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What is the Global market-size (TAM) for the Employee engagement software industry?
Hi! Thank you for your question about global market-size (TAM) for the Employee engagement software industry.
In short, the global employee engagement software industry may be anywhere between $6.26 billion and $13.21 billion or it could be much smaller based on how it is defined. However, the impact and the potential addressable market might be as large as $53.75 billion to $75.75 billion. I found the Starr Conspiracy, Aon, Grand View Research and Markets and Markets Research to be the most helpful in answering this question. I have provided a deep dive of my findings below.
OVERVIEW
Employee Engagement is one of the components of the larger Human Capital Management market which includes areas such as core HR, Workforce Management, Compensation Management, Recruiting, Learning Management among others. HR systems can also include Talent management systems. While performance management was at the core of HCM 1.0 stack, employee engagement is at the center of HCM 2.0 and new solutions have been emerging. Gallup reports that only 30% of American workers are engaged while globally, only 13% workers are engaged in their jobs. It claims that 20% or better productivity and profitability can be achieved by companies with high employee engagement. However, there is no clearly defined market size for employee engagement software. Therefore, I have collated some reliable sources to estimate a range for the same.
EMPLOYEE ENGAGEMENT
Grand View Research valued the global talent management software at $6.26 billion in 2015. It further subdivides the segment into recruitment management, compensation management, employee lifecycle management, learning and training management, and performance management. Employee Engagement is the major component of employee lifecycle management which in turn has the largest share of the market. Starr Conspiracy estimates the TAM in employee engagement to be $74 billion globally. It arrives at this estimate as a sum total of different segments – recognition, wellness, measurement and talent management.
IDC predicted the market for recognition at $32 billion in 2016 while Josh Bersin estimated the market to be $54 billion in 2016. IBISWorld put the wellness segment at a TAM of $7.8 billion for 2016. Starr Conspiracy estimates the size of measurement segment after speaking to several CEOs at $750 million. Lastly, Talent Management is estimated to have a TAM of $13.2 billion by William Blair. The total TAM varies between $53.75 billion and $75.75 billion.
Markets and Markets estimates the HCM market solutions including the employee engagement to be worth $10.96 billion in 2014 growing at 9.8%. This forecast puts the market estimate at $13.21 billion in 2016. Aon provides a detailed report on global employee engagement trends but does not comment on its market size.
Using these estimates, we can infer that while the global employee engagement market based on its impact may be between $53.75 billion and $75.75 billion, the software solution industry for employee engagement may be much smaller, anywhere in the range of $6.26 billion to $13.21 billion. A lot would depend on the definition of employee engagement industry since it generally is clubbed with other aspects of HR function. Starr Conspiracy provides a beautiful chart to represent the niche of employee engagement which may be inferred to be much smaller in size closer to $1 billion (eyeball estimate by separating out the wellness, talent management component from the estimate and adding the overlap with recognition to the measurement segment).
CONCLUSION
To conclude, the global employee engagement software industry may be anywhere between $6.26 billion and $13.21 billion or it could be much smaller based on how it is defined. However, the impact and the potential addressable market might be as large as $53.75 billion to $75.75 billion.
I hope the research is useful. Thank you for using Wonder!