The global human capital management (HCM) software market size was USD 16.9 Billion in 2022 and is likely to reach USD 28.93 Billion by 2031, with a CAGR of 8.3% during 2023–2031. The market growth is attributed to the rising adoption of cloud-based workforce management solutions in various end-user industries and increasing demand for advanced technology solutions for facilitating more flexibility to employees.
Human capital management software also known as HCM software is a human resource management (HR) technology platform built for carrying out various day-to-day employee management functions as well as analytics and performance management. The key purpose of HCM software is to transform traditional and manual HR department operations into digital operations to improve productivity, engagement, and business value.
The operations related to the HR department including recruitment, training, performance management, payroll, and compensation, among others, are streamlined using human capital management software solutions. Employees are more than business costs, they are assets for the company, whose value through various strategic management and investments can be maximized.
Not only do the HCM solutions aid in effectively managing key HR operations efficiently but also can be used for boosting employee productivity and value. The fundamental distinction between HRMS (Human Resource Management System) and HCM is the former is more about streamlining core administrative HR solutions, while the latter, HCM incorporates wider purposes that include HRM functions, performance management, and analytics to boost employee experience.
The market report finds that the COVID-19 pandemic impact was positive for the growth of the HCM software market. Organizations around the world during the pandemic adopted work-from-home models. For carrying out day-to-day HR solutions digitally, managing and boosting remote working employees’ productivity the corporate sector integrated its HR processes with cloud-based HCM software solutions.
The HCM tools proved to be beneficial in supporting online work mode and also helped in driving up employee productivity, which significantly increased the demand for HCM solutions. As organizations are able to provide flexible work-mode options to employees with the aid of advanced technological solutions, the demand for HCM solutions is expected to rise all over the worldwide corporate sectors in the coming years.
Human Capital Management (HCM) Software Market Dynamics
The research report presents a complete market overview by providing detailed information about the current market trends, existing drivers, growth opportunities and potentials, and emerging challenges. The global human capital management software market report has up-to-date insights about market scenarios that can shape the overall market performance and output during the forecast period, 2023 to 2031.
Key Trends
Increasing Integration of Automation Technologies in HR Processes
One of the major trends in the market is the increasing integration of automation technologies in several HR solutions. Advanced technologies such as Robotic Process Automation (RPA), Artificial Intelligence (AI), Machine Learning (ML), Big Data, and other analytics tools are integrated into HCM solutions for streamlining various day-to-day HR operations.
Robotic Process Automation and AI tools are beneficial in eliminating manual errors, reducing procedural delays, and improving the efficiency and productivity of an organization. Functions including attendance, performance analysis, employee records, salary & compensation management, and leave management, among others, can be automated using the above-mentioned automation tools.
The HCM vendors are adding technology tools in software solutions for improving employee engagement and well-being, which is another major trend in the HCM software market. The pandemic-fueled trend of working from home or working from preferred locations has increased the demand for technology solutions that facilitate more efficient engagement with a dispersed workforce. In addition, HCM solutions are also seen as a major tool for organizations in paying attention to the well-being of employees. Various emerging corporate wellness tools are helpful in ensuring the safety, happiness, and health of employees through various means of interactions.
Major Drivers
Rising Adoption of Cloud-based HCM Solutions
Cloud integration of HR processes and services is transforming the HCM industry. The cloud-based HCM solutions are efficient and cost-effective. These solutions allow more flexibility and can be accessed from anywhere with good internet access. The growing adoption of cloud-based human capital management solutions by small and medium-sized enterprises is anticipated to drive market growth during the forecast period.
Cloud HCM solutions are highly useful for organizations in cutting HR-related costs and reducing manual errors. These solutions can be used for managing a wide range of HR operations, from employee onboarding to employee retirement or resignation.
Several innovative HCM solutions are emerging from countries such as the US, Japan, India, and other regions that focus on a niche to wider areas of human capital management. The easy adoption and cost-effectiveness are driving the growth of cloud HCM solutions, which is projected to help the significant growth of the market during the projection period.
Rising Flexible Work Culture Across Corporate Sectors
The flexible work culture is settling in across corporate sectors with the rising internet connectivity solutions, which is expected to be one of the key market drivers for the HCM software market. The HCM software solutions are effective in monitoring and measuring employees’ work and productivity from anywhere. This enables organizations to provide work-from-home, hybrid work, or work-from-anywhere freedom to employees.
