Human Capital Management (HCM) 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, 2022-2029

The global human capital management (HCM) market size was USD 23.60 billion in 2021. The market is exhibited to grow from USD 25.53 billion in 2022 to USD 46.85 billion by 2029, exhibiting a CAGR of 9.1% during the forecast period. The global impact of COVID-19 has been unprecedented and staggering, with human capital management (HCM) experiencing higher-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global HCM market had exhibited a steady growth of 8.1% in 2020 as compared to 2019.

Rising demand for performance management and workforce management solutions due to dispersed workforce amid the COVID-19 pandemic is expected to propel the need for HR solutions. Integration of advanced technologies such as robotic process automation, artificial intelligence, and others into HR solutions will boost the demand for HR management solutions across industries. However, the global human capital management (HCM) market will show steady growth from 2021 to 2022.

COVID-19 IMPACT

Increasing Work from Home Policies to Drive the Demand for HCM Solutions

Companies are adopting online communication and collaboration solutions to handled business requirements, and manage apprehensions of their employees. During these critical times, digital solutions such as human capital management (HCM), team collaboration tools, and others are fostering online work environments and encouraging employees to effectively perform their jobs. As a digital workplace needs constant communication and collaboration between employees, it is important to have access to online communication tools and collaboration platforms. The HCM solution is helping professionals to manage employee-management communication and handle payroll functions efficiently

Due to workplace and business closures and social distancing norms, the pandemic adversely impacted industry verticals such as retail, food & beverages, BFSI, and others. According to the International Labor Organization, in April 2020, approximately 47 million employers, representing around 54% of all employers worldwide, operated businesses in the negatively affected sectors, including manufacturing, wholesale trade, food services, real estate, and others during the COVID-19 pandemic. The above information illustrates that a downturn in employment is anticipated to restrict market growth.

LATEST TRENDS

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Integration of Robot Process Automation (RPA) with HR Tools to Augment Growth

Robotic process automation (RPA) technology improves the efficiency and effectiveness of human resource operations. Robotic process automation plays a vital role in automating repetitive HR operational tasks such as compensation management, onboarding of new talent, payroll management, and compliance reporting. RPA increases the accuracy and speed of data management and processing and reduces the additional IT cost required for manual and repetitive tasks.

Organizations incorporate RPA technology to automate the process and improve HR workforce satisfaction. Market players are offering RPA integrated tools to address the clients' needs. For instance,

• In July 2020, IBM Corporation acquired a Brazilian service provider of robotic process automation (RPA), WDG automation. The acquisition aims to offer comprehensive artificial intelligence integrated automation capabilities incorporated with IBM CloudPak for transforming business operations, including employee management services.

Rising Focus on Talent Mobility and Cloud-Based Business Models to Boost Growth

The rising adoption of cloud-based solutions and talent mobility is expected to boost the market growth. Organizations focus on talent mobility as it improves employee engagement and retention by creating a leadership pipeline. Implementing a talent mobility program helps in performance management and identifying leadership candidates. A rising focus on talent mobility is expected to foster the demand for talent management solutions.

Organizations are adopting cloud-based human resource services to manage talent, workforce, payroll, and other HR operations efficiently and securely. Cloud-based human capital management (HCM) solutions help organizations collect, consolidate, and analyze the workforce information from anywhere. For instance, in January 2021, Oracle announced that ENGIE had chosen the oracle Fusion Cloud solution to advance human resource capabilities. ENGIE can standardize human resource processes such as HR information, career development, recruitment process, and workforce management using fusion cloud-based solutions.

DRIVING FACTORS

Integration of Artificial Intelligence (AI) technology in HR Tools to Foster Market Growth

Artificial intelligence in HR tools encourages organizations to accelerate employee engagement and experience. AI in HR management solutions enables the user to automate repetitive tasks, reduce administrative burden, and save time. Organizations are adopting AI in HR management tools workflows to accelerate recruitment & onboarding, improve personalized experiences for workers, and provide employee performance insights. Organizations are incorporating AI technology into the recruitment process. AI technology helps internal mobility and employee retention via employee recognition systems and personalized feedback surveys.

Market players are focusing on developing AI technology-enabled solutions to fulfill the requirements of end-users. For instance, Oracle Corporation offers Oracle Adaptive Intelligent (AI) Apps for AI and data-driven features, improving productivity and employee engagement, reducing hiring time, and automating routine tasks. Similarly, Ultimate Software developed the AI platform Xander to understand, predict, and provide personalized actions from the HR data. The solution delivers insights that improve organizational outcomes and employee retention. Thus, the rising adoption of AI technology in HR management tools will fuel the human capital management (HCM) market growth.

