Human Capital Management Market Size, Share & COVID-19 Impact Analysis, By Offering (Software and Services), By Deployment (Cloud and On-Premise), By Enterprise Size (SMEs and Large Enterprises), By End-use Industry (IT and Telecommunication, BFSI, Government, Retail, Healthcare, Education, Manufacturing, and Others), and Regional Forecast, 2023-2030

The global Human Capital Management (HCM) market size was valued at USD 26.63 billion in 2022 and is projected to grow from USD 28.86 billion in 2023 to USD 53.61 billion by 2030, exhibiting a CAGR of 9.2% during the forecast period.

Human Capital Management (HCM) is a collection of HR systems, tools, and practices used to recruit, attract, develop, train, retain, and manage employees to achieve business goals. It features human resource functions, compensation, and the main objective of a company. These solutions are deployed on cloud-based and mobile technology to run reports, process data, and create a smooth end-user experience.

The report covers various software offered by market players such as Cornerstone Ondemand’s human capital management software suite, IBM Corporation’s solution, and Workday Inc.‘s HCM software suite, among others.

The market focuses on several factors such as implementing Artificial Intelligence (AI) and Machine Learning (ML) in HCM modules. In addition, integrating Robot Process Automation (RPA) with HR tools provides several new opportunities for the key players.

COVID-19 IMPACT:

Shift of Business Operations toward Remote Work Environment Drove Demand for Human Capital Management Solutions

The COVID-19 pandemic greatly affected almost every industry's operational structure and policy. The rapid spread of the virus forced governments and business sectors to follow various social distancing and lockdown norms across countries. This is why companies had to adopt work-from-home strategies to ensure business continuity. They adopted online communication and collaboration solutions to handle business requirements and manage the apprehensions of their employees.

However, employers and managers unfamiliar with remote workers' management and communication had difficulties integrating their teams and enabling their employees to remain productive. Therefore, adopting human capital management solutions helped businesses and HR teams boost productivity, team management, and collaboration.

Furthermore, moving to virtual collaboration and remote work created significant opportunities for employers to overcome the rising economic and public health crisis.

Thus, implementing these solutions for remote work environments across companies may create ample market opportunities in the coming years.

LATEST TRENDS

Adoption of HCM Solutions to Enhance Talent Matching Processes will Act as a Key Trend

Businesses frequently use emerging technologies, such as machine learning, to enhance various talent-matching processes. These include optimizing job requirements, improving applicant expertise, widening the procurement pool, enhancing internal selection efficiency, and removing partial recruitment. These processes are also assisted by other tools, such as video tests, social sourcing tools, Chatbots, and predictive analytics, to test candidates that suit the role.

Additionally, by integrating cloud-based approaches and machine learning technologies, key players are opting for various business strategies to meet changing business needs. They are launching efficient human capital management solutions to increase efficiency and drive business growth. For instance,

• In May 2020, Workday, Inc. partnered with Microsoft Corporation to provide companies with an efficient solution to manage business operations. Through this partnership, Workday’s customers will be able to run the Workday Adaptive Planning solution on Microsoft Cloud that delivers greater efficiency and decision-making.

Similarly, Robot Process Automation (RPA) capabilities embedded with Artificial Intelligence (AI) and Machine Learning (ML) enable enterprises to standardize operations by eliminating additional IT costs. RPA technology is vital for delivering efficiency and innovation within HCM solutions and enables organizations to provide enhanced talent strategies. For instance, 

• In July 2020, IBM Corporation acquired WDG Automation, a Brazilian Robot Process Automation (RPA) service provider. The acquisition enabled IBM to provide comprehensive AI-incorporated automation capabilities integrated with its Cloud Pak for multi-cloud management, transforming business operations, including employee management services.

Thus, the adoption of cloud and RPA in HCM solutions will create the Human Capital Management market growth opportunities.

DRIVING FACTORS

Leveraging Cloud Computing for HR and Talent Management across Organizations to Boost Business Growth

Cloud computing has steadily evolved from a revolutionary IT approach to a major corporate technology. Cloud computing solutions in HR tools encourage organizations to accelerate employee engagement and experience by offering wider features that enhance performance and talent management functionalities.

With robust cloud-based solutions, the HR and management teams can easily access and provide business and personal data about employees. Cloud-based solutions offer new opportunities for companies by automating heavy and complicated tasks, such as performance review, timesheet submission, and payroll management.

Additionally, some cloud HR management solutions can be customized by HR professionals and corporate employees without the help of IT specialists. Thus, with cloud computing, HR managers can improve productivity and make data-driven intelligent decisions.