As digitization has ascended all over industries, it has enabled organizations to hire the most suitable talents from all over the world. As the flexibility of work hours and work from chosen locations becomes the new normal, it is expected to drive up demand for HCM solutions in facilitating seamless management of the worldwide dispersed workforce.
Existing Restraints
Organizations/HR departments are required to keep employee information private, due to its sensitive nature. Several organizations have concerns about the safety of employee data on cloud platforms, which is anticipated to restrain the market.
Employee records such as social security numbers, compensation, health conditions, insurance, and other such datasets need to be safe from hackers at all costs. The cloud-based HCM solutions are controlled by third-party platforms, which means any cyberattacks on these third-party providers’ platforms can cause information security concerns for client organizations.
Emerging Opportunities
The workforce analytics HCM solutions features are steadily becoming popular in several organizations across the globe. This is expected to create significant growth opportunities for the HCM software market. The analytics features facilitate data-backed decisions, which helps HR in supporting, developing, and retaining the workforce time-to-time.
HCM analytics features can give HR and other departments a better understanding of employee performance and productivity. HCM Analytics features can be used for enhancing hr processes such as talent development, talent mobility, employee engagement, and employee wellness. Furthermore, analytics tools give the HR department better insights into diversity and inclusion, to create a balanced workforce.
Scope of Human Capital Management (HCM) Software Market Report
The market report includes an assessment of the market trends, market segments, and regional markets. Overview and dynamics have also been included in the report.
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Attributes
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Details
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Report Title
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Human Capital Management (HCM) Software Market - Global Industry Analysis, Growth, Share, Size, Trends, and Forecast
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Base Year
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2022
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Historic Data
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2016–2021
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Forecast Period
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2023–2031
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Segmentation
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Component (Software [Workforce Management, Core HR, HR Analytics, and Applicant Tracking System] and Services [Consulting, Integration & Implementation, Training & Education, and Support & Maintenance]), Deployment (On-premise and Cloud-based), Enterprise Size (Small & Medium Enterprises and Large Enterprises), and Industry (IT & Telecom, BFSI, Retail, Energy, E-commerce, Healthcare, Travel, Hospitality, Manufacturing, Government, and Others)
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Regional Scope
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Asia Pacific, North America, Latin America, Europe, and Middle East & Africa
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Report Coverage
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Company Share, Human Capital Management Software Market Size and Analysis, Competitive Landscape, Growth Factors, Market Trends, and Revenue Forecast
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Key Players Covered in the Report
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Workday, Inc.; UKG Inc.; Microsoft; Oracle; Cornerstone; Benefitfocus.com, Inc.; SAP SE; IBM; PeopleFluent; ADP, Inc.; Bamboo HR LLC.; Sage Group plc; Epicor Software Corporation; Zoho Corporation Pvt. Ltd.; WebHR; Infor.; Ceridian HCM, Inc.; Sumtotal Systems, LLC; Cegid; Global Groupware Solutions Limited.; peoplestrategy; Ramco Systems.; Namely, Inc.; Zenefits; Rippling People Center Inc.; Paylocity.; Gusto; Bitrix24; Talentia Software; ClayHR; and Paycor, Inc
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Human Capital Management (HCM) Software Market Segment Insights
Based on component, the global human capital management software market is divided into software and services. The software sub-segment is further categorized into workforce management, core HR, HR analytics, and applicant tracking system. Furthermore, the human capital management services sub-segment is further segregated into consulting, integration & implementation, training & education, and support & maintenance.
Software segment is expected to expand at a significant growth rate during the projection period owing to the rising demand for HCM software solutions in streamlining various HR operations and reducing HR-related costs. The integration of advanced technologies and analytics features in HCM software is enabling HR departments to improve core operations and better the employee experience.
In addition, the analytics tools in the HCM software are beneficial in making data-driven decisions for improving employee development, workforce mobility, training, and employee wellness. The rise of the cloud computing trend over the last few years have given rise to the adoption of cloud-based HCM software solutions across global organizations, which is also aiding the software segment growth.
Human Capital Management Services segment is anticipated to hold a key share of the market in the coming years owing to the growing adoption of HCM solutions in worldwide organizations. With the growing use of cloud-based HCM software, there is rising demand for services such as consulting, integration & implementation, training & education, and support & maintenance to enhance the overall understanding of the software and gain maximum benefits from the solutions.
