As 2023 winds down, many set aside time to reflect on the year that was, as well as the year ahead. The human capital management (HCM) industry continued to see elevated interest and importance from global businesses, as the labor and human resources (HR) landscape continued to trudge into a “new normal” in the post-pandemic climate. Whether ensuring proper payroll compliance for remote workers across various regions to attracting and retaining top-tier labor talent, HR teams have been juggling several issues throughout the year.
According to market research firms, those trends are likely to continue in 2024 and beyond. This bodes well for HCM service providers, who are projected to see their strong steady growth continue through the end of the decade. Let’s take a deeper dive into the HCM industry projections and one such company that stands to benefit from the continued demand for human capital solutions:
Research Firms: HCM Industry CAGR Estimated Between 7%-9% Starting In 2024
Several market research firms have already issued their HCM industry estimates for 2024 and beyond. While the specific estimates vary, the consensus continues to favor North America as the leading market for the HCM industry. However, the Asia Pacific market is expected to see high growth for HCM, as the region begins to adopt new technologies and policies.
According to Expert Market Research (EMR), the global human capital management industry is estimated to grow at a CAGR of 8% between 2024 and 2031. EMR states the growth outlook is largely being driven by technological advancements, such as artificial intelligence, which is giving rise to the demand for automating more processes within the core HR functions. This is seen as a strong potential benefit to operational efficiency, as well as cost-cutting efforts.
Precision Reports has issued its estimates for the global HCM industry, which point to a 9% CAGR between 2024 and 2031. The market research firm currently estimates the global industry to be valued at over $21.7 billion and likely to reach a valuation of $36.4 billion by the end of 2031.
CHRO Survey Highlights Drive For Improvements In Employee Experience & Culture, AI Solutions
Chief Human Resource Officers (CHROs) are stating their plans for 2024 to include continued development of employee experience, as well as investment in AI, according to a recent survey published by The Conference Board US Human Capital Center. In the survey, 75% of respondents stated one of their 2024 priorities was to improve employee experience and organization culture. This suggests that CHROs are looking to improve their employee retention and attraction, to recruit top-tier workers in a tight labor market. Later in the survey, 56% of CHROs would confirm that retaining top employees was a major priority for 2024.
Despite news headlines suggesting companies trying to get employees back into the office, CHRO respondents in the survey did not make this a priority. Only 10% of surveyors said they would look to bring back workers into the office full-time. Conversely, 52% of those surveyed said they are planning to improve hybrid working initiatives and productivity.
Lastly, the survey points to an increased priority to utilize technologies, such as AI, to help automate more HR processes and functions. 61% of CHROs surveyed said they are investing in AI to streamline HR.
Taking a step back, the survey with CHROs across the United States appears to validate the growth estimate theses of the market research firms. Technological advancement for the goal of improving efficiencies and HR functions, combined with key employee retention are important factors for businesses heading into 2024.
Asure Software Stands To Benefit From These CHRO Priorities
Asure Software (NASDAQ: ASUR) is one such cloud-based human capital management service provider that stands to see continued benefits from overall growth in the industry. Throughout 2023, Asure has launched several new products and services specifically aimed at helping small and medium-sized businesses (SMBs) cut costs by streamlining operations, as well as improving employee retention and recruitment.
In partnership with companies like H&R Block (NYSE: HRB), Intuit (NASDAQ: INTU), Amazon’s (NASDAQ: AMZN) AWS, ZayZoon, Harbor Compliance, Lendio, and more, Asure has worked to deliver its SMB clients with a wide range of services across payroll & compliance, employee taxation, employee benefits & 401k, remote worker compliance & services, on-demand earned wage access, treasury compliance services, access to funding service providers and more.
During Asure’s recently-announced third-quarter financial results, the HCM provider reported a 34% y/y boost in revenues to $29.4 million. The company also beat its bottom-line estimates with an adjusted EBITDA of $6.2 million, which represented an improvement of $4.4 million in the third quarter of 2022.
As the fourth quarter of 2023 nears its completion, Asure’s management has reiterated their full-year 2023 guidance of $118 million and $120 million in revenue on adjusted EBITDA margins within 19% to 20%. For full-year 2024, the HCM provider is projecting revenue between $125 million and $129 million on an adjusted EBITDA margin range of 20% to 21%.
Conclusion
In conclusion, the Human Capital Management (HCM) industry is poised for significant growth in the coming years, driven by technological advancements and evolving HR priorities. As 2023 draws to a close, the industry outlook for 2024 and beyond remains robust, with market research firms predicting a steady growth rate. North America is expected to continue leading the market, but significant growth is also anticipated in the Asia Pacific region.
Chief Human Resource Officers (CHROs) are increasingly focusing on improving employee experience and culture, alongside the integration of AI technologies to streamline HR processes. This aligns with the market growth projections and emphasizes the importance of technological innovation and employee-centric strategies in driving the industry forward.
Asure Software, a key player in the HCM field, is particularly well-positioned to capitalize on these trends, as evidenced by its strong financial performance and strategic partnerships. The company’s focus on small-to-medium-sized businesses and its range of services addressing payroll, compliance, and employee benefits, positions it to benefit from the industry’s upward trajectory. With a positive financial outlook and a clear focus on adapting to industry trends, Asure Software is set to be a significant beneficiary of the ongoing growth in the HCM sector.
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