The HR technology market in Saudi Arabia is expected to experience significant growth over the next decade, with its valuation projected to more than double from $1.23 billion in 2023 to $2.68 billion by 2032.
This growth is driven by the Kingdom’s Vision 2030 initiative, which aims to modernize and diversify the economy, including the human resources sector, according to a report from Astute Analytica.
Growth drivers and market trends
The increasing demand for HR technology in Saudi Arabia is largely fueled by the need for efficient talent management, improved employee engagement, and streamlined HR processes.
According to Astute Analytica, 78% of Saudi companies plan to increase their investment in HR technology over the next three years, recognizing the importance of tech adoption for achieving organizational goals. In addition, 65% of HR professionals in the region believe that technological adoption is crucial for meeting their organizational objectives.
Talent acquisition and management big drivers
One key area of demand is talent acquisition and management. With the Saudi population expected to reach 39.5 million by 2030, the labor market is expanding rapidly, necessitating advanced recruitment tools.
Current statistics show that 72% of Saudi companies are using applicant tracking systems (ATS) to streamline their hiring processes, and 54% have adopted AI-powered recruitment tools. For example, Saudi Aramco has implemented advanced recruitment technologies, reducing hiring time by 30% and improving candidate quality by 25%.
Employee engagement and performance management are also significant drivers. Data indicates that 67% of Saudi companies have implemented cloud-based HR solutions for real-time feedback and performance tracking, while 58% are using employee engagement platforms to enhance morale and retention rates. SABIC, one of the largest petrochemical manufacturers, uses a comprehensive HR tech platform that has led to a 20% increase in employee satisfaction.
The public sector is also embracing HR technology as part of its digital transformation efforts. The government’s e-government initiatives have prompted 70% of public sector entities to integrate HR tech solutions, with 62% reporting increased efficiency and reduced administrative burdens. The Ministry of Human Resources and Social Development, for instance, has implemented a centralized HR management system that has streamlined payroll processing and improved compliance tracking.
Key market segments
The HR tech market in Saudi Arabia is segmented by application, type, end-use industry, and company size. Talent management is the leading application, accounting for 56.02% of the market. Outsourced HR tech solutions dominate the market by type, generating more than 75.9% of market revenue. The information technology sector leads the end-use industries, contributing 22.08% of the market revenue.
Large enterprises, particularly those with more than 5,000 employees, are the primary consumers of HR technology. These organizations face complex HR management challenges, such as intricate payroll systems and diverse employee benefits, which necessitate sophisticated HR solutions. They have the financial resources and strategic foresight to invest in cutting-edge HR technologies, enabling them to offer superior employee experiences and maintain a competitive edge.
Future prospects
The rapid growth of the HR tech market in Saudi Arabia is supported by the Kingdom’s robust digital infrastructure, high smartphone and social media penetration, and government support for innovation and job creation. However, the market also faces challenges, including increasing cybersecurity threats, a talent gap in technology skills, and regulatory uncertainty regarding data protection.
As the Kingdom continues to pursue its Vision 2030 goals, the integration of advanced technologies like AI and machine learning in HR processes is expected to rise. This digital transformation, combined with a focus on talent retention and the rise of remote work, positions Saudi Arabia as a leader in HR technology adoption in the region.
The information technology industry is at the forefront of HR tech adoption, leveraging digital tools to attract top talent and enable continuous learning and development. The sector’s rapid growth and the government’s ambitious digitization goals are driving the demand for advanced HR technology solutions.
Overall, the HR tech market in Saudi Arabia is on a robust growth trajectory, reflecting the Kingdom’s broader economic transformation and modernization efforts, the press release from Astute Analytica said.
