HR Software Market Size And Analysis 2024
HR software has developed significantly in recent years with new players and disruptions entering the market faster than ever.
To help take stock of it all and understand what’s coming next, I’ve put this article together covering HR software market size and broken it down by key segments.
HR Software Market Definition
The HR software market encompasses a range of digital tools and systems designed to streamline and automate various human resources functions and increase the department’s capabilities.
Examples of HR software include:
- HRMS/HRIS
- Applicant tracking systems
- Learning management systems
- Performance management software
- Scheduling software
- Payroll software
- Employee engagement software.
HR Software Market Overview
According to research by verifiedmarketresearch, the HR software market size was valued at USD 15.59 Billion in 2020 and is projected to reach USD 33.57 Billion by 2028, growing at a CAGR of 10.10% from 2021 to 2028.
Drivers of this growth include:
- Advancements in technology: The integration of AI and machine learning in HR software enhances decision-making, automates routine tasks, and provides predictive analytics for better talent management.
- Cloud adoption: The shift to cloud-based solutions offers scalability, cost efficiency, and flexibility, making it easier for businesses of all sizes to implement HR software.
- Regulatory compliance: The need for compliance with evolving labor laws and data protection regulations, especially in regions like Europe with GDPR, drives the adoption of advanced HR software solutions.
- Market maturity: Certain markets are starting to mature and buy HR software to make better use of their talent.
- Focus on workforce management: Organizations are increasingly focusing on employee engagement, performance management, and talent retention, which are facilitated by modern HR software.
Segmentation Analysis
The HR software market can be segmented by region, type, org size, industry, and deployment mode (cloud or on-premises).
Here’s how the market looks broken into these segments.
Region
North America
North America holds the largest share of the HR software market. This region is expected to continue its dominance due to the presence of major HR software vendors and high adoption rates of advanced HR technologies.
The market size in North America was valued at approximately USD 14.08 billion in 2023, with projections to grow to USD 22.52 billion by 2032 (Fortune Business Insights) (Acumen Research and Consulting). The strong economy, technological advancements, and a focus on talent management and HR automation drive this growth.
Europe
Europe is the second-largest market for HR software. The region's market size was valued at USD 10.94 billion in 2023 and is expected to reach USD 17.28 billion by 2032.
Asia-Pacific
Asia-Pacific is projected to experience the highest growth rate in the HR software market. The market size in this region was valued at USD 7.56 billion in 2023 and is expected to reach USD 14.42 billion by 2032.
Middle East & Africa
The Middle East & Africa region is anticipated to hold productive market opportunities. The market size was valued at USD 2.56 billion in 2023 and is projected to grow to USD 4.12 billion by 2032. Factors such as growing workforce mobility, employment in SMEs, and the adoption of modern HR technologies contribute to this growth.
Latin America
Latin America is expected to witness steady growth in the HR software market. The market size was valued at USD 1.92 billion in 2023 and is projected to reach USD 3.02 billion by 2032. The growing demand for highly skilled tech talent and the need for efficient HR solutions in managing a diverse workforce are driving factors in this region (Fortune Business Insights).
Type
Based on current market trends, here is an approximate distribution of market share by HR software type:
- HRIS: ~25%
- HRMS: ~20%
- Talent management system: ~20%
- Applicant tracking system: ~15%
- Payroll Management: ~10%
- Performance Management: ~5%
- Workforce Management: ~5%
These figures reflect the comprehensive nature of HR software solutions and the diverse needs of organizations across various industries.
Organizational size
SMEs
SMEs accounted for approximately 38% of the HR software market in 2022 and are expected to experience the highest compound annual growth rate (CAGR) among organizational sizes, reflecting their increasing investment in digital transformation.
Large Enterprises
Large enterprises hold a significant share of the HR software market due to their complex HR needs and substantial resources. In 2022, large enterprises accounted for about 62% of the HR software market.
Industry
As can probably be expected, the tech industry is more receptive to HR software and holds the largest share of the market:
- IT and Telecommunications: ~25%
- Banking, Financial Services, and Insurance (BFSI):~20%
- Healthcare: ~15%
- Retail: ~12%
- Manufacturing: ~10%
- Other aectors (including Transportation and Logistics): 10%
- Public sector: ~8%
Cloud vs on-premises
Cloud-Based HR Software
Cloud-based HR solutions accounted for approximately 55% of the market share in 2022 and are expected to continue growing as more businesses adopt digital and remote work practices (Technavio) (TechnologyAdvice).
As mentioned above, cloud-based HR software has been rapidly gaining traction due to its numerous benefits, including lower upfront costs, easy scalability, automatic updates, and remote access capabilities.
On-premises HR software
This deployment model accounted for the remaining 45% of the market share in 2022 but is less popular due to its higher initial investment and limited flexibility compared to cloud-based solutions (Technavio) (TechnologyAdvice).
Key Players
While it seems new solutions pop up by the minute, some big incumbent HR software companies still dominate the HR tech market.
Here they are ranked by their approximate market share:
- ADP: 11-13%
- Oracle workday: 10-12%
- Workday Inc: 9-10%
- SAP SE: 8-10%
- UKG Inc.: 7-9%
- Ceridian HCM Holding Inc.: 4-7%
: As markets mature and organizations continue to invest more into their people and adopt new technologies to future-proof their business, we’ll see a continued growth of the HR software market.
: Of all the regions, Asia-Pacific is expected to witness the highest growth rate in the HR software market in the coming years. The region's burgeoning small and medium-sized enterprises (SMEs) are also significant contributors to this market expansion.
: Key trends include the increasing use of AI for predictive analytics, the rise of mobile HR solutions, and the integration of employee wellness and engagement tools. Companies are also focusing on providing comprehensive solutions that cover all aspects of HR management from recruitment to retirement.
For further reading, try our article on HR technology trends and, if you want to dig deeper, attending an HR technology conference will help you find answers. We've also compiled a list of helpful HR tech newsletters to subscribe to.
