtual Assistants
• Metaverse
• AI Chatbot
• People Analytics
• Machine Learning
• Computer Vision
• Natural Language Processing
• Others

Application

• Workforce Management
• Talent Management
• Payroll Management
• Performance Management
• Recruitment
• Hiring
• Others

Enterprise Size

• Small & Medium Enterprises
• Large Enterprises

End-user

• IT & Telecommunication
• BFSI
• Manufacturing
• Retail
• Healthcare
• Government
• Others

Region

• Asia Pacific
• North America
• Latin America
• Europe
• Middle East & Africa

Key Players

• ALLYO
• ADP, Inc.
• Ceridian HCM, Inc.
• Cegid
• Cezanne HR Limited
• Cornerstone
• HireVue, Inc.
• Infor
• Netsuite Inc. (Oracle)
• SAP SE
• Workday, Inc.

Competitive Landscape

Key players competing in the global artificial intelligence in human resource (HR) market are ALLYO; ADP, Inc.; Ceridian HCM, Inc.; Cegid; Cezanne HR Limited; Cornerstone; HireVue, Inc.; Infor; Netsuite Inc. (Oracle); SAP SE; and Workday, Inc. Some of these companies adopted development strategies including mergers, collaboration, acquisitions, partnerships, and launch new products to expand their consumer base worldwide. For instance,

• On May 24, 2033, the SAP SuccessFactors team introduced three new powerful innovations with generative AI at SAP Sapphire. It helps HR to solve the skills gap, enhance recruiting and learning processes, and improve human development and productivity in the workplace.

• On November 28, 2022, Ceridian entered into a collaboration with Deloitte Australia to increase the business value of Australia and New Zealand’s organizations. The collaboration helps organizations to transform their human capital management (HCM) process through Ceridian’s Dayforce platform. Dayforce allows HR to efficiently manage the workforce and payroll.