RESTRAINING FACTORS

Growing Privacy and Security Concerns to Hinder Market Growth

The rising adoption of cloud-based solutions and automation platforms increased data privacy and security concerns. Security risks, including identity theft (espionage), salary data theft, denial of service attack (DDoS), and violation of regulatory rules (sabotage) on the human resource systems are expected to impede the demand for solutions. Organizations are deploying remote wipe technology and multi-factor authentication to eliminate the probability of privacy and security risks. For instance,

• In August 2019, Paychex, Inc., an HR solution provider, launched Cyber Liability Protection in collaboration with AXIS Insurance Company. The new policy assists organizations in mitigating the financial impact of ransomware, data breaches, online banking fraud, and hackers by providing recovery costs after an attack.

SEGMENTATION

By Offering Analysis

Rising Demand for Workforce Operational Insights Resulting Maximum Market Share for HR Management Solutions

Based on offering, the market is segmented into software and services.

Software is expected to lead the market during the forecast period. The software segment is classified into core HR, talent management, workforce management, payroll & compensation, and others (succession and leadership planning). The solution segment includes Ultimate Software’s UltiPro solution, Infor Cloud-based software, Workday Inc.’s suite, and others. These solutions provide meaningful and operational insights that assist in making business decisions. Rising adoption of the solutions is expected to exhibit the highest growth rate.

Core HR solutions are expected to showcase moderate growth during the forecast period. The rising adoption of cloud and automation is expected to surge the demand for core HR solutions.

Moreover, the adoption of workforce management software is gaining traction due to the dispersed workforce globally owing to the COVID-19 pandemic. The rising adoption of cloud computing and workforce analytics is expected to boost workforce management solutions demand during the forecast period.

Similarly, the demand for talent management solutions is expected to rise with a significant growth rate during the forecast period. Talent management solutions provide actionable insights into learning, onboarding, compensating, recruiting, and managing critical talent. Integrating artificial intelligence technology into talent management solutions boosts the demand for a solution.

Due to the rising adoption of mobile payments, market players are developing smart payroll and compensation solutions. Integrating robotic process automation technology into payroll solutions supports organizations to automate payroll and compensation tasks. Thus, integrating advanced technology across innovative payroll solutions will surge the demand for smart payroll and compensation solutions.

By Deployment Analysis

Increasing Demand for Data-driven Applications to Boost Adoption of Cloud-based Solutions

Based on deployment, solutions are categorized into cloud and on-premise.

Among these, cloud-based solutions hold a significant share due to the range of benefits such as faster and easy implementation, cost efficiency, and enhanced user experience. Managing a remote workforce is expected to boost the demand for cloud-based solutions.

On-premise solutions are likely to show moderate growth due to security regulations, tax & existing hardware implications, and upgrade requirements.

By Enterprise Size Analysis

Large Businesses are Focusing on Increasing their Spending to Improve Performance

By enterprise size, the market is classified into large enterprises and small & mid-sized enterprises.

Large enterprises hold a significant market share due to substantial investments in advanced technologies and the availability of ICT infrastructure. In addition, rise in investment in large enterprises is expected to help organizations improve their performance, build a global mindset, and re-engineer a functional discipline. Small & medium enterprises are likely to exhibit moderate growth due to limited resources.

By End-use Industry Analysis

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IT and Telecommunication, BFSI, Healthcare Industries to be Potential Customers of HR Solutions

Based on end-use industry analysis, the market is classified into IT and telecommunication, BFSI, government, retail, healthcare, education, manufacturing, and others (transportation & logistics, and energy & utilities) by industry vertical.

The healthcare industry is likely to adopt smart HR tools during the forecast period. Due to the COVID-19 outbreak, the demand for healthcare professionals has increased exponentially. To recruit high-performing clinical staff and workers, manage cost and compliance, and effective communication with staff, smart HR tool is significantly adopted by health professionals. This is expected to boost the demand for solutions across healthcare.

The BFSI industry is expected to be a potential market for workforce solutions. Banking and financial institutions incorporate HR tools to manage the workforce, payroll and compensation management, automate manual HR operations, and recruit and onboard the best talent.

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

REGIONAL INSIGHTS

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The global market has been classified into five major regions, including North America, Europe, Asia Pacific, the Middle East & Africa, and Latin America. The regions are further categorized into countries.

