HR and Payroll Software
Business for Sale Industry Economics
2003 - 2019
2019 - 2025
The HR and Payroll Software industry sells human resources, payroll, and recruitment software to businesses. The industry generates revenue through the sale of new software, software license updates, and subscription fees for online applications.
Businesses use the software to streamline administration and collate data while reducing the risk of litigation and other compliance issues. Companies also use the software to control labor costs, minimize risk and manage personnel.
Over the five years to 2019, the industry has experienced robust growth, with revenue rising at an annualized rate of 9.9% to $9.9 billion. The industry has benefited especially from increased private investment in software and the trend of businesses bringing HR services in-house to cut costs.
Operators in the HR and Payroll Software industry sell HR, payroll, and recruitment software to businesses. Industry revenue is generated from new software sales, software license updates, and subscription fees for online applications.
Over the five years to 2019, revenue from the HR and Payroll Software industry has increased at an estimated annualized rate of 9.9% to $9.9 billion. The ongoing transition to cloud-based systems has revolutionized the industry during the period.
Businesses have invested in new cloud-based software products as they replace their core infrastructure software, which has also bolstered industry demand.
Furthermore, human capital or talent management software products increasingly provide integrated services for performing recruitment, payroll, training management, compensation, and workplace planning within one platform, which has prompted businesses to reinvest in these systems.
Over the five years to 2024, the research estimates that revenue for the HR and Payroll Software industry will increase at an annualized rate of 7.8% to $14.5 billion.
The industry will benefit from a range of broadly positive economic conditions such as rising corporate profit, which will encourage investment in information technology and software.
Furthermore, a strong labor market will continue to represent an opportunity for industry players over the next five years, even though unemployment is expected to increase slightly.
With growing employment and an expected increase in the number of US businesses during the period, operators will benefit from a greater number of new users.
This industry develops software for human resource (HR) and payroll management. This service is provided online or through proprietary software.
The capital intensity of the HR and Payroll Software business is low. In 2019, operators usually spend $0.05 in capital expenditure for every $1.00 spent on salaries. Property, computers, and office furniture are the main areas of capital investment.
In many ways, the software is an intangible product; creating high-quality software necessitates both skilled workers and time. Labor costs are high in relation to income because industry operators compete for in-demand software engineers.
Wages are estimated to account for 36.5 percent of revenue in 2019.
The revenue volatility in the HR and Payroll Software business is low. Private investment in computers and software, which has increased continuously since 2014 and has risen with a moderate degree of volatility, is a factor in revenue volatility.
In addition, demand for industrial software is reliant on the number of enterprises in the United States, which is significant given that the sector’s major market is small to medium-sized firms. Since 2014, the number of enterprises in the United States has risen, contributing to increasing income during the last five years.