Top 10 HCM Software Vendors In Payroll Market Segment

Payroll market segment is expected to reach $2530 million by 2020


This report ranks the Top 10 HCM software vendors in Payroll market segment as part of Core HR product group. These top 10 vendors are ranked by their latest annual product revenues attributable to that particular market segment.

It also summarizes the market outlook and our forecast assumptions at the group level and for that segment, respectively.

The top 10 Payroll software vendors accounted for 62% of the Payroll market segment which topped $2396 million in license, maintenance and subscription revenues.

Here are the Top 10 HCM software vendors in Payroll market segment based on their latest annual product revenues. Check the methodology section below as well as our FAQ section on how we conduct research for these Top 500 market reports.

Rank Vendor 2015 Product Revenues In Payroll Market Segment, $M 2015 Share In Payroll Market Segment, %
1 ADP Subscribe Subscribe
2 Paycom Subscribe Subscribe
3 Paychex Subscribe Subscribe
4 Subscribe Subscribe Subscribe
5 Subscribe Subscribe Subscribe
6 Subscribe Subscribe Subscribe
7 Subscribe Subscribe Subscribe
8 Subscribe Subscribe Subscribe
9 Subscribe Subscribe Subscribe
10 Subscribe Subscribe Subscribe
Other Subscribe Subscribe
Total 2396 100%

Source: Apps Run The World, December 2016

Core HR Outlook

Here are our current market forecast for the Core HR segments through 2020. Through our forecast period, the Payroll market segment as part of Core HR product group is expected to reach $2530 million by 2020, compared with $2396 million in 2015 at a compound annual growth rate of 2%.

Click on each of the following segments to drill down the vendors that cater to those markets.

Exhibit 1 – Core HR Market Forecast 2015-2020 By Segment, $M

Core HR Segments, $M 2015 2020 CAGR, %
Benefit Administration 568 711 7%
Compliance 280 317 4%
Core HR 2967 3027 1%
Payroll 2396 2530 2%
Pension Administration 60 71 5%
Total 6271 6656 1%

Source: Apps Run The World, January 2017

In Core HR, which also includes performance management, traditional tools for personnel administration may give way to new Core HR apps that represent a dynamic system of record for multiple corporate functions from finance to legal in addition to HR.

Traditional Core HR applications vendors, which have engendered an array of existing and legacy systems, now face increased competition from conventional HCM companies including many that are migrating from HR outsourcing to HR technology selling and servicing via the Cloud. SAP, Oracle and Infor are logging heads with ADP, Paychex and Ceridian on a regular basis.


Other BPOs are beefing up on learning development to better differentiate themselves from competition.

Similarly, one of the biggest payroll service providers in the UK, MHR, formerly Midland HR, has invested heavily in HCM applications development. Currently it offers core HR, time and attendance and payroll applications to a large number of companies in the UK. Its payroll service already covers 10% of the UK workforce, or three million employees.

In 2016, Midland changed its name to MHR as it started laying the groundwork for global expansion including the US market. Currently MHR offers payroll services in Egypt, Germany and France.

Other vendors like Software Europe are aiming to transform the Core HR market, or general-business processes for that matter, by collapsing multiple functional areas into one via Cloud delivery. Software Europe now sells Cloud-based apps that span across human resources, finance, procurement and legal, allowing customers to develop more efficient processes by managing people, expenses, and contracts through a consolidated system that hides complexity along the way.

A system designed for HR can be extended to adjacent areas enabling users to configure workflows easily to accommodate similar processes such as approval of minutes for legal department and requests for budgets in finance, all of which can be accessed via the Cloud.

That kind of cross-functional aspect of Cloud delivery has made the likes of Gusto (formerly Zenpayroll) and Zenefits possible, especially in selling an integrated set of Core HR, payroll, expense management and benefits administration apps to midmarket where convenience and value trump features and technology advances.

In September 2015, ZenPayroll changed its name to Gusto as it continues to scale out its reach beyond payroll by addressing health benefits and workers’ compensation needs of millions of small and midsized businesses. Already Gusto has secured more than 40,000 customers running its payroll and HR software, doubling its customer count over the past few years. In September 2016, Gusto announced a full range of HR, onboarding, and benefits software with a $39 monthly base price and $6 per employee monthly fee.

Zenefits, which has raised more than $580 million in funding since its founding in 2013, now has more than 20,000 customers using its HR, payroll and benefits apps.

Then there is the freemium model that aims to challenge the incumbents by breaking down the pricing barriers. Flock is an all-in-one software platform to manage HR, Benefits, and Compliance. The free software is being subsidized by its partner network of insurance brokers that sponsor the benefits administration and compliance modules. Similarly, Goco has raised over $1.6 million in funding to go after the Zenefits installed base with a freemium approach to help sell its HR, benefits and payroll applications. Already, Goco said it has serviced nearly 30,000 companies.

