Compensation Software Market is segmented By Type (On-Premise Compensation Software, Cloud-Based Compensation Software), By End-User (SMEs, Large Enterprises, Others), and By Region (North America, Latin America, Europe, Asia Pacific, Middle East, and Africa) – Share, Size, Outlook, and Opportunity Analysis, 2024-2031
Market Overview
The Global Compensation Software Market is expected to grow at a CAGR of 8.3% during the forecast period (2024-2031).
The benefits offered by compensation software, which include optimized utilization of company revenue, enhancing positive reinforcement, boosting employee performance, and improving company reputation during talent acquisition are expected to fuel growth in the market. Compensation software involves the use of digital technology to calculate and offer financial and non-monetary benefits to employees and recruits by salaries, with the purpose of enhancement of employee engagement and optimization of company dollars. The rise in adoption of digital HR technology, which brings together smartphones, smart analytics, and cloud services together would present new expansion opportunities to key market players. The report covers all the major trends and drivers playing a vital role in the growth of the Compensation Software market. The global Compensation Software market has been segmented based on geography, type, and end-user.
Market Summary
| Metrics | Details |
| Market CAGR | 8.3% |
| Segments Covered | By Type, By End-User, and By Region |
| Report Insights Covered | Competitive Landscape Analysis, Company Profile Analysis, Market Size, Share, Growth, Demand, Recent Developments, Mergers and acquisitions, New Product Launches, Growth Strategies, Revenue Analysis, and Other vital insights. |
| Fastest Growing Region | Asia Pacific |
| Largest Market Share | North America |
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Market Dynamics and Trends
The increasing demand for automated compensation management processes which simplify administration processes by reducing errors caused by manual work coupled with saving organizations’ money and time while improving efficiency and productivity is expected to drive the global compensation software market over the forecast period.
In addition, adopting compensation software ensures that the incentives provided to employees are in line with the recent market trends, which helps organizations in maintaining low attrition rates. Moreover, employers can also identify top-performing employees by their work management, thus rewarding such employees for their effort. Also, it improves the workplace environment of the company, which plays a significant role in the performance and productivity of an employee. Thus, more companies are looking to adopt compensation software tools into their organizational activities.
For instance, in November 2018, Express Scripts Holding Company announced the launch of myDataSense, a new analytic tool to improve worker compensation for pharmacy services to lower costs and improve patient safety.
However, the tedious process, coupled with the inability of companies to match the best compensation practices of the industry, might hamper the market growth.
Market Segmentation Analysis
By Type, the global Compensation Software Market is segmented into cloud-based and on-premise compensation software. In 2018, on-premises compensation software accounted for a significant share of the global compensation software market. Benefits such as complete control over the critical data and the availability of installation, data migration, and employee training services as part of the software implementation, will contribute to the growth of this segment over the forecast period.
However, cloud-based compensation software is expected to witness a significant growth of over 12%, during the forecast period (2019-2026). Cloud computing is the act of using an interconnected network of Internet-hosted remote servers to manage, store, and process data. In cloud computing, data is accessed over the Internet rather than through a computer’s hard drive. Therefore, it is over 40 times more cost-effective for SMEs. Moreover, as part of the ‘cloud-first’ policy, 48% of U.S. Government agencies are using cloud services.
By the End-user industry, the global Compensation Software Market is segmented into Small and Medium Enterprises (SMEs), Large Enterprises, and Others (Educational and Government Institutions). In 2018, the Largen enterprises segment dominated the compensation software market and is expected to retain its dominance over the forecast period (2019-2026).
However, shifting preference towards automated compensation processes instead of manual processes coupled with the rising number of start-ups adopting automated workflow solutions is expected to impact the SME segment positively, therefore, resulting in a higher growth rate than the Large enterprise segment during the forecast period.
Market Geographical Share
By geography, the global Compensation Software Market is segmented into North America, Asia-Pacific (APAC), Europe, South America, and the Middle East and Africa (MEA).
In 2018, North America accounted for the majority share in the global Compensation Software market. With the presence of key market players in the area along with a higher local adoption rate of compensation software, the region is expected to maintain a steady growth rate during the forecast period. In addition, technological advancements and new user-friendly software launches by market players are expected to support the growth of the global market in this region. For example, in December 2018, Zenefits launched First Compensation Management App for small- to mid-sized businesses.
However, the Asia Pacific compensation software market is expected to witness the highest CAGR over the forecast period, owing to increasing awareness, rapid industrialization, and innovative product launches across various countries in this region. As an increasing number of startups and government support for SMEs in developing countries like China, India, and Indonesia, have positively affected the market. The adoption of compensation software in the aforementioned countries in the region is highest due to the growth of startups and micro-enterprises and the shift towards the adoption of automated workflows.
Market Companies
The global Compensation Software Market is moderately concentrated with the top 10 market participants accounting for the majority share in the market. Creating consumer awareness through aggressive marketing strategies and greater visibility of products across various industries are other steps taken by market participants to generate demand.
Some major players in the market are Oracle Corporation, PayScale, Inc., SAP SE, The Ultimate Software Group, Inc., and IBM. Other prominent players in the market include Automatic Data Processing, Inc., beqom SA, BullseyeEngagement LLC, PeopleFluent, Inc., and Workday, Inc.
The companies are focused on the formation of strategic partnerships and collaborations to expand their geographical reach and increase company revenue. For instance, in November 2018, HRsoft announced that it had joined Ultimate Software’s UltiPro® Developer Network. The new partnership gives HRsoft and Ultimate the ability to integrate their solutions to make it easier for mutual clients to exchange data between the UltiPro HCM solution and HRsoft’s compensation management software solution, COMPview.
