Human Capital Management Market Insights, 2031
The global human capital management market size was valued at $21.8 billion in 2021, and is projected to reach $51.3 billion by 2031, growing at a CAGR of 9% from 2022 to 2031.
Human capital management is a practice that organizations use to attract, recruit, train, develop, and retain best employees to achieve short- and long-term objectives. The system allows companies to invest in their employees to allow them to contribute at the highest level to achieve business goals. Human capital management sees employees as valuable resources that must be harnessed to fulfill their potential.
Advent of cloud-based HR management software has allowed HR departments to move their work schedules to the cloud while they work remotely, this factor aided in propelling the growth of the global human capital management market size during the forecast period. Moreover, the simplification of HR operations and increase in need for integrated HR suites during the period has positively impacted the need for the human capital management industry. However, the need to comply with government regulations hampers the HCM industry. On the contrary, the increase in adoption of workforce analytics solutions and rise in adoption of digital HR technologies is expected to offer remunerative human capital management market opportunities for the expansion of the market during the forecast period. The human capital management market is segmented into Industry Vertical, Component, Deployment Mode and Enterprise Size.
Market Trends Insights:
The human capital management industry is expected to witness significant growth, driven by several key HCM technology trends in the market. One of the prominent trends is rise in addressing the skills shortage. The current workforce is experiencing a skills gap that many organizations are struggling to fill. This gap is especially evident in industries like healthcare, technology, and manufacturing. Companies are addressing this challenge by investing in reskilling and upskilling programs, encouraging internal mobility, and leveraging technology to identify skills gaps and better match employees to roles. In addition, there is growing trend toward investing in leadership, essential to navigating the complexities of today’s business environment. Organizations are focusing on developing their leadership pipelines and ensuring that leaders are equipped with the right tools and training to manage diverse teams, foster innovation, and drive growth. Leadership development programs are evolving to focus on empathy, communication, and adaptability in addition to traditional business skills.
Another notable trend the market is expected to witness is the surge in emphasis on employee well-being , as companies are providing more comprehensive wellness programs that support mental health, work-life balance, and physical health. This includes offering flexible work schedules, mental health days, and resources to help employees manage stress and avoid burnout. In addition, there is shift in preference toward prioritizing people over work arrangements. The shift to hybrid and remote work has led companies to focus on creating supportive, engaging environments for employees, regardless of location. This includes tools for connection, virtual team-building, regular check-ins, and platforms for feedback and recognition. In addition, companies are prioritizing diversity and inclusion through training, inclusive hiring, and support for employee resource groups. Furthermore, offering flexible work hours, personalized career development, and tailored wellness programs helps meet individual employee needs, fostering a more positive and productive work environment.
Moreover, the human capital management market analysis highlights that more organizations are leveraging data and analytics to inform HR decisions, enabling them to make strategic choices about talent acquisition, retention, and workforce planning. By analyzing employee performance, engagement, and satisfaction data, companies can identify potential turnover risks and other HR challenges before they arise, using predictive analytics to proactively address these issues.
Segment Review:
The global human capital market is segmented on the basis of component, deployment mode, industry vertical, and region. On the basis of component, the human capital management market is segmented into solution and service. Moreover, on the basis of solution, it is segmented into HR, workforce management, recruiting, compensation & payroll, and others. Furthermore, on the basis of services, it is segmented into professional services and managed services. On the basis of deployment mode, the market is segmented into on-premise and cloud. By industry vertical, the market is segmented into BFSI, retail, healthcare, IT & telecom, government, manufacturing, hospitality, and others. On the basis of region, the HCM market is segmented into North America, Europe, Asia-Pacific and LAMEA.
By Component
The services segment is anticipated to grow at a significant rate during the period owing to rise in need of professional services for cloud based HCM Solutions.
By component, the solutions segment dominated the human capital management market share in 2021, and is expected to maintain its dominance in the coming years. Adoption of AI technology and use of cloud-based HCM solutions drive growth of the solutions segment. However, the services segment is expected to witness highest growth rate during the forecast period, owing to rise in adoption of HCM services among end users such as BFSI and manufacturing as they ensure effective functioning of solutions and platforms throughout the HCM process.