Core HR Market Definitions and Forecast Assumptions

Human capital management includes such functions as eRecruiting (applicant tracking), Onboarding (employee profile), Performance Management (assessment, goal management, succession planning), Core HR (personnel administration, benefits, compensation management, payroll), Workforce Management (absence management, activity tracking, scheduling, time and attendance), and eLearning (learning management system). For complete definition, please see below or visit our Taxonomy page.

Drivers behind the growth of Core HR applications market include

  1. Companies, especially those that operate in multiple countries, are searching for a system of record to minimize attrition, groom talented employees, while addressing complicated compliance requirements.
  2. Digital transformation in response to new user demands, market forces.
  3. Restructuring of HR processes to accelerate for next decade.
  4. Heavily modified Core HR systems entail rising costs
  5. Employers are reevaluating performance management process by giving workers continuous feedback with consistent and transparent metrics

Inhibitors include the following trends that cut across multiple Core HR segments:

  1. HR analytics fall short of expectations
  2. Potential changes to Affordable Care Act and other key legislations could undermine HCM’s near-term growth. Shifting regulatory and compliance demands prompt stopgap measures.
  3. For eLearning vendors, expanding a content library is a challenge. The same applies to fending off the ubiquity of Youtube and Lynda from LinkedIn. The issue is whether users are better off with courseware or do-it-yourself microlearning development tools.
  4. Eroding trust in the workplace, lack of employee engagement; Bring Your Own Device trend engenders Core HR system distrust as well.

The move toward continuous, ad-hoc and spontaneous feedback process will entail micro services that assimilate project management and team collaboration, requiring HR performance management apps vendors to combine personalized evaluation and unstructured communication. The challenge is to deliver tangible benefits for small work groups, while still using the same metrics to drive process improvement for the entire organization.

Further Readings

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Similar to any of the hundreds of reports that we have published since 2010, HCM Top 500 is a labor of love. Since 2013, our team of researchers have been conducting rigorous research on thousands of HCM vendors, surveying them quarterly, reviewing their products at even shorter intervals because of the compressed Cloud release cycle, and discussing HR vision with their customers to better understand user needs as well as different paths to upgrade and replace their existing systems.

Each year we also attend many industry-wide and vendor-specific user conferences – HR Tech, Dreamforce, SAPPHIRENOW, Oracle Open World, just to name a few, to gauge what customers are looking for.

Throughout this process comes a rich database of more than 2,000 HCM vendors as well as over 50,000 HCM customers that have been touched one form or another through regular surveys, phone and in-person interviews, email exchanges, and social media interactions, etc.

On a proactively basis, we contact the vendors directly to tabulate their latest quarterly and annual revenues by HCM segment, vertical market, revenue type, region, country and customer size.

We supplement their written responses with our own primary research to determine quarterly and yearly growth rates in each of the 22 segments and 21 verticals, in addition to customer wins to ascertain whether these are net new purchases or expansions of existing implementations.

Another dimension of our quantitative research process is through continuous improvement of our customer database, which stores more than one million records on the enterprise software landscape of over 100,000 organizations around the world.

The database provides customer insight and contextual information on what types of HCM, enterprise software systems and other relevant technologies are they running and their propensity to invest further with their current or new suppliers as part of their overall HCM and IT transformation projects to stay competitive, fend off threats from disruptive forces, or comply with internal mandates to improve overall enterprise efficiency.

The result is a combination of supply-side data and demand-generation customer insight that allows our clients to better position themselves in anticipation of the next wave that will reshape the HCM marketplace for years to come.

HCM Market Taxonomy

From hire to retire, HCM continuum extends across 22 markets, 21 verticals
From hire to retire, HCM continuum extends across 22 markets, 21 verticals

