HR Analytics Market Overview
The global HR analytics market was valued at $2,045.5 million in 2018 and is expected to register a CAGR of 15.6% during 2019–2024. Increasing demand for efficient hiring, increasing need for efficient talent retention strategies, workforce optimization, and changing work dynamics are some of the key factors driving the growth of the market across the globe.
On the basis of offering, the HR analytics market has been bifurcated into solutions and services, wherein the solutions category held the larger market share in 2018. This is attributed to the growing deployment of HR analytics software across all verticals. On the basis of type, the HR analytics solutions market has been categorized into retention, recruitment, workforce planning, compensation and incentive program, employee development, employee engagement, and others, which includes employee performance and time & attendance. Of these, the workforce planning category held the largest market share in 2018, which is attributed to the increasing demand for efficient resource utilization within organizations. HR analytics assists in resource allocation for the entire duration of a project and enables organizations to maximize their productivity through proper resource utilization.
On the basis of services type, the HR analytics market has been bifurcated into professional and managed, wherein the professional services category held the larger market share in 2018. This is attributed to the increasing demand for analytics software integration and implementation and consulting services in enterprises for regulatory compliance, operational efficiency, and gaining knowledge about the technological advancements happening in HR analytics.
Based on enterprise size, the HR analytics market has been categorized into large enterprise and small and medium enterprise (SME), wherein large enterprises held the larger market share in 2018. This is attributed to the capacity of large enterprises to make considerable IT investments for deploying HR analytics solutions. In addition, as large enterprises generally have dispersed operations across the globe, they are compelled to deploy HR analytics solutions for appropriate hiring and retention and to measure employee performance.
On the basis of industry, the market has been categorized into banking, financial services, and insurance (BFSI), information technology (IT) & telecom, healthcare, education, energy & utilities, government, retail, and others, which include automotive, hospitality, oil & gas, entertainment, and logistics. Of these, in 2018, BFSI held the largest share in the HR analytics market. As financial organizations are struggling to attract young talent, to engage their existing employees and optimize performance, they are increasingly demanding HR analytics solutions.
Based on region, North America held the major share in the HR analytics market in 2018, which is primarily attributed to the presence of numerous large-scale industries with a highly skilled workforce. In addition, the increasing IT spending and technological advancements are some of the other factors that are supporting the growth of the market in the region.
HR Analytics Market Dynamics
The rising demand for workforce optimization is primarily driving the growth of the HR analytics market across the globe. Workforce optimization helps businesses make their operations more efficient and effective as it ensures that all aspects of the business are working together in harmony. Workforce optimization helps
Align resources and skills to a specific job and customer demand for faster turnaround
Capture performance data in a standardized framework for better decision making
Empower the HR to monitor the performance and contribution of employees
Track work progress through processing and identify those at risk of missing service goals
In recent years, HR analytics has emerged as a popular technique for workforce optimization through the analysis of organizational data. It can offer HR professionals a deeper understanding of the strengths and weaknesses of employees, future shifts, and the best way forward. As the worldwide workplace scenario witnesses multiple waves of skill shortage, coupled with the rising demand for new expertise types, effective workforce planning is essential to stay ahead of the competition. As a well-articulated workforce planning strategy can help organizations remain strong in the market, the demand for HR analytics is increasing globally.
The adoption of artificial intelligence (AI) and machine learning in HR analytics is one of the key factors offering growth opportunities in the market. Presently, the demand for AI is growing across the globe. For instance, the worldwide AI market is expected to reach almost $36.0 billion in 2025 from around $650.0 million in 2016 with a CAGR of 56.5%. AI could help HR leaders predict the impact of talent decisions, forecast employee flight risk, identify high-potential employees, unearth engagement issues, recommend learning courses, and more, which would help increase the workforce efficiency of organizations in the coming years.
HR Analytics Market Competitive Landscape
With the presence of numerous players, the global HR analytics market is highly competitive. However, few of the competitors, such as ADP LLC, SAP SE, Oracle Corporation, and Workday Inc., cumulatively held the major share of the market. Other prominent players in the market include MicroStrategy Incorporated, Sage Group PLC, Zoho Corporation, Kronos Incorporated, Visier Inc., Sisense Inc., and International Business Machines Corporation.