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The HCM market's market dynamics are made up of many elements that reflect the changing landscape of operations management and organizational effectiveness. The first factor is technological advancement in the HCM market. Traditional HR has been revolutionized by incorporating artificial intelligence, machine learning, and data analytics. However, the current use of technology changes how things are done in HCM, as shown using chatbots for team member engagement, predictive analytics for talent acquisition, and automation for routine tasks, among others. As organizations continue to realize the significance of using technological innovation to enhance workforce productivity, there is increasing demand for innovative HCM solutions.
Another aspect that constitutes a part of market dynamics is the ever-changing regulatory environment. Employment laws, data protection regulations, and compliance requirements all evolve on an ongoing basis. Thus, players in this field must always keep their solutions in line with these changes so that they do not violate legal frameworks set in place to regulate them. Being able to adapt and provide solutions that are ready for compliance becomes a competitive advantage within the HCM marketplace. A complex regulatory landscape requires companies to demonstrate how their workforce management processes remain legally sound when selecting an ideal provider of human capital management services. Besides, globalization contributes to shaping the dynamics of the HCM market today, where businesses have gone international and hence need unified HCM solutions that address diverse workforce requirements needed by such firms. Multinational firms need seamless integration with local regulations, languages, and cultural nuances from their choice's vendors who offer scalable as well as globally compatible products that can serve organizations having an international footprint better.
Additionally, changing demographics characterize a dynamic Human Capital Management (HCM) industry. Remote work, the gig economy, and diversified preferences within workforces indicate that flexible, adaptive HCM systems are needed (Storey 35). Consequently, traditional eight-to-five structures are being replaced by more roundabout decentralized approaches (Lange & Majorov 13). Vendors offering customized products or services meant for a diverse and scattered workforce have an edge over their peers in this dynamic market. The competitive dynamics of the HCM market are also affected by competitors' efforts to differentiate themselves through unique features as well as value propositions (Holland 112). Continuous improvement is essential for survival in overcrowded marketplaces (Purcell 114). To attain better prospects of capturing a bigger market share, vendors must focus on research and development, enhancing customer experience on their portals, as well as incorporating strategic partnerships into their business milieu.
Covered Aspects:
| Report Attribute/Metric | Details |
|---|---|
| Market Size Value In 2022 | USD 14.1 Billion |
| Market Size Value In 2023 | USD 15.25 Billion |
| Growth Rate | 8.20% (2023-2032) |
Human Capital Management Market Highlights:
Human Capital Management Market Overview
Human Capital Management Market size is projected to grow from USD 16.5005 Billion in 2023 to USD 28.65 Billion by 2032, exhibiting a compound annual growth rate (CAGR) of 7.14% during the forecast period (2024 - 2032). Additionally, the human capital management market Size was valued at USD 15.25 Billion in 2023.
Integrating advanced technologies and artificial intelligence into human resource solutions to automate activities are the market drivers enhancing market growth.
Figure 1: Human Capital Management Market Size, 2022-2032 (USD Billion)
Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review
Human Capital Management Market Trends
Focus on employee experience is driving the market growth
Market CAGR for human capital management is being driven by the rising number of employee’s top talent. Companies realize the importance of providing a positive employee experience to attract and retain top talent. This has led to the development of HCM solutions that focus on improving the employee experience, such as mobile-friendly self-service portals and personalized training and development plans.
Additionally, the increasing adoption of cloud-based solutions offers several advantages over on-premise solutions, including cost savings, scalability, and accessibility. As a result, many organizations are transitioning to cloud-based HCM solutions to manage their human resources more efficiently. HCM includes various activities such as recruiting, onboarding, performance management, payroll, and training and development. The HCM market has been experiencing steady growth over the past years and is likely to continue its growth trend in the coming years.
Integrating artificial intelligence (AI) and machine learning (ML) can automate several HCM processes, such as resume screening and performance evaluations. It can improve the efficiency and accuracy of these processes while freeing HR professionals to focus on more strategic tasks. The use of data analytics is also becoming increasingly important in the HCM market. HR professionals can use data analytics to gain insights into their workforce, such as identifying employee turnover trends and analyzing training programs' effectiveness. It can inform decision-making and improve overall organizational performance.
For instance, companies require HCM solutions that can support their workforce. It has led to the development of HCM solutions that accommodate multiple languages, currencies, and regulatory requirements. As organizations continue to prioritize their human capital, the HCM market is expected to continue driving the Human Capital Management market revenue.
Human Capital Management Market Segment Insights
Human Capital Management Component Insights
The Human Capital Management market segmentation, based on components, includes service and software. The software segment dominated the market. It is driven by the growing adoption of cloud-based HCM solutions and the growing need for automation in HR processes.
Human Capital Management Deployment Insights
The Human Capital Management market segmentation, based on deployment, includes cloud and on-premise. The cloud segment dominated the market. It is due to the benefits of cloud-based solutions, including scalability, flexibility, and affordability. Managing a remote workforce to boost the demand for cloud-based solutions.
Human Capital Management End User Insights
The Human Capital Management market segmentation, based on end users, includes manufacturing, BFSI, IT/ITES, healthcare, transportation, and government. The IT/ITES end-user category dominated the market. Maintaining core human resources, talent management, and the need for workforce analytics, opting for HR software driving the market growth.