Definition of Human Capital Management (HCM) Applications

Core HR and Performance Management
Core HR and Performance Management Description
Personnel & Organization Management Core human resource management system, personnel records, HR master file, accruals, organizational development, org chart visualization
Payroll Payroll processing, tax filing, language support, country-level updates, payslip calculations, automatic deductions and other government requirements for proper disbursement of employee compensation.
Benefits Administration Benefits and health administration. Plan and design benefits lifecycle, billing and payment. Carrier solutions are also included for integration purposes.
Pension Administration Pension and retirement fund(401K) administration as well as software that helps manage profit sharing plan, defined benefit plan, or cash balance plan.
Compliance Compliance, regulatory updates and reporting including such laws as Affordable Care Act, Overtime Regulations, Fair Labor Standards Act
Performance & Goal Management HR performance management applications are designed to automate the aggregation and delivery of information pertinent to the linking of job roles and the mission and goals of the organization. More specifically, the system allows users to automate the performance review process by using mechanisms such as training and key performance indicators to continuously track and monitor the progress of an individual employee, work team, and division. Some of the key features include: Assessment of individual career objectives and organizational skills gaps that impede performance and job advancement. Continuous reviews and establishing milestones. 360-degree evaluation and real-time feedback. Performance appraisal automation. Goal setting and tracking. Employee surveys. Alignment of human assets to corporate objectives. Fast tracks for top performers.
Learning & Development Learning management systems refer to applications that automate the administration, tracking, and reporting of training events. Other tools may include courseware and other delivery, management, tracking, or integrated solutions whose focus is on the learning environment, including learning content management systems. Career development tools include apps for coaching, mentoring, employee development planning, and diagnosing of development needs.
Succession & Leadership Planning Identify and address current and potential talent gaps to create succession management reporting. Develop and maintain a continuous supply of internal talent to fill critical job roles. Improve employee engagement through digital tools to advance career path development opportunities.
Compensation Management Compensation management applications are designed to automate the process of providing cash, noncash, variable and nonvariable compensation to employees through advanced modeling, reporting, and built-in interfacing to payroll processing systems. Other key features include seamlessly manage compensation budgets and allocation in a single, shared tool. Streamline pay recommendation workflows and approvals. Support multiple pay and incentive practices. Ensure budget compliance and adherence to compensation guidelines. Quota and territory management. Calculation and distribution of commissions, spiffs, royalties, incentives to employees, and channel and business partners. Compensation analysis using internal and external data for retention risk analysis. Linking salary, commission and incentives — cash and noncash — to business objectives. Payroll and payment engine interfaces. Account payables integration.
Talent Acquisition 
Talent Acquisition Description
Applicant Tracking Applicant tracking software automates such functions as management of resumes, applicant information, scoring, workflow, matching, search, interview scheduling, job descriptions, EEOC reporting, job postings and notifications
Recruiting Recruiting applications are designed to automate the recruitment process of salaried and hourly employees through screening and skills assessment, as well as automated selection processes to improve hiring pipeline by identifying talent inside or outside the organization. Other key features include: Manage skills inventories. Create and manage job requisitions. Coordinate team collaboration within hiring processes. Video Interviewing, team building and digital coaching.
Marketing Applications designed to attract and engage candidates and employees. Other tasks automate functions such as candidate relationship management apps, career site technology, social recruiting, employee referrals, branding, video engagement, campus recruiting and internal hiring
Contingent Labor Management Processing of hiring of contingent labor, search, skills matching, assessment, interview scheduling, negotiation of rates, approvals, project milestone payments, project completion tracking, performance ratings
Sourcing Facilitate resource planning for staffing firms as well as vendor managed system, allowing for front office integration for employment agencies as well as talent acquisition apps designed for staffing firms.
Onboarding Applications designed to deploy workers to appropriate jobs, projects, or teams for accelerated on-boarding.
Workforce Management
Workforce Management Description
Absence and Leave Management Absence management applications offer automated features to support employee leave management, employer authorized leave, Short-Term-Disability/Workers’ Comp coordination, federal and state compliance, customized leave correspondence, medical certification processing, insurance premium payment tracking as well as employee self-service capabilities. Leave Management supports compliance activities related to government regulations such as the Family and Medical Leave Act in the United States and other local leave laws in different countries.
Workforce analytics Workforce analytics are used to analyze compensation, benefits, and other employee variables. These applications can also be used to analyze and optimize labor allocation for particular projects.
Fatigue Management Fatigue Management apps help automate key facets of fatigue risk mitigation, enforcing employee work-hour limits and aligning with fitness for duty best practices. Similar apps may act as electronic work diaries for real-time reporting and compliance with transportation laws.
Hardware (Time Clock) Time capture is the hardware platform that provides authentication features for clock-in and clock-out times, meal and rest breaks, as well as timesheet and payroll reporting and compliance.
Workforce Scheduling Products are designed to Increase forecasting accuracy by factoring in a variety of methods and historical patterns. Create optimal schedules to meet customer demands, while reducing costs and maximizing resources
Task Management Task Management offers labor management capabilities such as task-based and project-based activity tracking as well as measurement and reporting functions against performance standards like engineered labor standards, team standards and reflective standards.
Time & Attendance Time and Attendance applications are designed to automate employee time tracking in different locations, help reduce overtime expenses, improve payroll accuracy, eliminate pay errors and adjustments, along with the need to simplify and optimize administrative tasks and complex rate calculations by making available accurate and current labor data and full audit trail of payroll data.