HR Software

What is HR Software?

Human resource (HR) software assists businesses and other organisations with the management of employee records and personal information. This can range from contact details and attendance records, through to training schedules and performance management documentation. Ultimately, HR management systems use employees as their primary resource, offering an easily accessible overview of the ‘human’ aspect of any business.

Designed to provide users with swift and efficient access to employee details, HR management software can provide on-premise solutions as well as cloud and Software as a Service (SaaS) deployment options. As with all data repositories, security is key—much of the information stored within HR software packages is either private, commercially sensitive, or both, so in-built access controls ensure data protection protocols are adhered to.

Automating a large number of HR tasks, HR software for small businesses in particular can allow for a more cost efficient allocation of financial resources. For larger companies, there are HR platforms capable of handling scheduling issues in multiple time zones, permitting real time updates that can be simultaneously accessed, shared appropriately, and administered from locations anywhere in the world.

HR software is designed to help businesses manage and optimise their human resources processes. In Australia, HR management systems allow users to perform HR tasks, store HR information, and analyse HR data.

“As your business becomes more sophisticated with data, business intelligence, and reporting, you’ll find yourself spending more and more money and resources integrating all of these disparate HR-related systems,” Tardy explains. “That’s where HR management software comes in; it’s much easier to make data-driven decisions because you can see everything in one place.”

Whether recruiting job candidates, onboarding new hires, running payroll, administering employee benefits, tracking attendance, conducting performance reviews, or doing anything related to talent management, HR software can support it. Gartner research shows that the worldwide HR software market grew 11.7% to $22.4 billion USD (approx. $20.6 billion AUD) in 2022.[3]

On Capterra, you’ll find 2,001 human resources products, making it one of our largest software categories. Users have also submitted 16,154 HR software reviews in the past year alone.[4]

Essential HR Software buying information

Human resources (HR) software enables organisations to manage employee records, digitise HR processes, and automate everyday tasks. HR solutions cover various employee needs such as recruiting, payroll, benefits administration, and performance management.

HR software caters not only to large businesses with robust HR departments but also to small businesses with no HR employees at all. Users who are small business owners are among the most common visitors to our website, who are looking for HR software. All industries purchase and use some form of HR Management System.

Jenn Tardy[1], a diversity recruitment consultant with years of experience, advises business leaders and decision-makers to think carefully before making a purchasing decision: "You have to ask yourself what's more important to you: an interconnected system that gives you a broad view of all HR-related activities or specific systems that let you dive deeper into a specific topic.”

"HR software is great if you're interested in the former, but it doesn't give you all the bells and whistles. For that, you'll need to look for specialised software, like recruiting or onboarding."

Most HR management software is priced on a monthly subscription basis that scales based on the amount of functionality and the number of employees you have. Costs for HR management systems typically range from $360 USD (approx. $572 AUD) a month for an entry-level system up to $2,200 USD (approx. $3,495 AUD)or more for a premium system.[2]

First-time HR software buyers must consider their budget, number of employees, application requirements, use case, and any necessary integrations when making a purchase decision. Working with stakeholders to come up with a list of critical questions to bring to vendors can help you land on the best system for your needs:

• What HR tasks can employees handle themselves through employee self-service?
• What dashboards and analytics capabilities does the platform offer?
• What level of technical support does the software provide?
• How is artificial intelligence (AI) integrated into the platform, and how does it work?

What is the best HR Software?

According to our research, Deel is among the best-rated in the category, with a 4.82 out of 5 rating from over 2,019 verified user reviews from the past 2 years. It simplifies global hiring, onboarding, and payroll management by automating compliance, contracts, and payments. The platform supports multiple currencies and payment methods, ensuring flexibility and efficiency. Its user-friendly interface and robust features make it suitable for managing remote teams and navigating international employment regulations, providing a seamless experience for employers and employees.

