HR Software Market Size, Share, Trends, Growth 2032

HR Software Industry Prospective:

The global HR software market size was worth around USD 18.54 billion in 2023 and is predicted to grow to around USD 52.24 billion by 2032 with a compound annual growth rate (CAGR) of roughly 12.20% between 2024 and 2032.

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HR Software Market: Overview

Human Resource (HR) software is a digital tool used by HR professionals in companies to manage and improve the daily operations of company employees. HR programs are designed to assist companies in meeting their organizational goals. These applications promote better use of manpower by reallocating the time required for doing mundane tasks to more qualitative work. Businesses can use several types of HR software in the market. While some solutions offer comprehensive features, including employee attendance maintenance and payroll generation, certain tools are designed to provide specific assistance. HR software is also known as human resource management software (HRMS).

The demand for HR software has grown over the years. It is promoted by increased need within companies to optimize employee performance and improve employee information security. HR software can be broadly classified into cloud-based and in-house software systems. The former represents applications developed by an external party and provides services through the Software-as-a-Service (SaaS) model while the latter deals with developing HR software in-house that is tailored to meet business needs. The industry for HR software is projected to grow at a steady pace during the projection period but may face cost constraints.

Key Insights:

• As per the analysis shared by our research analyst, the global HR software market is estimated to grow annually at a CAGR of around 12.20% over the forecast period (2024-2032)
• In terms of revenue, the global HR software market size was valued at around USD 18.54 billion in 2023 and is projected to reach USD 52.24 billion by 2032.
• The HR software market is projected to grow at a significant rate due to the increasing international influence of businesses
• Based on the deployment, the hosted segment is growing at a high rate and will continue to dominate the global market as per industry projection
• Based on the end-user, the IT & telecom segment is anticipated to command the largest market share
• Based on region, North America is projected to dominate the global market during the forecast period

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HR Software Market: Growth Drivers

Increasing the international influence of businesses will promote the market adoption rate

The global HR software market is expected to witness high growth during the projection period due to the growing globalization rate. Businesses worldwide are marking presence and influence in international territories. The growing market saturation across industries has encouraged organizations to tap into unexplored market segments not only for customers but also to gain access to human capital. However, operating in international territories has its own set of challenges and limitations. One of the key challenges is complying with regional labor laws and regulations. Countries worldwide are tightening labor laws to prevent human capital explorations and ensure fair working conditions and wages.

For instance, in March 2024, the Republic of South Africa officially implemented the new law for the National Minimum Wage (NMW). According to the new law, workers are now eligible for a minimum pay of R27,58, rising from R25,42 for each ordinary hour worked. Adhering to ever-evolving and dynamic labor laws can be challenging. Compliance failure can lead to monetary and non-monetary losses. HR software has proven beneficial in assisting companies to comply with regional regulations and avoid any form of penalties. The applications offer features such as compliance alerts & notifications, automated compliance checks, and regulation monitoring features.

Demand for payroll software is projected to generate significant revenue during the projection period

Payroll-enabling HR applications have registered higher popularity among companies. These software programs allow HR professionals to carry out payroll-related tasks with utmost ease and without any errors. As more working professionals are hired in organizations, payroll tasks become more complex and challenging to manage with manual solutions. Most payroll HR software offers facilities such as automatic time tracking, expense management, direct deposit of payroll, and employee self-service. Automating payroll protocols can reduce the burden on HR professionals and allow them to use their time on more qualitative tasks. Payroll applications will promote higher growth in the global HR software market.

HR Software Market: Restraints

Cost constraints of HR software systems will limit the industry’s growth rate

The global industry for HR software is projected to be restricted by the expenses linked to digital applications for HR professionals. Traditionally, the human resource department is considered a cost center. Market companies suggest that the HR division in an organization has a limited budget. In addition to this, HR software is an expensive tool. The cost increases further as expenses for training professionals are considerably high. The average starting price of HR software with basic features is around USD 30 to USD 50 per employee.

