Human Capital Management Software Market Analysis

Human Capital Management (HCM) Software Market Overview

Human Capital Management (HCM) Software Market is projected to grow from USD 18.2 Billion in 2024 to USD 33.4 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 7.8% during the forecast period (2024 - 2032). Additionally, the market size for Human Capital Management (HCM) Software was valued at USD 17.4 billion in 2023.

During the projection period, the introduction of cloud-based HR management software will enable HR departments to migrate their work schedules to the cloud as they work remotely. This will function as a main market driver for the human capital management (HCM) software market.

Figure 1: Human Capital Management Software Market Size, 2024-2032 (USD Billion)

Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review

Human capital management (HCM) software Market Trends

HR tools and robot process automation (RPA) integration to drive the market growth

The efficacy and efficiency of activities involving human resources are increased by robotic process automation (RPA) technologies. Automating repetitive HR operational processes including compensation management, onboarding of new hires, payroll management, and compliance reporting is a critical function of robotic process automation. RPA decreases the additional IT costs associated with manual and repetitive processes while increasing the accuracy and speed of data management and processing. 

RPA technology is used by businesses to automate processes and raise employee satisfaction levels in HR. To meet the needs of the clients, market participants are delivering RPA integrated products. For instance, IBM Corporation purchased WDG automation, a robotic process automation (RPA) service provider in Brazil, in July 2020. In order to change business operations, including personnel management services, the acquisition seeks to provide full artificial intelligence integrated automation capabilities coupled with IBM CloudPak. Thus, this factor is driving the market CAGR.

However, the vast majority of businesses favour integrated solutions for all HR operations as a result of the rising usage of digital technologies. HCM solutions provide software tools that assist in streamlining an organization's complete HR procedure. They streamline the processes involved in payroll, hiring, performance evaluations, onboarding, training, time and attendance management, strategic planning, and operational management. 

The HR process is simplified by HCM because it offers a one platform for all activities. As it runs on a single platform, it seamlessly unites and controls all HR functions. Additionally, it enables users to exchange data with applications like ERP, which facilitates simple inventory management. Furthermore, financial and banking organisations favor HCM solutions, which reduces the complexity of their business procedures. For instance, HCM solutions are being used by the banking, financial services, and insurance (BFSI) sector in India to simplify HR operations. Therefore, during the projected period, these factors will propel the market for HCM solutions globally.

Furthermore, the main obstacles for the majority of SMEs are time, user adoption, and budget. Therefore, businesses look for the best HR solutions. With technological advancements, SMEs now have access to HCM solutions at various price points. Organizations can improve their competitive edge by implementing HCM solutions and cutting-edge HR solutions. For instance, businesses can recruit candidates of higher calibre and more quickly than their rivals. workforce management, staffing and hiring, payroll processing, training and education, performance management, employee self-service, and business intelligence are the main benefits of implementing HCM systems for SMEs. During the projected period, the demand for HCM solutions is anticipated to increase due to these advantages. Thus, it is anticipated that this aspect will accelerate human capital management (HCM) software market revenue globally.

Recent Development Human capital management (HCM) software Market

On May 23, 2023, PDS, a leading HCM solutions provider, announced a partnership with Absorb LMS Software, an AI-powered LMS (learning management system) provider, to expand Vista HCM. Absorb LMS Software inspires learning and fuels business productivity, while PDS' Vista HCM solution offers learning management planning and tracking capabilities.

Under this referral partnership, Absorb will integrate its LMS Software with PDS' Vista HCM solution, offering its customers a configurable platform to host their learning content engagingly.

On May 15, 2023, SAP SE and Microsoft announced a collaboration to help customers address the talent gap. In this next step in their long-standing partnership, Companies will use the latest enterprise-ready generative AI technology to help solve their customers' most fundamental business challenges. The integration of SAP SuccessFactors Solutions with Microsoft 365 Copilot and Copilot in Viva Learning will help people leaders recruit and develop their teams, bringing the power of AI.