Its main features are:

• Payroll Management: Users appreciate global payroll support, compliance, and automation, though some find the interface and setup confusing.
• Electronic Signature: Reviewers value the convenience, speed, and security of signing contracts digitally, enhancing remote work efficiency.
• Multi-Country: Users highlight the ease of receiving payments globally, supporting remote work and different currencies.
• Direct Deposit: Users find direct deposit convenient and fast, though some face initial setup challenges with bank linking.
• Document Management: Reviewers appreciate having all documents in one place, with easy access and strong security features.
• Payroll Reporting: Users value detailed, clear payroll reports for tracking earnings and deductions, aiding financial management.

Deel is a popular software platform praised for its robust payment management capabilities. It offers various payment options, such as bank transfers, PayPal, and cryptocurrency. It supports multiple currencies and complies with local regulations, making it great for businesses with remote teams.

The platform is easy to use, simplifying contract creation and financial management, and offers flexible withdrawal methods like bank transfers and the Deel Instant Card. Deel also integrates well with other financial services and provides excellent customer support, making it a valuable tool for international hiring and payroll management. Most users find Deel a worthwhile investment for its convenience and comprehensive features.

HR Software pricing

Most HR management software is priced on a monthly subscription basis that scales based on the amount of functionality and the number of employees you have. HR software costs typically range from $360 USD (approx. $572 AUD) a month for an entry-level system to $2,200 USD (approx. $3,495 AUD) or more for a premium system.[2]

• Entry-level HR software includes core functions such as an employee database, essential HR function management, and reporting and analytics.

• A more advanced HR solution that costs more typically includes additional features such as customisable reports, an employee self-service portal, and an activity dashboard.

64% of the HR software buyers Capterra advisors spoke to in the last year are budgeting $5 to $10 USD (approx. $8 to $16 AUD) per employee per month.[5]

Tardy advises first-time buyers to be aware that:

• Implementation, integration, and customisation are common upfront costs.
• Maintenance and support are common recurring costs.
• Training can be an additional expense.

You have a few options to save money when purchasing a HR system. Free trials are a great way to test new software before purchasing. Some vendors even offer free HR management systems outright. However, buyers should be aware that there can still be costs associated with ‘free’ software in the form of maintenance and customisation.

Lastly, HR software vendors may offer a discount if you opt for an annual subscription over a monthly one.

HR Software features rated by users

All HR software tools include an employee database, HR management, and reporting and analytics features, and most have a variety of common features such as applicant tracking, payroll management, and onboarding.

Core HR software features

• Employee database: Securely store and manage a database of employee information. 85% rate this feature as critical or highly important.
• HR management: Automate core HR functions such as payroll, benefits administration, and compliance. 84% rate this feature as critical or highly important.
• Reporting and analytics: View and track essential HR metrics. 72% rate this feature as critical or highly important.

Common HR software features

Our analysis of proprietary reviews data reveals other common HR management software features users rate as valuable:

• Applicant tracking: Manage job applications and resumes as candidates move through the recruiting process. 81% rate this feature as critical or highly important.
• Employee management: Track employee schedules, availability, and performance across projects and tasks. 81% rate this feature as critical or highly important.
• Self-service portal: A gateway for employees to access HR systems to perform tasks and find information. 79% rate this feature as critical or highly important.
• Payroll management: Track and process employee payroll. 77% rate this feature as critical or highly important.
• Onboarding: Automate the process of turning new hires into legal employees. 73% rate this feature as critical or highly important.
• Time and attendance: Track employee work hours and time off balances. 71% rate this feature as critical or highly important.
• 360 feedback: Collect and track employee performance feedback from peers, managers, and direct reports.
• Activity dashboard: View the status of ongoing processes, identify current incidents, and track past activities.
• Compensation management: Track compensation budgets and optimise compensation structures for employees.
• Customisable reports: Alter the layout and content of HR reports.

Top HR Software benefits identified by users

Improves HR performance and efficiency: Thanks to automation, digitised record-keeping, and employee self-service, users say HR software enables them to do more in less time.

“The capabilities provided by the platform have significantly streamlined our tasks and contributed to enhancing our overall efficiency.”