RESTRAINING FACTORS

Data Breach and Possible Denial of Service (DoS) Attacks May Hamper Market Growth

In cloud-based solutions, data breaches or leaks are critical limiting factors. This happens due to security breaches in cloud computing. Unauthorized parties or applications may access the data and other sensitive information stored, accessed or transmitted by employees. The DoS cloud attack could shut down all cloud services to prevent users from temporarily accessing them.

In addition to data breaches, if the information is inaccurate, businesses may be subjected to legal proceedings against the employee's data. These entities have a responsibility to protect the privacy of their employees and HCM data.

The factors mentioned above may hamper the market growth.

SEGMENTATION

By Offering Analysis

Rising Demand for Workforce Operational Insights for HR Management Software Solutions Propels Market Growth

Based on offering, the market is divided into software and services. Core HR, talent management, workforce management, payroll & compensation, and others come under the software segment. These solutions can efficiently manage the employees and maintain transparency between them and the management. Under services, the report covers HCM consulting & application and HR transformation services.

The software segment holds the largest market share and is expected to continue its dominance during the forecast period. These solutions assist businesses in delivering enhanced team member experience and higher productivity.

Workforce Management (WFM) solutions help in data analysis for core business processes and maintaining various HR activities. WFM applications are available in several buying options - they can be purchased as part of ERP suites, HR suites, operations applications, workforce management suites, or as stand-alone applications.

Additionally, the requirement for talent management solutions is expected to rise considerably during the forecast period. Adopting artificial intelligence in talent management solutions will expand the market.

By Deployment Analysis

Increasing Adoption of Cloud-based Models across Organizations Creates Growth Opportunity for the Market

Based on deployment, the market is segmented into cloud and on-premise. The cloud segment is expected to witness significant expansion during the forecast period. The growth is attributed to organizations shifting existing solutions to cloud for better user experience, consistent updates, and enhanced analytics & reporting, among others.

Cloud-based business models incorporated with HRM services are expected to demonstrate robust demand from end-users. For instance,

• In October 2022, Topia launched a remote work software solution, which aided enterprises in managing and supporting a fragmented workforce. It also enhanced the automation of taxes, approvals, risk assessments, and social security. The company aided HR teams in enabling talent mobility and flexibility, and promoting remote working among other employees.

By Enterprise Type Analysis

Large Businesses Focusing on Increasing their Spending for Better Productivity to Drive Market Growth

Based on enterprise type, the market is bifurcated into large enterprises and small and medium-sized enterprises. The large enterprises segment is likely to capture a large market share. These enterprises are anticipated to increase their spending on core HR. Large-scale companies have more HR/IT functions. Also, they constitute more HR functions such as payroll, recruiting, and benefits on a larger scale as compared to small enterprises. These factors will contribute to the global market growth.

Also, small and medium-sized enterprises segment is expected to be the fastest-growing segment due to the increasing need for market players to provide affordable options with positive high-value outcomes.

By End-use Industry Analysis

IT & Telecommunication Industry to be Potential Customers of HR Solutions

In terms of end-use industry, the market is divided into IT & telecommunication, BFSI, government, retail, healthcare, education, manufacturing, and others (energy & utilities). The IT & telecom segment is set to hold a sizable market share during the forecast period.

IT & telecommunication service providers are anticipated to significantly adopt core HR, talent management, and workforce management solutions during the forecast timeline. Organizations across industries are opting for HR software to administer employee benefits and address HR operations effectively.

REGIONAL INSIGHTS

The market is studied across North America, South America, Europe, the Middle East & Africa, and Asia Pacific.

North America will likely hold the maximum Human Capital Management market share throughout the forecast period. This is due to the presence of notable vendors, such as Ceridian HCM Holding Inc., Oracle Corporation, and IBM Corporation, among others, and substantial investments in cloud applications. Cloud-based technologies are gaining momentum globally as small firms are adopting cloud-based solutions for creating lucrative business opportunities.

Europe is expected to show significant market growth during the forecast period. The region is expected to show increasing demand for workforce automation solutions to improve compliance. For instance, industries across the U.K. have deployed workforce management solutions to manage employees. Also, the European Union has implemented a talent management strategy to lessen staff overload for professional growth. Such aspects are likely to create new market opportunities across the region.

Asia Pacific is anticipated to showcase a higher growth trajectory. Growing digitization and adoption of advanced technologies, such as Industry 4.0, smart factory, Big Data, and artificial intelligence, are likely to drive the demand for a more skilled workforce. This will fuel the intensity of hiring across the region. Also, expanding multinational businesses with substantial IT budgets is a major factor supporting the market growth.

The Middle East & Africa region is anticipated to hold a large market share. The growing mobility of workforces from different cultures and regions is one factor contributing to the region's growth. The IT sector in the Middle East & Africa remains competitive as the industry is undergoing digitization, thereby boosting the requirement for highly skilled employees. Changing work demands and requirements for skills are creating a huge need for advanced skills and capabilities.