Technology Insights:
The human capital management market insights highlight significant growth due to the increase in the adoption of technology across various industries. One major technological trend in the HCM market is the use of artificial intelligence (AI) and machine learning (ML). Organizations are utilizing cutting-edge technologies to enhance recruitment, streamline talent management, and tailor employee experiences. AI-driven tools assess extensive candidate information to identify the most suitable individuals for positions, while machine learning models forecast employee performance and potential, helping HR make well-informed choices. Furthermore, chatbots and virtual assistants offer immediate assistance by automating tasks such as responding to HR inquiries, arranging interviews, and supporting the onboarding process.
Cloud-based platforms are revolutionizing Human Capital Management (HCM) by providing flexibility, accessibility, and cost-efficiency, allowing organizations to manage their workforce globally. These solutions seamlessly integrate with other enterprise systems and offer advanced analytics to enhance workforce productivity. In addition, these solutions easily scale with organizational growth, supporting a more agile and responsive HR function. Data analytics is another key driver in the HCM market. HR leaders can now use data-driven insights to make strategic decisions regarding workforce planning, employee engagement, and retention. The ability to measure and analyze key performance indicators (KPIs) helps organizations align their HR strategies with business goals, leading to improved performance and competitive advantage.
Regional Review:
By Region
Asia-Pacific countries are expected to adopt a high rate due to ongoing digital and economic transformation of the region.
Region wise, the human capital management market was dominated by North America in 2021, and is expected to retain its position during the forecast period. This is attributed to a number of factors such as adoption of human capital management among various verticals such as retail and BFSI in the region. In addition, presence of growing number of human capital management vendors across the U.S. and Canada is expected to provide lucrative opportunities for the human capital management market. However, Asia-Pacific is expected to witness significant growth during the forecast period, owing to wide presence of small-and medium-scale organizations, which are turning toward human capital management solutions to manage their human resources system, particularly in developing countries such as China, India, and South Korea.
Competitive Analysis:
The Key players in the human capital management market include WORKDAY INC., Cornerstone, Oracle, Infor, SAP SE, UKG INC, Epicor Software Corporation, Sumtotal Systems, Llc, IBM Corporation, Adp, inc. These key players have adopted various strategies, such as product portfolio expansion, mergers & acquisitions, agreements, geographical expansion, and collaborations, to increase their market penetration and strengthen their foothold in the human capital management market
Top Impacting Factors:
Rise in Adoption of Cloud based HCM Software
Over the recent years, cloud-based software is witnessing an augmented trend, owing to its enhanced features such as automatic updates, unlimited capacity upgrades, built-in disaster recovery, and universal remote access capabilities. In addition, several industry verticals are adopting cloud services at a rapid pace owing to its benefits. Further, increase in usage of smart devices at workplace for better connectivity between departments supports growth for mobile HCM solutions. Further, advent of cloud-based solutions has made deployment easier for end users as these apps can be accessed over the web for a per-user subscription fee.
Increase in Automation of HR Operations
The future of HCM solution depends on powerful and robust integration. HCM solution that can effortlessly integrate with other software or tools is essential in evolving business environment, presently. Furthermore, the HR payroll industry is focused on advanced technologies such as artificial intelligence (AI) and blockchain to streamline business processes, which drives the human capital management industry.
For instance, in October 2020, TCS launched TCS Workforce Analytics, an AI-based unified system of engagement, insights & foresight for employees, managers and CXOs designed to enhance productivity and workforce experience. The new solution is designed to help enterprises deal with talent management challenges of the digital era. Such advanced developments drive the human capital management market growth.
Opportunity:
Increase in adoption of workforce analytics solutions
The increase in the adoption of workforce analytics solutions presents a significant opportunity in the human capital management (HCM) market. These tools help organizations optimize workforce performance by providing data-driven insights into employee productivity, engagement, and retention. By analyzing metrics such as turnover rates, skills gaps, and performance, companies can make informed decisions to align human resources with business goals, improve recruitment, and boost employee development.
