Human Capital Management Market by Offering (Software and Services), by Deployment (On-Premises and Cloud), by Enterprise Type (Large Enterprise and Small & Medium-Sized Enterprise) and by End-User (IT & Telecommunication, BFSI, Government, Retail, Healthcare, Education, Manufacturing and Others) – Global Opportunity Analysis and Industry Forecast 2024-2030

Human Capital Management Market Overview

The global Human Capital Management Market size was valued at USD 26.6 billion in 2023 and is predicted to reach USD 46.4 billion by 2030 with a CAGR of 8.2% from 2024-2030. Human capital management (HCM) also known as human resource management (HRM) market involves the process of hiring the right people, managing workforce effectively and optimizing the productivity. HCM solutions are essential to encourage strong client relationships, enhance service delivery, and ensure that businesses have the right talent in right place. The capabilities of this HCM solution include talent acquisition, workforce management, performance management, learning and development, and HR analytics. This ability to create a working environment that is engaging, developmental, and healthy for all employees leads industries to have a motivated and skilled workforce that will drive up productivity and profitability.

Market Dynamics and Trends

The increase in the number of startups globally driven by the requirement for talent acquisition, employee management, and development solutions drives the demand for effective human resource management which fuels the market growth.

For instance, in 2023, as per the latest report published by Microsoft the total number of startups throughout the world is growing in a significant rate with approximately 150 million startups worldwide and 50 million new ventures starting each year. This surge in startups significantly boosts the human capital management industry, as these new businesses need effective human resource solutions to manage their workforces.

Moreover, the growing culture of remote and hybrid working across the globe is driven by factors such as cost saving, advancements in technology and expansion of businesses across various regions. With such rise in these flexible working culture, the need for HCM solution to efficiently manage communication, and collaboration among the team in on the rise which in turn boost the market growth.

For instance, in June 2022, as per the latest report published by McKinsey, numerous companies throughout the globe are adopting remote and hybrid work models, with estimates showing that around 25-30% of people are working remotely. With such rise in the remote working culture across the globe the demand for HRM is anticipated to grow at a significant rate for managing remote employees, ensuring effective communication and tracking performance.

Additionally, the increase in investment by numerous companies across the globe for the adoption of cloud-based solutions in HRM to enhance flexibility, scalability, and real-time data access. This widespread adoption is driving the market growth as businesses aim to use these advanced solutions to enhance employee management and overall organizational performance.

For instance, in March 2023, Vodafone invested in cloud HR to transform its workplace culture and employees experience aiming to build a future-ready workforce by prioritizing digital and technical skills. This investment is expected to drive the demand for HRM system which are essential for managing and optimizing human resources, crucial for a company's success and growth.

However, the initial high investment and ongoing cost for the installation of HRM solutions in small and medium-sized enterprise restrains the growth of the market.

On the contrary, the integration of artificial intelligence (AI) in HCM system is anticipated to create future opportunities for the market. As, AI in HCM system automate task within HR processes, such as job descriptions, performance evaluations, and other HR documents which further increases efficiency and reduces errors, allowing HR teams to focus on more strategic initiatives.

For instance, in June 2023, Oracle launched a new generative AI capability within its Oracle Fusion Cloud HCM platform. These generative AI features are built to increase efficiency and streamline HR processes for candidates, employees, managers, and HR teams.

Market Segmentations and Scope of the Study 

The human capital management market report is segmented by offering, deployment, enterprise type, end-user and region. On the basis of offering, the market is divided into software and services. Software is further sub-segmented into core HR, talent management, workforce management, payroll & compensation and others. Services is further segmented into professional service and managed service. On the basis of deployment, the market is segmented by on-premises and cloud. On the basis of enterprise type, the market is segmented into large enterprise and small & medium-sized enterprise. On the basis of end-user, the market is segmented by IT & telecommunication, BFSI, government, retail, healthcare, education, manufacturing and others. Regional breakdown and analysis of each of the aforesaid segments includes regions comprising of North America, Europe, Asia-Pacific, and RoW.