South America is expected to be more inclined toward adopting HR technologies to boost business expansion and growth of organizations. According to the Society for Human Resource Management, Brazil, Mexico, and Chile are the biggest employers in Latin America. As a result, these countries are likely to be potential buyers of HCM solutions.

KEY INDUSTRY PLAYERS

Market Players to Opt for Merger & Acquisition Strategies to Expand their Presence

Prominent players operating in the global market are focusing on expanding their global presence through merger & acquisition strategies. Rising technological advancements and organizations' adoption of HCM solutions are projected to accelerate the market growth. These companies aim to acquire small and local firms to expand their business presence.

List of Key Companies Profiled:

• SAP SE (Germany)


• Automatic Data Processing (ADP), Inc. (U.S.)


• Oracle Corporation (U.S.)


• Microsoft Corporation (U.S.)


• Cornerstone OnDemand, Inc. (U.S.)


• Ceridian HCM, Inc. (U.S.)


• Infor, Inc. (U.S.)


• Ramco Systems Ltd. (India)


• Workday, Inc. (U.S.)


• Paycom Software, Inc. (U.S.)


• UKG Inc. (U.S.)


• Cegid (France)


• Bamboo HR LLC (U.S.)


• Sumtotal Systems, LLC (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• November 2022: Paycom Software launched Vault Visa, a payroll card with additional support for mobile applications. It enhanced employee expenditure, fraud protection, and provided exclusive offers integrating Visa, which improved clientele experience while using human capital management.


• November 2022: Ceridian announced a collaboration with Deloitte Australia to deploy the Ceridian Dayforce platform and transform the existing stand-alone human capital management processes. This collaboration expanded business operations in Australia and New Zealand, thus encouraging digital transformation across the countries.


• November 2022: UKG Inc. collaborated with Microsoft Corporation to integrate seamless UKG solutions with Microsoft services and cater to a larger clientele. The company also launched Flex, which aids consumers in finding better insights for partnerships and efficiently managing the workforce.


• October 2022: American University partnered with Workday to deploy the company's financial management, HCM, and adaptive planning solutions. This enabled the organization to enhance its self-service capabilities and improve payroll, finance, time-tracking, and talent management systems.


• October 2022: PEAK Matrix evaluation recognized Ramco Systems as a multi-region leader of payroll software solutions. This resulted in the company’s geographical business expansion in the APAC region, while leveraging technologies, such as RPA, ML, and AI, to further enhance their solutions.

REPORT COVERAGE

The market research report provides a detailed market analysis. It focuses on key points, such as leading companies, offerings, and applications. Besides this, the report offers an understanding of the latest market trends and highlights key industry developments. In addition to the above-mentioned factors, the report contains several factors that have contributed to the growth of the market in recent years.

REPORT SCOPE & SEGMENTATION

ATTRIBUTE	DETAILS
Study Period	2019-2030
Base Year	2022
Estimated Year	2023
Forecast Period	2023-2030
Historical Period	2019-2021
Growth Rate	CAGR of 9.2% from 2023 to 2030
Unit	Value (USD Billion)
Segmentation	By Offering, Deployment, Enterprise Type, End-use Industry, and Region
By Offering	Software Core HR Talent Management Workforce Management Payroll & Compensation Others (Succession and Planning) Services
By Deployment	On-premise Cloud
By Enterprise Type	Large Enterprises Small and Medium-sized Enterprises
By End-use Industry	IT & Telecommunication BFSI Government Retail Healthcare Education Manufacturing Others (Transportation & Logistics, Energy & Utilities)
By Region	North America (By Offering, Deployment, Enterprise Type, End-use Industry, Country) U.S. (By End-use Industry) Canada (By End-use Industry) Mexico (By End-use Industry) South America (By Offering, Deployment, Enterprise Type, End-use Industry, Country) Brazil (By End-use Industry) Argentina (By End-use Industry) Rest of South America Europe (By Offering, Deployment, Enterprise Type, End-use Industry, Country) U.K. (By End-use Industry) Germany (By End-use Industry) France (By End-use Industry) Italy (By End-use Industry) Spain (By End-use Industry) Russia (By End-use Industry) Benelux (By End-use Industry) Nordics (By End-use Industry) Rest of Europe Middle East & Africa (By Offering, Deployment, Enterprise Type, End-use Industry, Country) Turkey (By End-use Industry) Israel (By End-use Industry) GCC (By End-use Industry) North Africa (By End-use Industry) South Africa (By End-use Industry) Rest of the Middle East & Africa Asia Pacific (By Offering, Deployment, Enterprise Type, End-use Industry, Country) China (By End-use Industry) Japan (By End-use Industry) India (By End-use Industry) South Korea (By End-use Industry) ASEAN (By End-use Industry) Oceania (By End-use Industry) Rest of Asia Pacific