hr-tech
Sector: HR-Tech
What This Sector Is
HR-tech is the software + services ecosystem that helps organizations hire, pay, develop, retain, and offboard employees. It's a $50B+ sector globally (TAM depends on definition — $100B+ if including staffing + insurance-broker commissions), with meaningful public-market representation across payroll + HR platforms, talent acquisition, learning, benefits administration, and workforce staffing.
Buyers: HR leaders (CHRO, VP HR, People Ops), sometimes IT or Finance for budget approval. Buying cycles range from 3 months (SMB payroll swap) to 18+ months (enterprise HCM replacement). Procurement increasingly involves cross-functional buyer committees + formal RFPs for mid-market and up.
Sub-categories (and how they differ)
Payroll + HR Platforms (Core HCM)
The largest and most established sub-sector. Historically dominated by ADP + Paychex (SMB / small-mid); Workday took mid-market + large-enterprise from Oracle/SAP over 2010–2020. Mid-market wave: Paycom, Paylocity, Dayforce (Ceridian), Rippling (private) competing aggressively. Buyers: SMB needs streamlined payroll + benefits; mid-market needs integrated HCM; enterprise needs global + complex workforce management.
Unit economics: Recurring SaaS, ~70–85% gross margin for software. Services ~30–40% GM (implementation services). NRR: 100–110% typical for quality HCM players. Gross retention: 90–95% (sticky — CoA migration is painful).
Key metrics: ARR, NRR/GRR, employees under management (EUM), revenue per employee under management, operating margin, FCF margin.