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The global workforce analytics market size was valued at USD 1.59 billion in 2022 and is projected to grow from USD 1.81 billion in 2023 to USD 4.78 billion by 2030, exhibiting a CAGR of 14.9% during the forecast period.
Workforce analytics is an enhanced suite of data analytics solutions for workforce performance improvement and evaluation. It evaluates staffing, employment, employees, development and training, and compensation & benefits. The market comprises applications such as workforce planning, compensation management, performance and talent management, recruitment, and employee collaboration & engagement, among others.
Further, the demand for enhanced analytical solutions is increasing owing to the challenges organizations face in analyzing their employees' massive amounts of data. This factor is expected to boost the workforce analytics market growth.
Growing Demand for Analyzing Employee Work Performance to Push Market
The COVID-19 pandemic had a positive impact on the development of the market owing to increasing implementation of work from home model by various organizations, which is anticipated to surge the requirement of workforce analytics for efficient and productive management of the workforce.
As the governments of numerous countries initiated industrial activities to recover the economy, various organizations have initiated their hiring process, boosting the demand for the software. In addition, the need to evaluate the employee’s work performance and make smarter decisions while hiring the potential applicant for a preferred position boosted the demand for the software.
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Rising Demand for Monitoring Performance to Boost Software Demand
The major factors driving the market growth are trends such as increasing use of data for strategic workforce planning, achieving a competitive advantage, the need to reduce long-term labor issues, and ensuring employee engagement & satisfaction.
Tracking this data helps analyze the effectiveness of managers engaging their employees in planning improvement, clarifying doubts, setting expectations, and reporting performance anxieties. Thus, evaluating their employee's performance clarifies the parts of their performance that require improvement and sections that are meeting or exceeding expectations. For instance,
The factors mentioned above will bolster the market during the projected period.
Integration of Artificial Intelligence (AI) and Machine Learning (ML) with Workforce Analytics to Fuel Market
Workforce analytics is a data-driven method for managing individuals at work. It relies on statistical and data methods to aid companies in improving and understanding employee performance, engagement, and retention. Recently, the market has been elevated by the rising availability of data and the implementation of new technologies such as ML and AI.
In addition, enterprises are using ML and AI to automate the procedure of evaluating workforce data, which can be utilized to classify patterns and trends that would be otherwise challenging to detect. These unique insights can then be used to make better decisions about improving performance, managing employees, and sustaining talent in the company.
As a result, the incorporation of AI and ML in workforce analytics is expected to boost market growth during the forecast period.
High Installation Costs of Software to Hamper Market Expansion
The key areas of improvement are in the execution process of this product into companies. The lack of product information causes these analytics tools not to be personalized suitably for the organization, which hinders an effective and productive implementation strategy. In addition, uniting available data from various sources, concerns related to data privacy and compliance, and lack of analytical skills are expected to hinder the market growth during the forecast period. Moreover, the high implementation cost is likely to slow down the market growth.
Cloud to Lead Owing to Swift Digital Transformation
By deployment, the market is bifurcated into cloud and on premise. The cloud segment accounts for the maximum market share. It is also anticipated to grow at the highest CAGR during the projected period as cloud-driven deployment provides flexibility, efficiency, and cost-effectiveness. Also, it provides a better platform for the users that can be accessed from various points.
The on-premise segment has high software installation costs and upgrading charges, making users choose cloud-driven software owing to its benefits. This quick shift from using on-premise to a cloud-based platform hindered the segment's growth.
Rising Product Demand will Assist Large Enterprise Segment to Dominate
As per our study, the software is used by large enterprises and small & medium enterprises. Large enterprises will dominate the market during the forecast period due to early adoption of the software. Moreover, a report by Enlyft, a software company, mentioned that of all the customers using SAP SuccessFactors Workforce Analytics, approximately 72% are large enterprises and 38% are small & medium enterprises.
Small & medium enterprises segment is anticipated to witness a rapid growth rate during the forecast period owing to the increasing number of SMEs in developing regions such as the Middle East & Africa, South America, and Asia Pacific.
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Increasing Data Generation of Employees to Boost the IT & Telecommunication Segment
According to our research, the IT & telecommunication segment holds the highest share in the global market due to rapid development in the sector owing to the rising need for better IT & telecommunication services. Various companies are investing highly in this software for data security and managing the data efficiently.
The challenges encountered by BFSI, including security threats, expansion, and low-profit margins have encouraged the industry to set up better infrastructure and technology to survive. Therefore, BFSI is anticipated to invest in these solutions to achieve these needs, boosting the market during the forecast period.
North America Workforce Analytics Market Size, 2022 (USD Billion)
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As per our report, the market is studied across North America, South America, Europe, Asia Pacific and the Middle East & Africa. These regions are further categorized into leading countries.
In 2022, North America dominated the market holding 40.5% of the global share. The region is technologically advanced that accepts new technologies sooner. In addition, several organizations providing analytics solutions in the region are also responsible for North America's dominance in the global market.
Asia Pacific is projected to witness a quick rise in revenue growth during the forecast period and offers huge potential for market growth. The growing adoption and deployment of advanced technologies, such as cloud-based solutions, fuels the demand for this software. Moreover, increasing partnerships and collaborations among regional enterprises to deliver better solutions are propelling the Asia Pacific workforce analytics market share.
Europe holds the second highest share in the global market owing to increasing concern of dealing with enormous data, reducing labor costs, improving operational competences, and developing digital technologies such as cloud, Big Data, 5G, mobile platforms, and advanced analytics platforms.
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The increasing productivity in the manufacturing sector in the Middle East, Africa, and South America is anticipated to elevate the opportunity for these software providers. The manufacturing industries are becoming a vital economic indicator of the Middle East & African countries over the past few years. According to the World Bank’s World Development Indicators database, the Middle East & African manufacturing sectors have grown steadily, at 12.37% in 2020. Hence, the need for software to manage the workers and recognize their proper potential fuels regional growth.
Market Leaders Launch New Products to Strengthen Market Position
Significant key players in the industry are working toward enhancing new and advanced workforce analytics solutions for customers. They also aim to enhance their existing product portfolio to provide flexible and easy-to-use solutions with exclusive features. In addition, the companies focus on partnerships, collaboration, and acquisitions to improve their product offerings.
KEY INDUSTRY DEVELOPMENTS:
An Infographic Representation of Workforce Analytics Market
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The research report comprises prominent areas worldwide to get a better knowledge of the market. In addition, the study provides insights into the most recent market trends and an analysis of technologies being adopted globally. It also highlights some of the growth-stimulating restrictions and elements, enabling the reader to gain a detailed understanding of the market.
Value (USD Billion)
By Deployment, Enterprise Type, End-user, and Region
By Enterprise Type
The market is projected to reach USD 4.78 billion by 2030.
In 2022, the market stood at USD 1.59 billion.
The market is projected to grow at a CAGR of 14.9% in the forecast period (2023-2030).
By deployment, the cloud segment is likely to lead the market.
Integration of Artificial Intelligence (AI) and Machine Learning (ML) with workforce analytics to drive market growth.
ADP, Inc., Cornerstone OnDemand, Inc., IBM Corporation, Kronos Incorporated, SAP SE, Workday, Inc., WorkForce Software, LLC, Visier, Inc., Oracle Corporation, and TriNet Group, Inc. are the top players in the market.
North America is expected to hold the highest market share.
By end-user, the healthcare segment is expected to grow with the highest CAGR.
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