HR as a Service (HRaaS) Market Size (2023 - 2030)

The global HR as a Service (HRaaS) Market is estimated to be worth USD 6.8 Billion in 2022 and is projected to reach a value of USD 17.45 Billion by the end of 2030, growing at a CAGR of 12.5% during the forecast period 2023-2030.

Human Resources as a Service (HRaaS) refers to the benefit of outsourcing HR functions. HRaaS is often used as a turnkey solution, managed by a member of the management team who works in Human Resources, Operations, or Finance. This benefits the firm/company by refocusing on strengths to effectively build their business, while also improving the human capital management abilities of the team's Supervisors and Managers, therefore establishing a professional work environment in which one can recruit and retain the best personnel to achieve your goals. Aside from the long-term time and expense benefits, there is also employee-related risk mitigation to preserve the organization's image and assets.

The company greatly benefits from regaining focus on the core strengths to grow the business successfully, while improving the management skills of the organization, where one can attract and retain their employees to accomplish the shared goals.

Globalization has had such an influence that even small enterprises and start-ups are expanding into new markets to gain a competitive advantage. Over the years, this market has seen steady growth and will continue to lead during the forecast period.

Global HR as a Service (HRaaS) Market Drivers:

Reduced costs and scalability have played a huge role in boosting the growth of the market.

The capacity to considerably reduce expenses and save time is one of the primary advantages of employing HRaaS. HRaaS delivers integrated user interfaces with built-in programs and functionalities that may automate operations that were previously done manually by HR divisions, such as calculating payrolls or recording travel expenditures and leave records. This allows the focus on vital company activities and relieving from time-consuming tasks. In contrast, to on-premise Human Resource solutions, HRaaS requires less investment in building or maintaining IT and infrastructure and may significantly cut expenses and human intervention.

Minimization and effective management of risks is a key factor in driving the market growth.

Employment and labor law are two key areas where businesses might reduce risk through outsourcing. Employment and labor laws change regularly, and staying current on rules and regulations that have a substantial influence on the workplace may be a difficult undertaking. Outsourced HR specialists are responsible for staying informed of different federal and state employment rules and assisting firms in complying with these laws to prevent costly litigation brought on by employees. They also monitor and audit the organization's and its workers' policies and practices. Additionally, help regarding legal expertise, management, procedure, documentation work, awareness, and handbooks is provided.

Global HR as a Service (HRaaS) Market Challenges:

Data security, privacy, cultural change, increased employee turnover, information leaks, dependency and loss of control, and distance from employees are a few of the barriers that can hinder the growth rate of the industry.

Global HR as a Service (HRaaS) Market Opportunities:

Rapid technological advancements in the field of AI, Data Analytics, and Cloud Computing have been a boon to the market. Secondly, the demand has significantly increased persuading more youngsters towards R&D innovations. Thirdly, companies and firms are readily investing owing to the advantages associated. Furthermore, the learning and skill programs, enhanced employee satisfaction, and planning of the workforce have presented the market with an ample number of opportunities.

COVID-19 Impact on the Global HR as a Service (HRaaS) Market:

The pandemic had a mixed impact on the market. Lockdowns, social distancing, and movement restrictions were the new norm. This caused a shift towards online mode emphasizing remote work. More firms and companies had to go with the technology causing a digital transformation. The advantage of this market was significantly highlighted thereby becoming essential for organizations. However, due to the economic slowdown, budget restrictions and cost cuttings caused challenges to a few organizations causing hesitance to invest in the technology.

Global HR as a Service (HRaaS) Market Recent Developments:

• In May 2020, Oracle announced Oracle Analytics for Fusion HCM to enable HR teams to boost business performance.

• In April 2020, Kronos and Ultimate Software united to establish UKG (Ultimate Kronos Group), forming one of the leading cloud-based HR and labor management firms. The goal of this merger was to combine their expertise in workforce management, human resources, and payroll solutions.

HR AS A SERVICE MARKET REPORT COVERAGE:

Global HR as a Service (HRaaS) Market Segmentation: By Deployment Model

• Cloud-Based

• On-Premises

The cloud-based model is the largest and fastest-growing segment in the HR as a service market. Due to the major shift towards remote work, there have been constant and rapid updates, accessibility, affordability, and reduced burden causing notable profits to the market.

Global HR as a Service (HRaaS) Market Segmentation: By Organization Size

• Small and Medium-sized Enterprises

• Large Enterprises

Large enterprises are the largest growing segment due to the larger workforce and complex requirements, and implementation of robust solutions to optimize their business capabilities. Additionally, they have well-equipped finances further boosting the market growth. Small and Medium-sized enterprises are the fastest growing due to the shift towards working from home, increasing awareness about the uses, and scalability, and having more focus on core work.

Global HR as a Service (HRaaS) Market Segmentation: By Service Type

• Core HR

• Talent Management

• Employee Engagement

• Workforce Planning and Analytics

• Others

Core HR is the largest growing segment owing to tasks like payroll management, workforce management, performance management, and compliance tracking. Talent management is the fastest growing due to the services offered like recruitment, onboarding, time and attendance tracking, and employee benefit management.

Global HR as a Service (HRaaS) Market Segmentation: By End-User

• IT and Telecom

• Healthcare

• BFSI

• Retail

• Manufacturing

• Others

The IT and Telecom sector is the largest growing segment due to increased demand, skilled professionals, extensive knowledge and research, insights, and digital transformation. Healthcare is the fastest growing because of expansion, larger workforce, demand, and regulatory compliance and staffing needs.

Global HR as a Service (HRaaS) Market Segmentation: By Region

• North America

• Europe

• Asia-Pacific

• South America

• Middle East & Africa

North America is the most dominating region due to its economy, technological advancements, companies, and diverse industries. USA and Canada are the top leading countries. Asia Pacific is the fastest growing owing to developments, demand, innovations, economic growth, and digital transformation. China, Japan, India, and Australia have shown significant improvements and growth.

Global HR as a Service (HRaaS) Market Key Players:

1. ADP

2. Workday

3. Ceridian

4. Oracle HCM Cloud

5. BambooHR

6. Gusto

7. SAP SuccessFactors

8. Paychex

9. Cornerstone OnDemand

10. Ultimate Kronos Group