Microsoft's Azure OpenAI Service to access powerful language models and analyze and generate natural language. The integrations will enable new experiences to improve how organizations attract, retain, and skill their people. Generative AI will bring trusted innovation and opportunities for companies worldwide.

On May 09, 2023, Ultimate Kronos Group (UKG) Inc., an HCM software firm, announced that it is integrating Google Cloud's generative AI offerings to transform the decision-making process for business leaders. UKG's cloud-based human capital management software platform offers payroll, talent management, learning & onboarding, workforce management & planning, and analytics capabilities. Google's large language models will enable UKG to create applications for unified search AI and conversational AI.

On May 25, 2023, Paychex, Inc., a leading integrated HCM software provider, announced that its Cloud-based SaaS solution, Paychex Flex, has earned industry recognition for the fourth consecutive year. The company provides human capital management solutions for human resources HRs, payroll, benefits, and insurance services.

Paychex's HR Tech is used in small and medium businesses (SMBs), focusing on the core HR/workforce category solution. By leveraging the company's cloud-based SaaS solution, Paychex Flex, dedicated HR professionals, users can strategically alleviate many current challenges impacting their business operations.

Human Capital Management (HCM) Software Market Segment Insights

Human Capital Management (HCM) Software Service Insights

The human capital management (HCM) software market data, based on service, integration and consulting. The integration segment dominated the human capital management (HCM) software market revenue in 2021 and is projected to be the faster-growing segment during the forecast period, 2022-2030. Automation of payroll and compensation tasks is made possible for enterprises by integrating robotic process automation technologies into payroll solutions. The demand for intelligent payroll and compensation solutions will therefore increase as a result of combining cutting-edge technology into creative payroll solutions.

Human Capital Management (HCM) Software Software Insights

The human capital management (HCM) software market segmentation has been segmented by software into core HR, workforce management and staffing vendor management. The core HR segment dominated the market growth in 2021 and is projected to be the faster-growing segment during the forecast period, 2022-2030. Basic HR responsibilities are included in core HR apps under HCM. During the projection period, there will be a rise in demand for HCM solutions for core HR applications as a result of the adoption of digital technologies in businesses as well as the need for cost savings and effective labour management.

Human Capital Management (HCM) Software Deployment Insights

The human capital management (HCM) software market segmentation, based on deployment, on premise and on cloud. The on-cloud segment dominated the human capital management (HCM) software market revenue in 2021 and is projected to be the faster-growing segment during the forecast period, 2022-2030 due to a variety of advantages such quicker and simpler implementation, cost effectiveness, and improved user experience. The demand for cloud-based solutions is anticipated to increase as companies manage distant workforces.

Figure 2: Human Capital Management (HCM) Software Market by Deployment, 2021 & 2030 (USD Billion)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Human Capital Management (HCM) Software Regional Insights

By region, the study provides the market insights into North America, Europe, Asia-Pacific, and the Rest of the World. North America human capital management (HCM) software market accounted for USD 6.8 billion in 2021 and is expected to exhibit a 43.90% CAGR during the study period. The primary drivers that will propel the HCM solutions market in the region are a growth in job possibilities and a rise in the number of job seekers as a result of globalization, higher use of social media in recruiting procedures, and an increased requirement for cost optimization.

Further, the major countries studied in the market report are: The U.S., Canada, Germany, France, the UK, Italy, Spain, China, Japan, India, Australia, South Korea, and Brazil.

Figure 3: HUMAN CAPITAL MANAGEMENT (HCM) SOFTWARE MARKET SHARE BY REGION 2021 (%)

Source: Secondary Research, Primary Research, MRFR Database and Analyst Review

Asia Pacific human capital management (HCM) software market accounts for the fastest growing market share because more sectors are becoming digitalized and because more people are becoming aware of cutting-edge technologies. The market for HCM software is anticipated to grow as a result of a rising trend toward automation in nations like China and India. Moreover, China human capital management (HCM) software market held the largest market share, and the India human capital management (HCM) software market was the fastest-growing market in this region.

