Forrester recently published The Human Capital Management Solutions Landscape, Q2 2025. We took a peek at 41 vendors, the new set of core use cases for human capital management (HCM), and what new extended use cases are picking up in the market, along with the traditional and new HCM capabilities.

The global HCM market size was valued at $31.34 billion in 2024. The market is projected to grow from $34.12 billion in 2025 to $64.97 billion by 2032. Global organizations are signaling a significant strategic priority on talent and workforce management, evidenced by projected substantial increases in technology investments across HR, recruitment, workforce management, and talent intelligence over the next five years. This investment reflects a critical understanding of the direct link between talent optimization and business outcomes. While a best-of-breed approach has historically been prevalent, we’re observing a clear and accelerating shift toward full HCM suite adoption across both large and midmarket enterprises in most industries. This trend is driven by the need for integrated data, streamlined processes, and a unified view of the workforce, suggesting a move away from siloed solutions to a more holistic and strategic platform approach. The dominance of SaaS HCM solutions underscores a demand for agility, scalability, and continuous innovation in managing an organization’s most valuable asset – its people. 

A Few Key Observations From The Recent HCM Landscape:

The rise of flexible workforces and total workforce management. Today’s workforce now comprises full-time employees, contingent workers, and freelancers and gig workers. Gone are the days where HCM solutions only focused on full-time employee data management. Today’s HCM solutions try to compete with Beeline and Fieldglass. In a tough macroeconomic and layoff-ridden environment, being open to contingent workers and gig workers helps modern businesses to be agile, scalable, and profitable.

Digital workers are coming. While many find this concept alarming and detest the anthropomorphizing of a “piece of software” or a “digital agent” – it’s inevitable. This is now not a matter of “if”, it’s a matter of “when”. The traditional HR org chart consists of positions with roles, responsibilities, and skills to perform a specific job function. Today we know with certainty that AI and automation will impact every job to a varying degree. Every person occupying a position will have AI agents and automation take over certain job functions and there’s no better system than a HR system to help define, control, and manage these agents. It will only be a matter of time until some HCM vendors provide comprehensive, secure, and advanced governance, risk, and compliance controls to manage the digital workforce of tomorrow. This will trigger the c-suites to accept and adopt the concept of digital workers in order to meet their fiduciary duty toward their board and investors to ensure their organizations are as automated as possible with a rebalanced workforce.

The marketplace economy is here and maturing. Today’s mature HCM vendors have developed massive underlying platforms that are highly extensible, which enables independent third-party software vendors, partners, and even customers to develop low-code/no-code functional or vertical software solutions and sell them to a wider audience, creating a huge buy-and-sell vendor marketplace. This trend is picking up rapidly and is extremely lucrative to HR vendors, partners and customers, creating a highly incentivized ecosystem and economy for all participants.

HCM evolves to include spend, identity, and IT asset management. There’s been an increased emphasis and heavy demand on unified business operations across the organization rather than siloed systems and data. HCM being the employee system of record plays a key role and acts as the connective tissue between systems. It provides the ideal foundation to ensure that employee data flows seamlessly across the enterprise, even as an employee moves through the organization. Many vendors are exploring knowledge graph semantics to make this happen. The new HCM model now covers some aspects of spend management, such as expense management, bill pay, and corporate cards; some aspects of identity and access management, such as a controller of employee identity; and IT asset management to manage worker assets and devices across the organizations.

Payroll finally gets its innovation moment thanks to consumer-grade fintech! Payroll is always viewed as highly transactional, compliance driven, extremely risk averse, and boring enough to never be considered as an ideal candidate for disrupting innovations. For decades, no auditor and controller or CHRO wanted to take on the liability of experimenting with payroll. Beyond cloud-based, multicountry payroll and global payroll engines, there weren’t many changes to this segment. However, newer consumer-grade fintech innovations – such as like paycheck-linked lending and bill pay, earned wage access, real-time pay, dynamic direct-deposit switching, improved credit scoring, financial wellness, and automated verification of income and employment – are becoming increasingly popular, driven by the SMB market.

Exciting news! The publication of this HCM landscape kicks off the Forrester Wave™ for HCM Solutions. I’m looking forward to spending the next four months evaluating a select group of market-leading HCM vendors across their key offerings and product strategy. Stay tuned for the Forrester Wave™ publication later this year! Meanwhile, have a look at the HCM landscape report here.

For more insights from the report, information on any of the vendors discussed in the report, and overall HCM market trends, please book time with me (an inquiry or guidance session).