HR Software Market: Opportunities

Integrating advanced technologies such as Artificial Intelligence (AI) in HR software may generate more growth opportunities

The global HR software market players are focusing on developing highly advanced HR systems equipped with the latest modern technologies, such as AI and machine learning (ML). Sophisticated HR software can perform extensive tasks with minimal human input. In January 2024, OrangeHRM, a leading solution provider focusing on Human Resource Management solutions, announced the launch of AI-enabled helpdesk. It is a virtual assistant that allows a seamless user experience. Other areas in HR software that have received significant interest include deploying regional regulations-compliant systems and securing employee information. In May 2024, Cezanne, a leading human resource information systems (HRIS) specialist, launched Cezanne Payroll, building on the company’s existing product portfolio. Cezanne Payroll is designed to provide in-house payroll and enable HR to use a native solution for accurately managing company payroll data. It is a highly secure cloud software that is compliant with all UK payroll laws.

HR Software Market: Challenges

Data privacy and growing concerns about cyber security will challenge the market expansion rate

The global HR software industry is projected to be challenged by the rising number of cybersecurity threats putting employee information at risk. According to Harvard Business Review, over 80% of data breaches in 2023 were carried out on information stored in cloud systems. In addition, managing employee data privacy is a major factor to be considered when using third-party solutions. Certain regions have strict laws against data privacy breaches from the organization's end. These factors could lead to restricted adoption of HR software.

HR Software Market: Segmentation

The global HR software market is segmented based on deployment, organization size, end-user, and region.

Based on deployment, the global market segments are on-premise and hosted. In 2023, the highest growth was witnessed in the hosted segment. It deals with HR programs designed by HRMS specialists that provide solutions to different clients. Hosted programs offer more flexibility and scalability. The service consumers only have to pay service charges instead of investing in developing a complete supporting infrastructure. According to market research, more than 90% of companies globally are leveraging the advantages of cloud solutions.

Based on organization size, the global HR software industry is divided into small & medium enterprises and large enterprises.

Based on the end-user, the global market segments are retail, IT & telecom, BFSI, manufacturing, government, and others. In 2023, the highest demand was observed in the IT & telecom industry. Businesses operating in the sector employ a large number of workers across fields. Moreover, most IT companies operate at a global level and require systems to assist them in complying with regional laws. Microsoft Corporation, for instance, employs over 220,000 employees. The changing working regulations in the retail sector will promote the HR software adoption rate in the industry.

HR Software Market: Report Scope

HR Software Market: Regional Analysis

North America to continue dominating the market during the forecast period

The global HR software market is expected to witness the highest growth in North America. The region is projected to register a CAGR of more than 34.01% over the forecast period. Factors driving the regional demand include a robust infrastructure supporting the development & application of innovative IT solutions across fields and the presence of a growing AI ecosystem. The US is a leading nation in AI-based advancements, which the regional market can leverage for extended growth.

Europe is expected to gain significant growth momentum in the HR software industry in the coming years. The regional market will be driven by the existence of a strict environment concerning labor laws and compliance. Europe is one of the leading regions with employee-friendly labor regulations. Additionally, the recent launch of the General Data Protection Regulation for protecting confidential information related to citizens has been pivotal in the large-scale adoption of HR software across companies in Europe.

Asia-Pacific is a growing market for HR software. Regions such as India, China, Singapore, South Korea, Japan, and others are leading revenue generators. The presence of a large workforce along with growing investment in AI-backed solutions will promote higher regional growth.

HR Software Market: Competitive Analysis

The global HR software market is led by players like:

• Gusto
• SAP SuccessFactors
• UKG (Ultimate Kronos Group)
• Oracle HCM Cloud
• ClearCompany
• Paycor
• Workday
• Kronos
• BambooHR
• Namely
• ADP
• PeopleSoft
• Ultimate Software
• Zenefits
• Ceridian.

The global HR software market is segmented as follows:

By Deployment

• On-Premise
• Hosted

By Organization Size

• Small & Medium Enterprises
• Large Enterprises

By End-User

•  Retail
•  IT & Telecom
•  BFSI
•  Manufacturing
•  Government
•  Others

By Region

• North America
  • The U.S.
  • Canada
• Europe
  • France 
  • The UK
  • Spain
  • Germany
  • Italy
  • Rest of Europe
• Asia Pacific
  • China
  • Japan
  • India
  • South Korea
  • Southeast Asia
  • Rest of Asia Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • GCC
  • South Africa
  • Rest of Middle East & Africa