More numbers predicting a healthy expansion for the HCM technology business. A report from Verified Market Research predicts the market for HCM software will grow at a CAGR of some 38% between 2023 and 2030, from $22 billion at the beginning of the period to $207 billion at the end.
The market is gaining momentum as more employers recognize the role dedicated technology plays in getting HR work done, not to mention optimizing how practitioners operate. By streamlining processes involved with sourcing, hiring, workforce management and time and attendance, technology solutions lead to “enhanced workforce efficiency and productivity,” the researcher said.
That view isn’t particularly new, but the form of HCM’s environment is ever-changing. The sector has been steadily growing for several years, and now small business is turning more and more to the cloud for both field and office staff management, providing new opportunities for HCM tech vendors. In addition, rising demand for workforce insights, along with the integration of advanced technologies (think AI and machine learning) are primary catalysts for growth across regions.
Also fueling growth, VMR said:
- Managing a Diverse Workforce: In the globalized business landscape, organizations continue to face the challenge of effectively managing a diverse and multi-cultural workforce. HCM software provides solutions to address the environment’s complexity, to help improve overall workforce management.
- Enhancing Employee Productivity: HCM solutions allow businesses to optimize employee performance through talent management, performance tracking and skill-development programs.
- Regulatory Compliance: Compliance with employment regulations and data privacy laws has always been critical, and HCM software vendors offer a range of features to maintain data security and ensure adherence to relevant laws.
- Security Concerns: Security is something of a double-edged sword for vendors. Despite the promising growth prospects, they face significant security concerns related to the adoption of cloud-based HR platforms. Employers are increasingly conscious of data privacy and protection issues. The potential for HR infrastructure attacks leading to denial of service presents a considerable threat to business growth, VMR said.
At the same time, the industry is able to serve the market with products that help customers with:
The HCM Software Industry presents a diverse array of prospects for organizations aiming to optimize their HR operations:
- HR Management: HCM software helps HR make informed decisions regarding recruitment, employee management and talent retention.
- Employee Management: Employee management tools aid businesses in tracking employee performance, skill development and overall engagement.
- Talent Management: HCM solutions play an important role in identifying and nurturing candidates and employees, helping to strategically position them in roles that contribute to the organization’s profitability and productivity.
- Payroll and Compensation: Automated payroll and compensation management streamline processes, reduce errors and enhance overall efficiency.
VMR isn’t the only researcher to focus on the cloud’s potential as a growth driver for HCM technology vendors. A report in May from Market Research Future said the value of the Core HR software market could increase at a rate of 11.1% between 2022 and 2030. The firm estimated the market’s size will reach around $35 billion by the end of the period.