Furthermore, workforce analytics aids in forecasting talent needs and identifying diversity gaps, helping businesses create more inclusive and equitable workplaces. With advancements in AI and machine learning, these solutions are becoming more powerful, enabling organizations to improve decision-making and achieve a competitive advantage. As demand for these tools grows, companies that adopt workforce analytics can enhance employee experiences and drive long-term success.
Rise in adoption of digital HR technologies
The rise in the adoption of digital HR technologies is a significant opportunity for the human capital management (HCM) market. As organizations adopt digital transformation, tools such as AI, machine learning, and cloud platforms are being utilized to automate HR responsibilities, boost efficiency, and enrich the employee experience. These tools facilitate smoother processes in recruitment, payroll, performance management, and employee engagement, while also supporting data-informed decision-making for enhanced talent management and workforce planning.
The shift in trend toward remote and hybrid work models has further accelerated the need for digital HR tools, allowing businesses to manage distributed teams effectively. Cloud-based HR solutions offer scalability and real-time access to data, making them a flexible option for businesses. As organizations rely more on digital HR technologies, ensuring data security is essential. Companies must protect sensitive employee data to prevent breaches, which can lead to loss of trust, legal issues, and financial penalties. Prioritizing data security is essential for a secure and reliable HR infrastructure. Overall, the adoption of digital HR technologies is revolutionizing HCM. The market varies by organization size as small and medium-sized businesses (SMBs) are adopting digital HR tools and workforce analytics to streamline HR processes, while larger enterprises use these technologies to scale operations globally, creating a strong growth opportunity for the market.
For instance, on February 25, 2025, RCM Technologies expanded its Human Capital Management (HCM) software services by launching a new program to resell the UKG Ready suite. This initiative aims to empower small businesses with comprehensive HCM solutions, enhancing their ability to manage human capital efficiently.
COVID-19 Impact Analysis:
The COVID-19 impact has prompted every company and business to shift their business operations toward a remote work environment. Moreover, due to strict guidelines issued by government authorities, people were forced to be in-house. This led to adoption of human capital management by enterprises globally. So, the COVID-19 had positive impact on the human capital management market. Moreover, human capital management is becoming increasingly important, especially as work evolves related to COVID-19. With more employees working remotely and increased demand for specialized skills and workforce data, HCM teams and managers can offer comprehensive support across an organization and bring out the best in everyone. For instance, according to a report published by Glassdoor, in December 2020, more than 51% job seekers relied on online platforms for new opportunities. Similar trends were being noticed across the world, which supported growth of the global HCM market size during the period.
Recent Product Launches in the Market:
- In October 2024, Adrenalin eSystems launched a new AI-powered HR platform designed to enhance workforce management. This platform integrates AI into various HR functions, offering real-time insights, predictive analytics, and automated recruitment. It aims to reduce hiring times and improve decision-making through data-backed insight.
- In September 2024, Darwinbox launched a next-generation payroll platform in India, enabling 100% digital payroll processing for the first time. This new platform, built on the RIVeR (Review, Initiate, Verify & e-approve, Release & Report) framework, aims to streamline payroll management by automating data flows, facilitating real-time reconciliation and e-verification, and ensuring robust control and compliance1. This innovation is set to redefine payroll management by making it more efficient and accurate.
- In February 2025, Workday launched a new Agent System of Record to manage AI agents within organizations. This system centralizes the management of AI agents, providing tools for onboarding, role definition, real-time monitoring, and compliance. It aims to help businesses effectively integrate human and AI workflows, ensuring optimal performance and cost management.
- In October 2024, SuccessFactors has significantly enhanced its Human Capital Management (HCM) capabilities with new features focused on AI, skills, and talent intelligence. These updates include AI-driven job recommendations, performance review analysis, and mobile use-cases, all integrated into SAP's intelligent agent, Joule. Additionally, SuccessFactors has upgraded its global payroll system and opened its Talent Intelligence Hub to accommodate various skills and skillstech vendors.
Recent Partnerships in the Market:
- In November 2024, Workday partnered with Compa to revolutionize compensation management by integrating Compa's real-time market intelligence data into Workday's platform. This collaboration aims to help companies make more informed and competitive pay decisions, enhance internal mobility strategies, and promote pay equity. The integration will be available to Workday HCM customers in 2025
- In April 2024, Workday partnered with Randstad to enhance global talent management with AI-driven solutions. Randstad will deploy Workday Financial Management and Workday Human Capital Management (HCM) across 39 markets. This collaboration aims to transform Randstad's HR and finance systems, promoting efficiency, scalability, and equitable talent management.