Europe human capital management (HCM) software market is expected to grow at a substantial CAGR from 2022 to 2030 due to increased disease prevalence and increased demand for healthcare services as a result of research and development in the healthcare industry. Healthcare providers are therefore more likely to utilize workforce management systems to manage and recruit their workforce. Further, the UK human capital management (HCM) software market held the largest market share, and the Germany human capital management (HCM) software market was the fastest-growing market in the region.

Human Capital Management (HCM) Software Key Market Players & Competitive Insights

Major market players are spending a lot on R&D to increase their product lines, which will help the human capital management (HCM) software industry grow even more. Market participants are also taking various strategic initiatives to grow their worldwide footprint, including new product launches, contractual agreements, mergers and acquisitions, increased investments, market developments and collaboration with other organizations. Competitors in the industry must offer cost-effective items to expand and survive in an increasingly competitive and rising market industry.

One of the primary business strategies manufacturers adopt in the human capital management (HCM) software industry to benefit clients and expand the sector is manufacturing locally to reduce operating costs. In recent years, human capital management (HCM) software industry has provided medicine with some of the most significant benefits. The human capital management (HCM) software market major player such as Oracle Corporation (U.S.), SAP SE (Germany), International Business Machines Corporation (U.S.), NetSuite Inc. (U.S.), Workday Inc. (U.S.), Ultimate Software Group, Inc. (U.S.), ADP LLC (U.S.), Cornerstone OnDemand (U.S.), Benefitfocus Inc. (U.S.) and BambooHR (U.S).

The headquarters of the American multinational computer technology company Oracle Corporation are in Austin, Texas. By sales and market value in 2020, Oracle ranked third among all software companies worldwide. In August 2021, Oracle Corporation has said that Oracle Fusion Cloud Payroll will be included in Oracle Fusion Cloud HCM for India. The company wants to increase the reach of Oracle cloud products around the globe by adding payroll for India.

Workday, Inc. is an American on-demand (cloud-based) software provider for student information systems, human resource management, and financial management. In August 2020, Workday, Inc. and IBM Corporation together announced the introduction of Artificial Intelligence (AI)-based solutions to address the coronavirus crisis for workers returning to their places of employment. The organisations will have planning capabilities thanks to the union of Workday Adaptive Planning and IBM Watson.

Key companies in the human capital management (HCM) software market includes

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  Oracle Corporation (U.S.)

  
  


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  International Business Machines Corporation (U.S.)

  
  


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  SAP SE (Germany)

  
  


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  NetSuite Inc. (U.S.)

  
  


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  Workday Inc. (U.S.)

  
  


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  Ultimate Software GroupInc. (U.S.)

  
  


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  ADP LLC (U.S.)

  
  


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  Cornerstone OnDemand (U.S.)

  
  


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  Benefitfocus Inc. (U.S.)

  
  


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  BambooHR (U.S)

  
  

Human Capital Management (HCM) Software Industry Developments

The EY company and IBM announced the release of EY.ai Workforce in 2023. This cutting-edge HR solution enables businesses to incorporate artificial intelligence (AI) into critical HR business operations. This is a critical next step in the firms' partnership and a major turning point in the way AI is being used to boost productivity in the HR department.

The top eight HCM solutions for the year in the corporate and midmarket segments are highlighted in SoftwareReviews' 2023 Human Capital Management (HCM) Emotional Footprint Report, which was released in 2023 by SoftwareReviews, a reputable source of information on the landscape of software providers. Adoption of HCM software is critical for businesses, particularly in light of the growing focus on luring, keeping, and involving employees.

Human Capital Management (HCM) Software Market Segmentation

Human Capital Management (HCM) Software Service Outlook (USD Billion, 2018-2030)

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  Integration

  
  


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  Consulting

  
  

Human Capital Management (HCM) Software Software Outlook (USD Billion, 2018-2030)

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  Core HR

  
  


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  Workforce Managements

  
  


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  Staffing Vendor Managements

  
  

Human Capital Management (HCM) Software Deployment Outlook (USD Billion, 2018-2030)

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  On-Premise

  
  


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  On-Cloud

  
  

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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