Current Market Perspective
The current market perspective for Core HR and Payroll centers around its ability to simplify and optimize employee management and payroll operations with unmatched multi-country availability and support. Data from several leading independent market analysts reveal that the Cloud HR market is growing steadily, and the market for end-to-end solutions for midsize companies continues to rapidly grow.
Trends
Research by independent market analysts has identified three major trends in the area of Core HR and Payroll:
Artificial Intelligence (AI) and its technological impact on work: AI is by far the most significant current trend impacting the world of Human Resources. AI technologies and platforms have permeated every area of HR, including recruitment, development, employee experience (EX), and career management. AI tools are being embedded in learning systems, recruiting platforms, EX systems, call centers, and in our daily roles as HR professionals. This underscores the critical role of AI and technology in reshaping HCM strategy and work practices and highlights a significant market demand for AI-enabled HR technology solutions.
According to Gartner, by 2027, employees will initiate 30% of all HCM suite transactions through natural language command; at least one AI application will assist these transactions.
Employee experience and engagement: Analysts see an evident trend towards prioritizing holistic employee well-being and recommend that solutions should aim to improve the overall employee experience while integrating well-being and diversity initiatives.
User data privacy, security, and AI governance: Highlighting concerns in data management, this segment indicates a market requirement for robust data security and AI governance solutions. The core message is that there is growing complexity and importance of data management and governance in the modern workplace, particularly with the increasing use of Generative AI (GenAI) and advanced analytics in HCM.
Customer Needs
In keeping with these trends, customer needs continue to evolve to adapt to changing markets. Some examples of currently recognized needs in the HR area include:
Global payroll automation: To manage payroll across multiple jurisdictions, customers need automated solutions that ensure compliance with local regulations and streamline payroll processing for a global workforce.
Data extensibility: HCM applications need to offer data extensibility, allowing seamless integration within HCM systems and the broader corporate digital ecosystem. This facilitates better data flow and analytics across the organization.
Cross-border compliance: With the increase in flexible work arrangements and global business expansions, customers require solutions that manage cross-border compliance effectively, ensuring adherence to various regional regulations.
Human oversight in AI: Despite the rise of AI automation, the need for human oversight remains critical. Customers require systems that incorporate human judgment, empathy, and ethical considerations in the decision-making processes.
Challenges
Any HR solution aiming to move forward with cloud and AI technology will only be successful if they take into account certain challenges in the current market. For example, while there is no doubt that the AI trend is making strong headway in the market, concerns about data security, algorithmic bias and compliance with data privacy laws are a barrier to adoption of AI automation in many organizations. In many countries, the complexity of local legislation, collective agreements, and company policies means AI-generated responses must meet strict local compliance standards, which require additional layers of validation, many of which cannot yet be automated.
Another major challenge lies in the globally shifting talent market, characterized by increased workforce mobility and the need for agility to meet HR requirements for workers around the world. This is compounded by the need to comply with local, national, and regional laws, industry regulations, and cultural expectations, just to name a few. Payroll, in particular, involves navigating regulatory complexities among organizations with global workforces. Real-time payroll solutions face the challenge of complying with a myriad of local regulations and industry specific rules, such as collective bargaining agreements and company policies.