Cowen Human Capital Management Survey: Resiliency Evident

THE COWEN INSIGHT

Our Human Capital Management (HCM) survey of 2,515 respondents covers SMB and enterprise organizations. The report shows HCM spending trends, adoptions rates, switching intentions, and vendor positioning.

The data reflects resiliency in HR tech spend over 2H22-1H23. 46% of all organizations cited increasing HR tech spend y/y, versus just 8% decreasing spend. Outlooks are most bullish among midsized and enterprise organizations. Moreover, resilient HCM spending counters a rising skeptics’ view of impending industry slowdown amid recessionary fears.

SUSTAINED HUMAN CAPITAL MANAGEMENT GROWTH

We expect durability in healthy HCM growth trajectory. Our survey suggests positive net spending indications across employer segments. We also expect HCM solution adoption to continue over the next 12 months and 3 years.

HCM stocks have not been immune to broader stock market pressures over 2022, but on average, have been relative outperformers versus other tech sectors. A rising debate is the sustainability of such outperformance with increased focus on potential fundamental slowing. Our survey’s spending data counters a rising skeptics’ view of impending industry slowdown amid recessionary fears for 2023.

HUMAN CAPITAL MANAGEMENT SURVEY

Our HCM Survey provides an updated view of HCM solution spending trends, adoption rates, switching intentions, and vendor positioning. The data is primarily focused on payroll, HRMS, time and attendance and recruiting offerings.

We partnered with leading industry advisor/consultant Sapient Insights Group to survey 2,515 respondents globally. The survey covers the full spectrum of HR buyers. It includes participants across industries with a sample that was relatively split evenly among SMB, mid-size, and enterprise organizations. The report provides a wide perspective on solution providers across each employer size segment, with takeaways for both pure-play HCM software, services vendors, and ERP vendors.

HR TECH SPEND EXPECTED TO INCREASE

Our 2022 survey reflects resiliency in HR tech spend (2H22-1H23 period), led by mid-sized and enterprise organizations. 46% of all organizations cited increasing HR tech spend y/y for 2H22-1H23, versus just 8% decreasing spend. The increasing spend mix this year is relatively consistent with the 47% that cited increased spend in the prior year survey. Not only is there a higher mix of respondents citing increased y/y spend for 2H22-1H23, but the range of average growth of those respondents citing increased spend across employer size [18-22%] is also at a stronger level than the range of average contraction of those citing decreasing spend [(13%)-(20%)].

Net spending indications (% increasing less % decreasing), at 38%, is in line with the 2018-2019 surveys. This suggests a normal spend environment for 2H22-1H23 after the elevated 2021 uptick that followed the weaker 2020 survey period amid the pandemic. Overall survey data implying favorable HCM spend intentions increases our confidence in modeled growth projections across coverage despite rising macro uncertainty.