- In April 2024, Sendero partnered with UKG to enhance the delivery of Human Capital Management (HCM) solutions. As a Solution Delivery Partner, Sendero provides project management, implementation, and change management expertise to UKG customers using the UKG Pro suite. This partnership aims to streamline implementations, optimize workforce management operations, and ensure successful project outcomes.
Key Benefits for Stakeholders:
- The study provides an in-depth analysis of the global human capital management market forecast along with current & future trends to explain the imminent investment pockets.
- Information about key drivers, restraints, & opportunities and their impact analysis on global human capital management market trends is provided in the report.
- Porter’s five forces analysis illustrates the potency of the buyers and suppliers operating in the industry.
- The quantitative analysis of the market from 2022 to 2031 is provided to determine the HCM market potential.
Human Capital Management Market Report Highlights
| Aspects | Details |
 Market Size By 2031 | USD 51.3 billion |
 Growth Rate | CAGR of 9% |
 Forecast period | 2021 - 2031 |
 Report Pages | 309 |
 By Industry Vertical |
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 By Component |
|
 By Deployment Mode |
|
 By Enterprise Size |
|
 By Region |
|
 Key Market Players | UKG INC, Sumtotal Systems, Llc, WORKDAY INC., SAP SE, IBM Corporation, Infor, Oracle, Adp, inc., Epicor Software Corporation, Cornerstone |
Analyst Review
According to CXOs of leading companies, the human capital management market is projected to witness a healthy growth rate in the future. This is attributed to the increase in popularity of cloud-based HCM solution and increased awareness among end users about benefits of unified HCM solutions.
In addition, the global human capital management market is projected to witness prominent growth, especially in Asia-Pacific and North America. This growth is attributed to increased investments by key players for human capital management and adoption of cloud-based HCM solutions. In addition, technological advancements such as artificial intelligence (AI) and machine learning (ML) provide ample growth opportunities for the human capital management market.
Moreover, HCM software supports various HR functions such as recruitment and talent management, payroll, and benefits management. These integrated modules contain organizational features to manage complete employee experience. In addition, HCM software can be run and accessed in cloud at company premises or on-premise. By using cloud-based HCM software, businesses can significantly reduce maintenance costs, increase accessibility, improve employee experience, and increase security of employee records. In addition, HCM software manages employee data in a database and leading cloud HCM software providers offer advanced analytics to help employers gain insight into how best to manage their workforce.
Furthermore, enterprises make significant investments in mergers and acquisitions to enhance their existing solutions and deliver new solutions as well as develop automation technologies. For instance, in January 2020, Cornerstone OnDemand completed the acquisition of Clustree, a technology company.
The acquisition aimed to fasten development of the world’s biggest skills engine to aid organizations in detecting, developing, and implementing their talent for the positions needed today and in the future. Prominent market players explore new technologies and platforms to meet increase in customer demands. Product launches, partnerships, and product development are expected to enable them to expand their product portfolios and penetrate different regions. For instance, in September 2021, Oracle released Oracle Payroll Core, an adaptable payroll management solution. The solution is a part of Oracle Fusion Cloud Human Capital Management (HCM) and would aid both intergovernmental and non-governmental organizations in steering through complicated pay rules and policies to optimally pay any employee, anywhere, in any currency.
The global human capital management market size was valued at USD 21.8 billion in 2021, and is projected to reach USD 51.3 billion by 203
The global human capital management market is projected to grow at a compound annual growth rate of 9% from 2021-2031 to reach USD 51.3 billion by 2031
The key players profiled in the reports includes IBM Corporation, WORKDAY INC., Infor, Sumtotal Systems, Llc, SAP SE, Epicor Software Corporation, Oracle, Cornerstone, Adp, inc., UKG INC
The North America is the largest market for the Human Capital Management Market.
Simplification of HR operations and increase in need for integrated HR suites are the major drivers for the market growth.
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