Software reviewer Software Advice reviewed the data of HR-related companies to assess how the industry has changed from 2008 to 2013. This data included revenue, number of employees, and location taken from the Inc. 5000 list from 2008 and Inc. 5000 list from 2013, where the data was aggregated and compared. It also needs to be noted that the data collected by Inc. is from the previous year, so the information is really from 2007 and 2012, respectively. Below are the highlights from their analysis. Software Advice does have a copy of the full report, while you can view the charts and stats in the Slideshare presentation at the end of this blog post. The overall findings show that the HR industry grew, increasing revenue and its number of employees.
HR Industry Growth in Comparison
The good news is that the HR industry grew 20% from 2008 to 2013! The bad news is that this growth is rather sluggish compared to the growth other industries had in the same five-year period. In fact, of the industries that grew during that time period, human resources was one of the slowest-growing industries. Below is a chart that illustrates the revenue growth of 25 industries during this five-year period. These 25 industries are industries that are analyzed annually in the Inc. 5000 list.
Where did HR industry growth particularly take place?
The HR industry, or the ecosystem as Software Advice referred to it as in its report, is comprised of five main business models:
- Staffing and recruiting firms: Companies whose primary service is finding and placing talent for clients.
- Business service providers: Companies who perform outsourced HR functions, such as payroll and benefits administration.
- Management consulting firms: Companies working with clients to improve overall performance, helping address organizational problems and develop plans for improvement.
- HR technology firms: Companies offering clients software solutions that perform HR functions, such as payroll and applicant tracking, and online professional networking sites and job boards. This category also includes HR software vendors, who specifically offer solutions for HR functions. These companies are typically categorized in the software industry but were included in HR for the purposes of this analysis.
- Multiple models: Companies employing two or more of the above business models. For instance, some companies offer staffing and recruiting services, in addition to management consulting.
When we break down the 20% industry growth, we find that business service providers led the way with 60% growth over that same five-year period. Staffing and recruiting firms were a distant second with 25% growth. Part of the distance may be due to the fact that staffing and recruiting firms consolidated during the five-year period, while business service providers grew and increased their percentage of the overall HR industry.
What is This Growth and Consolidation?
Essentially, over the five-year period there was a decline in the number of staffing and recruiting firms while there was also a growth of business service providers. Management consulting, HR technology, and multiple business model firms stayed relatively the same.
Where are HR Companies Located?
HR companies are located all over the country, and industry growth isn't consolidated to one or two states or parts of the country. The map below shows not only where HR firms are located, but which states increased and decreased in the number of top HR firms. New Jersey, Colorado, and Ohio had the biggest gains while Texas, Arizona, and Illinois had the biggest losses.
The Slideshare presentation below showcases the full report, charts, and statistics from Software Advice's analysis.