–Mara D., senior HR manager, nonprofit

Facilitates small business growth: Managing a workforce gets complicated quickly as you grow. Users say their HR software has kept up with their growth and allowed them to scale their HR processes easily.

“With our company growing from 150 to over 800 employees in the past 5 years, [our product] remains an essential partner in our success.”

–Julie G., HR and operations manager, food and beverage

Provides secure storage space for employee data: HR software reduces errors and security concerns associated with more manual methods, such as paper files and spreadsheets.

“It gives us a consolidated database of accurate employee information.”

–Jessica D., game programmer, computer software.

Common challenges of HR Software identified by users

Recent reviewers of HR management systems highlight a few common challenges. One issue is obtaining timely customer service to resolve problems with the software or related services, such as payroll. Another challenge is cost, with reviewers mentioning difficulties in securing an affordable price or finding desired features locked behind paywalls.

Prioritising good customer support is essential when dealing with vendors. Enquire about the level of support they offer and any associated costs. It's also important to distinguish between feature "needs" and "wants"—focus on options that include only the features you need to keep costs down.

In terms of functionality, the main challenges with HR Software include generating customised reports and implementing rules to approve or deny employee absences automatically. If reports and absence management are important, look for mentions of these features in reviews to better understand how well products handle them.

What is HR Software used for?

Analysis of our extensive HR Software reviews highlights the most common use cases:

• Managing a centralised employee database: Businesses use HR software to maintain a secure database of employee information, including name, role, salary, contact details, and more.
• Tracking employee attendance and paid time off (PTO): HR management systems can help businesses track employee hours through manual time logging or integration with time clock hardware.
• Attracting, assessing, and hiring job seekers: Companies use HR software to post job openings, schedule candidate interviews, evaluate resumes, and track promising candidates through their recruiting and hiring workflow.
• Automating payroll: Instead of doing the math and cutting paychecks manually, HR systems can automatically calculate accurate wages and tax withholdings while depositing funds directly to employee bank accounts.

HR software in Australia generally falls into one of two categories: the “core HR” category or the “strategic HR” category.

The core HR category covers all the HR software that supports critical HR functions that every business has to perform. This includes:

• Applicant tracking systems: Post job openings, manage job applications, assess candidate options, and track applicants as they progress through your recruiting process.
• Onboarding software: Automate and manage the transition of new hires into employees.
• Payroll software: Run payroll, track compensation costs, and generate important payroll and tax reports.
• Time tracking software: Track employee attendance, schedules, and billable hours for contractors.
• Benefits administration software: Enrol employees in offered benefits, track their usage, and generate reports.

The strategic HR category covers human resources products that help businesses optimise their workforce or improve employee productivity and engagement. This includes:

• Performance management software: Set individual employee goals, gather 360 feedback, and conduct performance reviews.
• Learning management systems: Create, manage, and administer employee training and skills development modules.
• Employee engagement software: Survey employees and diagnose common issues driving job dissatisfaction.
• Compensation management software: Optimise compensation budgets and enable pay-for-performance.
• Succession planning software: Identify high performers and develop a leadership bench for the future.
• Workforce management software: Plan, track, and manage the allocation and requirements of labour resources.
• HR analytics software: Aggregate employee data and visualise trends over time.

Depending on your needs, you may want to purchase a standalone HR system that performs a single function or a comprehensive talent management suite that performs multiple functions

Who uses HR Software?

Companies across various industries utilise HR management software to streamline HR processes or to address gaps in crucial HR functionalities that their current methods cannot fulfil.

While HR personnel are the primary users of HR products, they are not the only ones. Managers use HR software to conduct performance reviews, approve leave requests, and onboard new employees. Employees also use HR software to update their contact details, view payslips, enrol in benefits, and perform other HR-related tasks.

Insights from our advisor calls over the past year indicate that HR software buyers frequently come from small businesses with one to 24 employees and annual revenue of 5 million USD or less. Interestingly, one of the most common contacts for HR software isn't a dedicated HR professional but rather small-business owners who do not have a dedicated HR department.

