According to a research report “Human Capital Management Market by Component, Software (Core HR, Applicant Tracking System, HR Analytics, & Workforce Management), Services, Deployment Model, Organization Size, Vertical & Region – Global Forecast to 2026″ published by MarketsandMarkets, the global HCM market size is expected to grow from USD 22.3 billion in 2021 to USD 32.0 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 7.5% during the forecast period. HCM advancements can be related to a number of factors; however, some of the major factors include the adoption of AI and ML technologies in HR processes and cost reduction achieved using HR software, which is the primary driver, enabling the adoption of HCM technologies within enterprises. Cloud security remains a restraint for adopting HCM cloud among enterprises users, specifically in the highly regulated verticals, such as BFSI, healthcare, and energy and utilities. The opportunities in adjacent markets, such as contingent workforce management and AI-based recruitment, open up new revenue prospects for vendors in the HCM market.
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SMEs segment to hold a larger market size during the forecast period
The adoption of HCM is high among SMEs as these enterprises must manage huge volumes of personnel information for employees, especially to be managed virtually after the pandemic outbreak. SMEs are located across geographies and need a centralized system to manage this information. Increased attrition rates, high recruitment costs, and competitive market have prompted SMEs to invest in HCM software and adopt go-to-market strategies to make informed decisions for their business growth.
BFSI segment to grow at the highest CAGR during the forecast period
BFSI segment is expected to have the highest adoption of HCM software where this vertical is expected to outperform other verticals in terms of growth. The vertical has mainly adopted HCM software to have a centralized system to manage the information of all employees have efficient coordination with enhanced performance especially during pandemic outbreak. Economic changes significantly affect this vertical. Advanced technologies and various software and services can help this vertical prioritize its actions and manage its workforce smoothly. Hence, the BFSI vertical is a major contributor to the HCM market growth.
Human Capital Management Market Regional Analysis:
The Asia Pacific HCM market is expected to grow at the highest CAGR from 2021 to 2026 due to the rising adoption of cloud and mobility trends. The region’s diverse economies, large population, and varying HR needs make it a significant and evolving market for HCM solutions. Asia Pacific has enormous adoption potential because of nations such as China, Japan, and Australia’s rising workforce and many small and medium enterprises. The region is projected to be over USD 7 billion market by 2026 in HCM revenue. Small and medium-sized businesses in the region will likely adopt a significant proportion of HCM solutions during the next five years, owing to an increase in their need to manage their personnel.
Japan’s rapid technological advancements and R&D activities are expected to create opportunities for HCM vendors in Japan. Japan’s unique business culture, labor laws, and workforce dynamics contribute to distinct characteristics in the country’s HCM market. HCM solutions are used across various industry verticals, such as manufacturing, financial services, healthcare, and retail, to optimize workforce management and HR processes.
The ANZ HCM market is mature and well-developed. Organizations in both countries, across various industries, have been early adopters of HCM solutions to improve their HR processes and workforce management. Regulatory compliance, diversity, talent shortages, remote work trends, and the need for cloud-based, data-driven solutions drive the ANZ HCM market.
The report also studies various growth strategies, such as mergers and acquisitions, partnerships and collaborations, and developments, adopted by the major players to expand their presence in the global HCM market. The HCM market comprises major software providers, such as Workday (US), Oracle (US), ADP (US), SAP (UK), Microsoft (US), IBM (US), Ultimate Kronos Group (US), Ceridian (US), SumTotal (US), Infor (US), Cegid (France), EmployWise (India), PeopleStrategy (US), Cornerstone OnDemand (US), Meta4 (US), Ramco Systems (India), Bamboo HR (US), Namely (US), Workforce Software (US), Zoho (India), Sage Group (UK), Epicor Software (US), Zenefits (US), Paylocity (US), Gusto (US), Bitrix (US), Benefitfocus (US), WebHR (US), Talentia Software (France), PeopleFluent (US), Vibe HCM (US), Rippling (US), Ascentis (US), and, BizMerlinHR (US).
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