Stars of 2023: 2 Technologies HR Will Depend on by the End of the Year
After a tumultuous three years, analysts expect 2023 to be the year when HR technology spending and activity slows down. According to HR analyst Josh Bersin, this is in part due to slowing hires. Though roughly half of employers will spend more on tech during the year, Bersin expects their per-employee spend across industries will fall.
In 2020 and 2021, HR technology companies scrambled to address the demands imposed by COVID-19. At the same time, they moved forward with their expected efforts in product development. Overall, the HR sector was healthy and dynamic. According to the research firm Imarc Group, the global market for HR technology reached $31.5 billion during 2022 — and it is expected to reach $53.3 billion by 2028.
Now, in the early days of the new year, human capital management technology stands on the cusp of a fresh chapter, where dramatically enhanced systems provide both employers and employees more flexibility, more mobility and more raw computing power to use in learning, onboarding, payroll — pretty much any area that HR touches.
Of course, the specifics will vary from silo to silo and vendor to vendor. But I believe many of those will be driven by at least one of the areas we’ll talk about here: earned wage access and virtual reality. By the end of 2023, those two technologies will be among HR technology’s foundation blocks. Here’s why.
Earned Wage Access Breaks Into the Mainstream
Earned wage access — the ability for employees to access their pay at any time, rather than on a pre-determined schedule — hasn’t been around for very long. Observers say it appeared about 10 years ago, when its use gained traction as employees discovered the speed, convenience and portability it provided. All indications were that the use of EWA would continue to steadily grow until, at some point, it broke into the mainstream. That point seems to be here.
During 2022, EWA gained notable momentum. The unpopularity of payday loans, coupled with the pandemic’s impact on the world of work, had a lot to do with it. But just as important was EWA’s increasing popularity among younger workers and investors. In 2021, just seven industry startups raised more than $1.1 billion in debt and equity, outpacing their total funding between 2015 to 2020, according to PitchBook.
There’s no sign that EWA’s momentum will slow during 2023. For one thing, providing lower-ranked workers with ready access to their earned wages continues to be a concerning issue for employers. For another, employers have discovered that offering EWA brings non-monetary advantages with it, such as increases in engagement and employee retention.
The popularity of EWA among workers is quite real. Some 60% of them want daily access to their earned pay, said the National Payroll Survey. Most (83%) believe they should have access to their earned wages at the end of each workday or shift, according to Ceridian. About 78% said that no-cost access to on-demand pay would increase their loyalty to an employer.
The possibility of economic crisis and the rising cost of living have made EWA’s features more appealing to people. Ceridian, for one, believes participating employers can more easily attract candidates, especially as a growing number of employees seek to take back control of their financial wellbeing.
All of this explains the surge in momentum EWA saw during 2022, and that energy won’t dip because of a change in the calendar. As TechCrunch puts it, “Earned wage access promises to be the shakeup that the payroll system has perhaps required for a while now.”
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Virtual Reality Extends Its Reach in HR
In 2021, the global market for virtual reality was valued at $21.8 billion, on its way to $87 billion in 2030, said Grand View Research. That’s a CAGR of 15% during that period.
Originally developed for gaming and entertainment applications, VR technology provides solutions for a number of verticals including healthcare, education, entertainment, tourism and business institutions.
Today, companies like Strivr, Talespin and Immerse focus on providing VR for business uses such as employee training. CEO Derek Belch describes Strivr's use of the technology as an enterprise-grade platform that allows organizations to create virtual reality content, manage it and manage related devices. “We are an end-to-end solution,” he said.
But we're still very early in the VR market, and Belch says a number of both established and startup companies are “attacking different pieces of the value chain” to encourage the use of by organizations who need employee learning solutions. These companies are producing content, developing strategies, handling change management and providing analytics, becoming more familiar with the technology and putting it to more effective use at each step.
Although the hardware used in VR has improved considerably over the past five or six years, Belch says it has to get better. “It has to be less of a brick on your face and more of a pair of swing goggles or glasses or something that’s less obtrusive, cumbersome, heavy, hot, whatever,” the CEO said. Not that today’s hardware is bad; it's good enough for a really awesome user experience, he said, but number one on his wish list is significant improvement in the hardware to where it’s not an area of friction for an end user.
Hardware improvement or not, VR is still providing an “awesome” experience along with effective solutions to corporate problems. That indicates a business with a lot of running room.
Both of these technologies — earned wage access and virtual reality — are positioned to become foundational components of the HR technology world. While they address very different challenges, they both come with real experience in the market, attractive economics and a growing user base. Neither one of them is new anymore.
Related Podcast: Why VR Training Is Poised for Growth
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