On the basis of deployment, the global market is bifurcated into on-premise and cloud-based. The cloud-based segment held the largest share of the market revenue in 2021 and is projected to register a considerable CAGR during the forecast period. The key drivers for the rise of cloud-based HCM software solutions adoptions are their cost-efficiency and easy adoption enabled by HCM vendors.
Cloud HCM solutions can connect various HR processes and every employee across the organization. With the help of modern cloud-based HCM software, HR departments can efficiently manage each stage of the employee lifecycle at the organization.
Several cloud solutions have emerged in recent years that efficiently manage various HR operations including talent attracting, screening, recruiting, onboarding, managing attendance, managing payroll, salary, compensation, and benefits. Additionally, developing talent, reviewing talent, managing performance, and optimizing workflow can also be carried out using cloud-based HCM software solutions.
On-premise software segment is also anticipated to account for a key market share in the coming years. The segment growth is attributed to the demand for unique and organization-specific HCM solutions.
In addition, the privacy concerns related to employee and organization data are anticipated to drive management from various businesses to prefer installing on-premise HCM software solutions. On-premise software is installed on local networks and built with specific encryption, which allows more privacy and security for the data.
Based on enterprise size, the global human capital management software market is divided into small & medium enterprises (SMEs) and large enterprises. The large enterprises segment is expected to expand at a rapid pace during the projected period. Large enterprises have higher budget allocations for improving workflow in different departments through advanced technology solutions.
Moreover, multinational corporations or MNCs have large workforces to manage and assess, which requires reliable technology solutions to be adopted to minimize gaps in the manual process or outdated technologies. Investment in advanced technological solutions such as human capital management is rising in large enterprises, which is expected to be the major driver for market growth during the forecast period.
Small & medium enterprises segment is anticipated to witness rapid growth during the forecast period owing to the rising adoption of cloud-based HCM solutions across the globe. Cloud computing rise has offered SMEs cost-effective HCM solutions, which include advanced technologies and analytics features. The ease of adoption and ability to gain maximum results on human capital development from the cloud HCM is expected to significantly drive segment growth in the coming years.
On the basis of industry, the global market is segregated into IT & Telecom, BFSI, retail, energy, e-commerce, healthcare, travel, hospitality, manufacturing, government, and others. The BFSI (Banking, Financial Services, and Insurance) segment is projected to expand at a significant pace owing to rising demand for human capital management analytics solutions in the sector.
The workforce count in the BFSI sector is one of the largest across several sectors, owing to which there is high demand for HCM tools in managing employee records, payroll & compensation, talent attraction, recruitment, onboarding, talent development, and various others. In addition, the regular need to asses employee development and productivity in the BFSI sector is also expected to drive up the demand for human capital management software solutions in the coming years.
IT & Telecom segment is also expected to grow at a considerable pace owing to the increasing adoption of HCM solutions by IT & Telecom companies worldwide. IT & Telecom is a major industry globally, which has a large workforce. The need to automate various HR-related operations in the IT & Telecom sector to drive up employee productivity and experience is driving the HCM product demand. Furthermore, the rising utilization of cloud-based HCM software solutions in the sector is expected to fuel the segment growth during the projection period.
In terms of region, the global human capital management software market is classified as Asia Pacific, North America, Latin America, Europe, and Middle East & Africa. The market size of North America is expected to dominate the HCM software market during the projection period. The adoption of advanced technology solutions for workforce management is higher in the region, which is expected to fuel the market in the region.
In addition, some of the prominent market players situated in the region are focused on adapting the transformation of AI and analytics solutions for companies to increase employee productivity, experience, and seamless management of each HR process. The HCM solutions are expected to support companies in the North America human capital management market, to enhance employee assessment and retention.
Asia Pacific is anticipated to be the second fastest-growing region in the global HCM software market owing to the rapid adoption of technology solutions in the region. The rapid digitization in the emerging economies in the region such as India, Japan, and China has transformed the enterprise operations in the region. Furthermore, the cloud-computing is enabling companies in the region to take benefits of modern technology tools including AI, big data, analytics, and others to automate different HR operations.