Geographical Analysis

North America dominates the human capital management market share and is expected to continue to its dominance during the forecast period. This is attributed due to the growing adoption of HCM solutions within the government organizations for streamlining workforce management and automating administrative tasks.

For instance, in 2022, SAP NS2 a subsidiary of SAP, launched secure and compliant cloud-based HCM solutions for the government agencies and other highly regulated organizations. These solutions modernize enterprise systems, offering human capital management in a secure cloud environment tailored to stringent compliance requirements.

Moreover, the presence of key market players such as Oracle, Workday and Paycom are adopting various strategies including research and development in this region which in turn is boosting the market growth. For instance, in 2024, Paycom launched its latest development Beti that empowers employees to do their own payroll. This empowerment enhances accuracy, as employees are able to review and verify their hours, benefits, and deductions, reducing errors and the need for subsequent corrections.

On the other hand, Asia-Pacific shows a steady rise in human capital management industry during the forecast period. This is attributed due to the presence to numerous healthcare infrastructure in this region driving the growth of the market. The healthcare sector, with its diverse and sizable workforce, relies on HCM solutions for tasks such as scheduling, payroll, compliance, and professional development. According to National Library of Medicine, 1030935 healthcare institutions established in China by 2021. With such increase in healthcare sector highlights the need for efficient data management and streamline their work flow that significantly drives the demand for the market. 

Moreover, the surge in Banking, Financial Service and Insurance industry (BFSI) with dynamic workforce creates high demand for advanced HCM systems to effectively recruit, train, and manage performance of the employees. 
For instance, the latest report from the government of India states that it is one of the fastest growing fintech industry in the world with a market size of USD 584 billion in 2022 which is expected to reach USD 1.5 trillion by 2025. With such rise in the fintech sector, the demand for advanced HCM solutions to manage the growing workforce, and integrate with emerging technologies is on the rise.

Competitive Landscape

Various key players operating in the human capital management industry are Workday, Inc., Oracle Corporation, SAP SE (Societas Europaea), Paycom Software, Inc., Microsoft Corporation, Paylocity Holding Corporation, UKG Inc. (Ultimate Kronos Group), BambooHR LLC, Automatic Data Processing, Inc. (ADP) and Cornerstone. These market players are adopting various strategies such as product launches and collaborations to remain dominant in the market.

For instance, in April 2024, Paylocity launched its latest feature targeting GenZ aimed at transforming talent acquisition, employee engagement, and retention for the next generation of workers.

Additionally, in October 2023, ADP launched its first all in one HCM solution for the construction industry aiming to provide the construction firms everything they need such as to run payroll accurately, manage HR efficiently, and recruit and develop workers more effectively.

Moreover, in April 2023, Paycom launched its latest product Global HCM that allows businesses and their domestic and international employees to manage their HR needs within one, easy-to-use system.

Key Benefits

• The report provides quantitative analysis and estimations of the human capital management market from 2024 to 2030, which assists in identifying the prevailing market opportunities.

• The study comprises a deep-dive analysis of the current and future human capital management market trends to depict prevalent investment pockets in the industry.

• Information related to key drivers, restraints, and opportunities and their impact on the human capital management market provided in the report. 

• Competitive analysis of the players, along with their market share is provided in the report.

• SWOT analysis and Porters Five Forces model is elaborated in the study.

• Value chain analysis in the market study provides a clear picture of roles of stakeholders.

Human Capital Management Market Key Segments

By Offering

• Software

  • Core HR

  • Talent Management

  • Workforce Management

  • Payroll & Compensation

  • Others

• Services

  • Professional Services

  • Managed Services

By Deployment

• On-Premises

• Cloud 

By Enterprise Type

• Large Enterprise

• Small & Medium-Sized Enterprise  

By End User

• IT & Telecommunication

• BFSI

• Government

• Retail

• Healthcare

• Education

• Manufacturing

• Others

REPORT SCOPE AND SEGMENTATION:

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