HR Tech market to touch $35.68 billion by 2028 with AI revolution
The increasing demand for highly qualified and skilled talent has been constantly fuelling the growth of the human resource (HR) technology market in recent years.
Valued at $24.02 billion in 2021, the global HR technology market size is expected to reach a value of $35.68 billion by 2028, at a CAGR of 5.8% over the forecast period 2022–2028, says a recent survey by growth consulting firm SkyQuest.
Organisations are increasingly turning to human resource software and services to help them fill in many of the gaps in their talent acquisition process, including finding and screening qualified candidates, administering job offers, and firing employees who no longer meet company standards.
In a recent survey by SkyQuest on human resource technology market and use cases among large and mid-level businesses, 81% of respondents said that they are using some form of HR software, and 78% said that their company uses or plans to use HR technology to improve performance reviews, communications, and tracking of employee development.
Further, 79% of respondents feel that HR software has made their reviews more efficient, 86% say it has improved communication between management and employees, and 88% feel that HR software has helped them track employee development
As many as 74% of respondents in the HR technology market use HR technology to monitor employee performance and 54% use it to manage employee records, the survey adds.
Additionally, 53% of respondents said that HR technology helps them identify and prevent fraud and abuse.
What drives growth for the HR technology market?
After a detailed analysis of the market, SkyQuest has identified key factors that are primarily responsible for driving growth of the market.
HR technology plays an important role in developing and maintaining a successful workplace. By ensuring that all employees are aware of their rights and responsibilities, HR technology can play a critical role in helping to ensure a productive, safe and fair work environment, the survey notes.
Some of the most common areas HR technology is primarily used include:
- Enhanced communication and teamwork: By sending updates and notifications to employees about their rights and responsibilities, the software can help to improve communication between employees and management in the human resource technology market. In turn, this can lead to improved teamwork and greater productivity.
- Reduction in employee turnover: By providing employees with clear information about their rights and responsibilities, HR technology can help to reduce the incidence of employee turnover. As employees become more comfortable with their working environment, they are less likely to leave because they feel mistreated or unhappy.
- Improved safety and health protections: By monitoring employee behaviour and tracking any incidents or complaints, HR technology can help to ensure that all employees are treated safely and healthily. This protects both the employee[s] and the company from potential liability damages in the global human resource technology market.
- Accurate records: By storing all relevant data related to employee attendance, pay rates, etc. business can effectively plan strategies for employee retention, safety, satisfaction, and work-life balance, among others
AI to drive the next wave of HR technology
As artificial intelligence (AI) continues to evolve, more businesses are turning to AI-enabled HR software to automate processes and make managing HR easier.
As per SkyQuest estimate, AI would result in $1.9 trillion in value added across industries by 2025.
As businesses continue to face mounting challenges, including ever-changing competitive landscapes, increased pressure on operational efficiency, and an increasing need for innovative solutions, HR analytics is becoming increasingly integral to the management of personnel.
Today, 53% of businesses across the global human resource technology market are willing to use AI to identify patterns and trends in large data sets, making it a valuable tool for identifying and addressing organisational issues related to performance appraisal, interviewing, and employee retention.
In addition to its ability to improve efficiency and effectiveness within HR systems, over 78% of HR professionals are of the opinion that AI is also thought to be especially beneficial in the detection of discrimination and other violations of human rights.
Businesses that wish to remain compliant with regulatory mandates are increasingly considering incorporating AI into their HR analytics practices in order to enhance their ability to detect and prevent such violations.
Some organisations have chosen to focus on specific uses for AI in HR Analytics, such as automated assessment of talent pipelines or improving discrimination prevention.
With the rapid expansion of AI in various industries, including HR, it is no surprise that incorporation of AI into HR analytics is on the rise in the global human resource technology market.
A recent survey by recruiting platform Hootsuite found that 61% of respondents plan to use AI in their HR operations within the next 3 years. Additionally, over half of HR professionals believe that AI will play a more significant role in their organisation’s HR analytics over the next 12 months.
Despite the hype around AI and its potential applications in HR, SkyQuest has identified some challenges that need to be overcome before widespread implementation can take place in the global human resource technology market.
For example, many organisations are still learning how to effectively use AI for HR purposes. In addition, privacy concerns remain an ongoing challenge as data collected by AI can be sensitive and revealing. However, with continued investment and careful planning, it is clear that AI will play an increasingly important role in HR management going forward.
Top trends in HR technology market
- Artificial intelligence and machine learning are driving the adoption of new HR technologies
- Increased automation and digitisation are making HR more streamlined and efficient
- Employers are increasingly turning to employee engagement platforms to boost productivity and morale
- Employee data privacy is paramount for many enterprises, which is motivating them to invest in secure HR systems
- Growing adoption of employee chatbots
- Increased use of cloud-based solutions in human resource management
- Collaborative working becoming more prevalent in HR departments
Top players in global HR technology market
- Cornerstone OnDemand, Inc. (US)
- IBM Corporation (US)
- Infor (US)
- NetSuite, Inc. (US)
- Oracle Corporation (US)
- SAP SE (Germany)
- Talentsoft (Europe)
- Ultimate Software (US)
- Workday, Inc. (US)
- Automatic Data Processing (ADP), Inc. (US)
- Ceridian HCM, Inc. (US)