The value of the HCM market is set to rocket, driven by technological advances and a move towards a distributed workforce.
Organisations are increasingly recognising the benefits of placing human capital management technology (HCM) at the centre of their HR, payroll, and recruitment functions.
This rapid take-up of HCM solutions means the market is predicted to experience significant growth in the coming years. There are variances when assessing exactly how much value will be added to the sector, but the vast majority of recent research on HCM forecasts billions of dollars being added to its value over the next decade. The US and North America are expected to lead the charge.
A report released in May from Technavio predicts that the worldwide global human capital management solutions market size is expected to increase by $12.16 billion between 2020 and 2025.
The HCM market observed year-on-year growth of 9.52% in 2021 and the growth momentum is expected to accelerate at a CAGR of 10.57% during the forecast period. North America is expected to have the largest share of the market, with around 34% of the overall market growth expected to originate from the region.
The longer-term forecast is also positive. A recent study from Fortune Business Insights predicted the following: “The global HCM market size was $23.6 billion in 2021. The market is expected to grow to $25.53 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 HCM experiencing high-than-anticipated demand across all regions compared to pre-pandemic levels.”
In 2021, North America accounted for almost half of the market at a value of $10.73 billion, with that trend expected to continue. The report noted: “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.”
So, HCM is a market segment set to increase in value at a fierce rate over the next decade, but what are the trends driving this long-term upward trajectory?
The capabilities of HCM solutions has come a long way, driven by advances in enterprise technology. In the world of HCM, businesses are increasingly using software with artificial intelligence (AI) and robotic process automation (RPA) capabilities.
In the US, the battle for talent is fierce; hiring managers are using AI and machine learning tools built into HCM software to go through what can be hundreds of candidates to filter out unsuitable applicants, leaving those more suited to the position.
RPA is also being widely utilised by businesses as part of their HCM strategy. RPA is effectively a digital worker that is able to automate repetitive and time-consuming tasks, such as payroll, data input, and remittance, enabling HR teams to focus on high-level tasks.
Enterprises worldwide are turning to the cloud-based solution to drive efficiencies, improve output, and reduce costs. In the HCM sector, customers can choose from a significant number of bespoke cloud-based HCM solutions that can be customised to suit the needs of their organisation.
These cloud solutions are able to connect all HR processes across a business, meaning companies with multiple locations across the US and further afield can collaborate on recruitment, talent acquisition, employee relations, and other HR functions such as payroll and remittance. Whereas previously, all HCM information would have been stored locally on one or two machines, all HR personnel across an enterprise can be given log-in credentials which they can use across multiple devices.
There is no single corner of the business world that hasn’t seen change brought about by the pandemic, and HCM is no exception. The way businesses and their people work has changed, with hybrid and remote working becoming the norm for many.
As a result, businesses have flocked to cloud-based solutions and collaboration tools such as HCM that have allowed HR and personnel teams to handle onboarding, employee communications, and payroll functions efficiently. HCM solutions have helped businesses to continue operating during a time of real upheaval and stay connected to their employees.
Having experienced the benefits of HCM, businesses are embracing these solutions in increasing numbers. By 2023, Gartner predicts the majority of solutions deployed by organisations to support new ways of working during COVID-19 will be retained.
Grosvenor Technology is a market leader in the human capital management market, blending 30 years of engineering know-how with innovative security products and technology. We develop a range of human capital management hardware, all supported by our software partners. Our products and first-class support can help your business become more efficient, reduce costs, and enhance employee experience.