Segments
The global human capital management software market has been segmented on the basis of
Component
- Software
- Workforce Management
- Core HR
- HR Analytics
- Applicant Tracking System
- Services
- Consulting
- Integration & Implementation
- Training & Education
- Support & Maintenance
Deployment
Enterprise Size
- Small & Medium Enterprises
- Large Enterprises
Industry
- IT & Telecom
- BFSI
- Retail
- Energy
- E-commerce
- Healthcare
- Travel
- Hospitality
- Manufacturing
- Government
- Others
Region
- Asia Pacific
- North America
- Latin America
- Europe
- Middle East & Africa
Key Players
- Workday, Inc.
- Microsoft
- UKG Inc.
- Oracle
- Cornerstone
- Benefitfocus.com, Inc.
- SAP SE
- IBM
- PeopleFluent
- ADP, Inc.
- Bamboo HR LLC.
- Sage Group plc
- Epicor Software Corporation
- Zoho Corporation Pvt. Ltd.
- WebHR
- Infor.
- Ceridian HCM, Inc.
- Sumtotal Systems, LLC
- Cegid
- Global Groupware Solutions Limited.
- peoplestrategy
- Ramco Systems.
- Namely, Inc.
- Zenefits
- Rippling People Center Inc.
- Paylocity.
- Gusto
- Bitrix24
- Talentia Software
- ClayHR
- Paycor, Inc
Competitive Landscape
The competitive landscape of the global human capital management software market report provides key insights into the growth strategies and development initiatives implemented by the key players in the market.
Key players competing in the global human capital management software market are Workday, Inc.; UKG Inc.; Microsoft; Oracle; Cornerstone; Benefitfocus.com, Inc.; SAP SE; IBM; PeopleFluent; ADP, Inc.; Bamboo HR LLC.; Sage Group plc; Epicor Software Corporation; Zoho Corporation Pvt. Ltd.; WebHR; Infor.; Ceridian HCM, Inc.; Sumtotal Systems, LLC; Cegid; Global Groupware Solutions Limited.; peoplestrategy; Ramco Systems.; Namely, Inc.; Zenefits; Rippling People Center Inc.; Paylocity.; Gusto; Bitrix24; Talentia Software; ClayHR; and Paycor, Inc. Some of these major HCM vendors in the HCM industry adopted various business development strategies including mergers, acquisitions, partnerships, collaboration, product launches, and production capacity expansion to expand their consumer base and enhance their market share.
- In April 2023, Paycor announced that it will acquire Verb, Inc., a behavioral science-based, microlearning solution to provide best-in-class workplace training. Paycor plans to fully transform Verb into its HCM platform to expedite the advancement of Paycor’s various pathways. Verb will be a new solution from Paycor to help industries inspire sustainable behavior change within frontline leaders through a sequence of individualized development journeys.
- In April 2023, Dayshape, a leading market resource management software solution, partnered with Workday, to provide strategic benefits to various professional services. The enhancement of Dayshape with Workday is intended to help the customers of Workday to go beyond the specifics of human capital management systems.
- In Jan 2023, Voya Financial, Inc., a leading investment company, declared to complete the acquisition of Benefitfocus, Inc., a leading administration technology solution that provides brokers and health plans to employers. Voya will now serve the workplace savings needs and several benefits to around 38 million working professionals.
- In November 2022, BambooHR, an integrated human capital management application partnered with Nivati to improve employees' access to health and wellness benefits. BambooHR believes in accelerating the strategic development of human resources. BambooHR's expansion with Nivati will allow employers and business owners to deliver employees with an extensive wellness platform designed to provide happiness and more productivity.
- In September 2022, Workday, Inc. a leading cloud applications provider for human resource solutions in the HCM industry, introduced next-gen skills technology to help enterprises support changing talent strategies. The technology allows organizations to securely and easily bring skills management data in and out of the Workday system. The technology is intended to provide client organizations with deeper insights into workforce skills and provide more personalized employee experiences.
- In March 2021, PeopleFluent a leading provider of integrated talent management solutions to worldwide organizations announced a partnership with Visier, a well-known global leader in people analytics and planning. The partnership is intended to facilitate the Visier analytics platform’s powerful insights into PeopleFluent’s talent management platform. The talent management suite includes workplace performance, compensation, and succession solutions.
- In April 2020, Ultimate Software Group announced a merger deal completion with Kronos Incorporated to establish a new cloud computing platform UKG Inc., specialized in human resource and human capital management solutions.
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