Human Capital Management Size Insights
The Human Capital Management market segmentation, based on size, includes SMEs and large enterprise. The large enterprise segment generated the most income. It is due to the need for large organizations to manage a large workforce, the availability of resources to invest in HCM solutions, and the rising demand for workforce analytics.
Figure 2: Human Capital Management Market, by Size, 2022 & 2032 (USD billion)
Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review
Human Capital Management Regional Insights
By Region, the study provides market insights into North America, Europe, Asia-Pacific, and the Rest of the World. The North American human capital management market will dominate the HCM market, owing to several key players in the region and the high adoption rate of advanced technologies among organizations due to many enterprises in the country.
Further, the major countries studied in the market report are The U.S., Canada, German, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.
Figure 3: HUMAN CAPITAL MANAGEMENT MARKET SHARE BY REGION 2022 (%)
Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review
Europe's Human Capital Management market accounts for the second-largest market share. The market is largely driven by the increasing demand for workforce optimization solutions and the adoption of cloud-based technologies. Further, the German Human Capital Management market held the largest market share, and the UK Human Capital Management market was the fastest-growing market in the European region.
The Asia-Pacific Human Capital Management Market is expected to grow at the fastest CAGR from 2023 to 2032. Owing to the rising of advanced technologies, such as artificial intelligence and machine learning, among regional organizations. Moreover, China’s Human Capital Management market held the largest market share, and the Indian Human Capital Management market was the fastest-growing market in the Asia-Pacific region.
However, the increasing awareness about the benefits of HCM solutions and the need for organizations to streamline their workforce management processes are expected to drive the growth of these markets in the coming years.
Human Capital Management Key Market Players & Competitive Insights
Leading market players are investing heavily in research and development to expand their product lines, which will help the Human Capital Management market grow even more. Market participants are also undertaking various strategic activities to expand their footprint, with important market developments including new product launches, contractual agreements, mergers and acquisitions, higher investments, and collaboration with other organizations. To expand and survive in a more competitive and rising market climate, the Human Capital Management industry must offer cost-effective items.
Manufacturing locally to minimize operational costs is one of the key business tactics manufacturers use in the Human Capital Management industry to benefit clients and increase the market sector. In recent years, the Human Capital Management industry has offered some of the most significant advantages to medicine. Major players in the Human Capital Management market, including Software AG (Germany), AAD LLC (US), Infor (US), NetSuite Inc. (US), Oracle Corporation (US), Automated Data Processing Inc. (US), Cegid Groups (France), Workday Inc. (US), Ultimate Software (US), SAP SE (Germany), and others, are attempting to increase market demand by investing in research and development operations.
Oracle Corporation is an American international computer technology corporation in Austin, Texas. The company sells database software and technology, cloud-engineered systems, and software products, such as enterprise resource planning (ERP) software, capital management software such as (HCM), customer relationship management (CRM) software (also known as customer experience), enterprise performance management (EPM) software, and supply chain management (SCM) software. In August 2021, Oracle Corporation propounded that it is introducing Oracle Fusion Cloud Payroll as a part of Oracle Fusion Cloud for India. By adding payroll for India, the firm wants to grow its footprint of Oracle cloud solutions.
Infor is a multinational company located in New York City that provides industry-specific enterprise software licensed for use on-premises or as a service. Infor marketed "micro-verticals," which were versions of its software adapted for specific industries. It claimed these products were easier to implement than those of its competitors. In July 2020, Infor launched a fully integrated multi-tenant payroll module for managing human resources. This module offers multiple service partners in-house payroll processing options for managing activities such as wage payments, tax filing, and other value-added services.
Key Companies in the Human Capital Management market include
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IBM Corporation (US)
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Software AG (Germany)
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SAP SE (Germany)
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Workforce Software (US)
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AAD LLC (US)
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WORKDAY (US)
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Oracle Corporation (US)
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Kronos Inc. (US)
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Linkedin (US)
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Ultimate Software (US)
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Infor (US)
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Zenefits (US)
Human Capital Management Industry Developments
In September 2022:Workday announced a next generation of open and connected skill ecosystems to allow organizations to easily and securely move skill data within and outside the enterprise. With this functionality, companies will gain deeper insights into people skills and deliver improved employee experiences.
In May 2020:MS Teams partnered with Workday Financial Management and Workday HCM to make it easier for employees to access Workday. It aims to simplify day-to-day tasks, such as submitting expenses, providing anytime feedback, looking up employees, or requesting time off, all without leaving Teams.
In May 2019:Ceridian HCM, Inc. propounded the acquisition of Asia-based company Excelity Solutions Pte Ltd. from Everstone Group. The acquisition is expected to gain a strong position for the company in Asia Pacific.
Human Capital Management Market Segmentation
Human Capital Component Type Outlook
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Service
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Software Solution
Human Capital Management Size Outlook
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SMEs
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Large Enterprises
Human Capital Management Deployment Outlook
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Cloud
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On-premise
Human Capital Management End User Outlook
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Manufacturing
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BFSI
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IT/ITES
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Healthcare
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Transportation
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Government
Human Capital Management Regional Outlook
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North America
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US
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Canada
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Europe
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Germany
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France
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UK
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Italy
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Spain
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Rest of Europe
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Asia-Pacific
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China
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Japan
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India
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Australia
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South Korea
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Australia
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Rest of Asia-Pacific
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Rest of the World
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Middle East
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Africa
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Latin America
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