Regulatory compliance pressures will drive healthy growth in people management software over the next four years. According to IT research and advisory group IDC, spending on human capital management (HCM) applications rose by 6% in 2005 to hit $1.6 billion. However, between 2006 and 2010, the market will gain pace and exhibit double-digit growth.

Analysts at IDC put the acceleration down to several factors. Companies are now taking compliance issues much more seriously and are using HCM to tighten up their people-related processes. Another influence is the continued adoption of HR applications delivered as a service over the Internet. Such software-as-a-service (SaaS) offerings offer lower upfront costs and are quicker and easier to implement than their packaged software counterparts.

IDC reports that in many organisations, data produced by HCM applications has now become a critical requirement for measuring quality and success, as well as aiding crucial business decisions around resources.

The well-documented skills shortages are, according to IDC’s predictions, likely to encourage further investment in HCM applications as companies become more focused on retaining skilled IT workers.