North America is anticipated to hold a dominant position in the global market. The rising adoption of advanced technologies, smartphones, and workforce analytics solutions is expected to spur the region's market growth. As per U.S. Bureau of Labor statistics, employment in healthcare industry is likely to exhibit an exponential trend over 14% between 2018 to 2028. This estimated growth can be attributed to the rising prevalence of diseases and research & development in the healthcare sector that led to more demand for healthcare services. Hence, to recruit and manage the workforce, healthcare providers are more likely to adopt workforce management solutions.

Asia Pacific is expected to grow significantly during the forecast period. Rising startups and the adoption of new technologies such as Industry 4.0, data analytics, cloud technology, and artificial intelligence demand a skilled and talented workforce in the coming years. Thus, managing and recruiting qualified professionals is expected to boost the demand for workforce management solutions across the region.

The Middle East & Africa is projected to experience significant market opportunities during the forecast period. According to the World Bank collection of development indicators in 2018, the Middle East, Africa, and North Africa reported 85.5% literacy rate. This figure represents that the region poses potential job opportunities that are expected to boost the adoption of advanced HR tools across the region.

The rising adoption of advanced technology such as AI, cloud, and analytics-enabled solutions by organizations is likely to exhibit substantial opportunities to implement advanced HR solutions in the region. For instance, in July 2021, Office Depot Europe incorporated Oracle Fusion Cloud solutions to transform HR processes and support the rising workforce. Thus, digital transformation across the region creates new market opportunities.

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Latin America is projected to showcase healthy growth during the forecast period. The organizations in the region are working on developing educational and IT infrastructure to prepare a potential workforce to address future opportunities in the coming years.

KEY INDUSTRY PLAYERS

Market Leaders to Enter into Strategic Mergers & Partnerships to Enhance Existing Product Portfolio

To geographically expand the business presence, companies, such as Cegid, Ceridian HCM, Inc., Cornerstone OnDemand, Inc., are entering into a strategic partnership. Similarly, the companies are integrating other key technologies, such as cloud, artificial intelligence, predictive analytics, machine learning, and more, to provide advanced human capital management (HCM) solutions. The advanced real-time insights help the employer to make better decisions. For instance,

• In August 2020: Workday, Inc. in partnership with IBM Corporation announced the launch of AI-based solutions to deal with the coronavirus crises for employees returning to workplaces. The combination of Workday Adaptive Planning and IBM Watson will provide planning capabilities to the organizations.


• In May 2019: Ceridian HCM, Inc. announced the acquisition of Asia-based HCM company Excelity Global Solutions Pte Ltd. from Everstone Group. The acquisition is expected to gain strong position for the company in Asia Pacific

LIST OF KEY MARKET PLAYERS PROFILED:

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


• Ceridian HCM, Inc. (U.S.)


• SAP SE (Germany)


• Cornerstone OnDemand, Inc. (U.S.)


• Infor (U.S.)


• NetSuite, Inc. (U.S.)


• Oracle Corporation (U.S.)


• Ultimate Software (U.S.)


• Workday, Inc. (U.S.)


• Cegid Group (France)

KEY INDUSTRY DEVELOPMENTS:

• August 2021- Ceridian HCM Inc. announced that the U.K. gym operator, PureGym, chose Ceridian’s human capital management (HCM) platform, Dayforce, to support its growing operations and improve employee engagement. Dayforce to deliver a suite of products, including talent management, workforce management, payroll, and learning & development.


• August 2021- Oracle Corporation announced that it is adding Oracle Fusion Cloud Payroll as a part of Oracle Fusion Cloud HCM for India. Through the addition of payroll for India, the firm is looking to expand its global footprint of Oracle cloud solutions.


• April 2021- Cezanne HR announced new notification and dashboard features to its cloud suite. The new capabilities enable to improve employee engagement and business efficiency. The addition of new notifications such as expiring fit notes, licensing, and disciplinary follow-up help HR teams to stay up to date.


• July 2020- Infor launched a fully integrated multi-tenant payroll module for global human resources. The payroll module offers multiple service partners in-house payroll processing options for managing payroll activities such as wage payments and garnishments, tax filing, and other value-added services.

REPORT COVERAGE

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The report highlights leading regions to offer a better understanding of the user. Furthermore, the report provides insights into the latest industry trends and analyzes technologies deployed at a rapid pace at the global level. The report examines various paradigm shifts associated with the transformation of software. It further highlights some of the growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the market.

The research report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product types, and leading applications of the product. Besides this, the report offers insights into the market trends and highlights key industry developments. In addition to the aforementioned factors, the report encompasses several factors contributing to the growth of the market.

Report Scope & Segmentation