AI technology and its impact on the HCM market

Digital transformation is an ongoing process, and the resulting “war for talent” is still a major issue. Gaining and, more importantly, retaining skilled workers has come to be one of the major competitive advantages of the information age. Hence human resources management has evolved from being strictly operational to becoming a strategic option in order to win, develop, and retain experts and high-profile staff in an increasing number of companies. Therefore, the key role of HR departments is no longer just administrative and legal tasks; the focus has shifted to fully supporting an organization’s digital journey.

As the focus of HR shifts from administrative tasks to improving workforce productivity, modern HCM solutions with embedded artificial intelligence (AI) technology can help organizations streamline processes and increase employee efficiency, and they can help supervisors take more informed workforce-related decisions. Across the HR value chain, there are a number of different use cases for AI. The application areas of AI in HCM are more or less “holistic”, as the technology has the potential to change the entire HCM value chain, from recruiting and onboarding to retaining and offboarding.

Thus far, AI has been used in HR to automate repetitive, low-value tasks and increase the focus on more strategic work. AI tools automate common HR tasks such as benefits management and handling frequent questions or requests. Chatbots are one example of how AI is simplifying HR-related processes. For instance, employees can use chatbots to get answers to their HR-related administrative questions; potential applicants can use chatbots to receive information about the recruiting process or the organization they want to apply to. This way, HR professionals are relieved of manual tasks and can focus on more high-value tasks.

There is widespread fear that the addition of AI capabilities might make a large part of HR professional jobs redundant by increasing automation and digitalization. However, the exact opposite is the case – modern HCM tools support HR professionals in their daily tasks, thus freeing up time for human interactions.

The market for human capital management solutions is growing fast due to the need of companies to evolve their HR applications and support modern HR management methods. As AI technology has been propagated as an accelerator of business applications in the past few years, it is not surprising that the leading HCM providers have incorporated AI features, making them an integral part of their products and, more importantly, also their marketing strategies.

If you want to find out more about existing use cases and receive an outline of the major software players in this field and the associated implications for IT service providers, please click here.