Common HR Software integrations

We analysed our extensive reviews database and determined that accounting software, document management software, and CRM software are the three categories that most often integrate with HR software.

Buyers need a strong integration between HR and accounting software to run payroll. Document management software integration helps manage employee handbook pages and job descriptions, while CRM software integration can feed accurate sales data to calculate commission pay.

Your integration requirements will depend on the size of your business, based on our conversations with HR software buyers in the past year. While small businesses with one to 100 employees slightly favoured standalone HR products (53%), larger firms with 101 or more employees preferred integrated suites (66%). This is a typical progression as companies grow: They start with a handful of standalone systems for core HR functions, such as payroll or employee scheduling, then work up to an integrated HR suite once their HR department has matured.

Each approach has pros and cons. Piecing your HR software stack with a bunch of standalone systems will allow you to adopt a top-tier system for every HR function. However, integrating them could cause problems. Having an all-in-one HR software suite avoids integration issues since all the functionality is housed in one platform. Still, you may have to compromise on functionality because suites can’t be best-in-class at everything.

Whatever direction you decide, it’s important to plan what your HR software stack will look like ahead of time. Without proper planning, you may adopt systems that perform overlapping functions, adding unnecessary cost, training time, and vulnerabilities for security breaches. Because of these functional overlaps, 83% of HR employees told us they had plans to consolidate software applications within the next 12 months.[6]

Recent HR Software trends

According to Gartner's annual HR Priorities survey, leadership development has become a top priority for HR leaders in 2025.[7] Specifically, leader and manager development is at the forefront, as 73% of middle managers report feeling overwhelmed, stressed or burned out at work. To address these challenges, HR departments increasingly leverage software to develop managerial training modules, connect new managers with mentors, and identify areas where managers may struggle the most.

Alongside leadership development, workplace dynamics are also evolving. 46% of Australians work entirely on-site, 41% have a hybrid setup, and only 10% work entirely remotely. Despite these figures, a significant portion of the workforce (51%) would prefer a hybrid work model, while over a third (35%) would like to work remotely.[8] This preference is driven mainly by the desire to improve work-life balance, prompting companies to reassess office engagement and understand the motivations behind employees' preferences for alternative work arrangements.

60% of Australian employees collaborate with coworkers in another country at least once a month.9 For international collaborations, document management tools can help log important discussions and project updates to ensure team members in different time zones can access the latest information, alongside practical workplace communication tools for remote teams.

For HR teams across Australia, the transformation in work practices extends beyond location. The rapid growth of AI is reshaping numerous business processes, including project management and marketing. In HR, recruiting has been particularly impacted by AI advancements. Interestingly, 64% of Australian job seekers feel they have a better chance of being hired if AI is involved in the recruiting process. Furthermore, 74% of job seekers believe that AI is generally less biased than humans when evaluating candidates, indicating a growing trust in AI's role in recruitment. This aside, 44% of job seekers will likely reject job offers if the recruitment process is overdependent on AI.[10]

According to Australian job seekers who use AI in their job search, the top benefits of AI are being able to appear as a better job candidate (26%) and being able to apply to more jobs (21%). 27% of Aussie job seekers have used AI to complete a test assignment or skills assessment, 24% have used AI to mass apply to jobs, and 22% have used AI to generate answers to interview questions.[11]

Learn more about how HR Software can help your business

• 5 digital onboarding best practices for new remote employees

• 10 effective workplace communication tips for managing remote teams

• 7 ways to monitor staff performance without crushing employee morale

• 10-Step employee onboarding checklist for SMEs

• 5 key ways to improve your strategic human resource planning

Sources

[a]. Data for Capterra's Digital Natives survey was collected in August 2023. Results comprise responses from 1,029 participants. The criteria to be selected for this study are as follows:

• Australian resident
• Between 18 and 65 years old
• Use a computer to perform daily work tasks
• The generations who participated in this study are: Baby boomers: born between 1946 and 1964, Generation X: born between 1965 and 1979, