Fortune Business Insights recently conducted a study related to the human capital management (HCM) market and has predicted that the global HCM market size will hit $32.68 billion by 2027, with a compound annual growth rate (CAGR) of 9.3%. The reportOpens a new window also theorized that an increasing propensity toward artificial intelligence (AI) and machine learning-driven robotic process automation (RPA) to get rid of unnecessary IT costs would be a key trend in the HCM market transformation. The HCM market size in 2019 was $16.24 billion.
The following are a few key insights from the report in detail.
Also read: What Is HRIS? System, Model, and Application
Demand for Intelligent Workforce Management Solutions Will Drive Growth
According to the study, a few important factors will drive the HCM market’s growth. The primary driver is the growing demand for intelligent workforce management solutions.
For starters, organizations are getting increasingly digitalized, which is driving the demand for HCM solutions. According toOpens a new window  Marjolein Wenderich, head of people & organization, Capgemini Invent in the Netherlands, “Increasing digitalization across sectors is leading to surge in the use of human resource management software.â€
Secondly, companies with a large workforce are looking for efficient and effective ways to manage employees and customers using HCM solutions. As the COVID-19 pandemic affected workforce productivity, vendors, too, are looking to offer intelligent workforce management solutions to organizations. For example, Infor launched a workforce management solution in China in May 2020. The solution makes it possible for companies to provide efficient workforce utilization and staff scheduling.
When it comes to a specific region, a few other factors are driving the growth. For example, in North America, the growing adoption of employee experience platforms, mobile platforms, and workforce analytics solutions are expected to drive growth. In the Asia Pacific region, globalization, demographics change, and technological progress are expected to drive growth.
The Middle East and Africa, as well as Latin American regions, are expected to see significant market opportunities owing to the growing literacy rate and job opportunities. In Europe, growing job opportunities are expected to drive growth.
Economic Instability Due to the Pandemic Is Impeding Growth
 While the HCM market growth looks promising, a few factors are impeding the growth. One major factor is the COVID-19 pandemic, which affected global employment and economic stability.
The unemployment rate worldwide saw an unprecedented spike during the pandemic. The pandemic also caused huge financial losses to organizations. Hence, the adoption of HCM solutions was limited, affecting the market growth. Having said that, new policies to improve economic stability and employment will create opportunities for the HCM market.
Another major impediment to market growth is growing privacy and security concerns. The growing adoption of cloud-based HR automation platforms has led to data security and privacy concerns. Further, market players are unable to provide powerful cloud security solutions, which is likely to restrict the growth of the HCM market. Having said that, organizations are taking steps, such as multi-factor authentication and zero trust security to mitigate security threats.
Integration of RPA With HR Tools Will Be a Key Growth Trend
RPA plays a key role in delivering innovation and efficiency in HCM solutions and enables companies to deliver improved talent strategies. Companies are looking for new ways to recruit talent and offer new services at reduced costs. RPA capabilities, along with AI and ML, make it possible for them to standardize operations and eliminate additional IT costs.
Another key trend that will encourage market growth is the increasing focus on employee mobility cloud-based models for talent planning. An increasing focus on talent mobility is expected to improve the adoption of talent management solutions. Similarly, cloud-based business models integrated with HRM services may witness growing demand from end-users.
Also read: DailyPay Launches ExtendPX For Human Capital Management, Payroll Service Providers
ADP, IBM, Infor, and Kronos Are a Few Key Players
The report lists a few companies that are the top players in the HCM market. Some of them are:
- Automatic Data Processing (ADP)
- Ceridian HCM, Inc.
- Cezanne HR Ltd.
- Cornerstone OnDemand, Inc.
- IBM Corporation
- Infor
- Kronos, Incorporated
- NetSuite, Inc.
- Oracle Corporation
- SAP SE
- Talentsoft
- Ultimate Software, and
- Workday, Inc.
According to the study, the HCM market is highly competitive and fragmented. Market players such as Kronos, Oracle, and Cornerstone OnDemand are adopting strategies like mergers and acquisitions (M&A) to strengthen their market position. These M&A activities help them to improve their product portfolio, allowing them to provide new offerings.
As more organizations look for more innovative solutions to manage their workforce more efficiently and effectively while saving time and money, the HCM market can only be expected to grow.
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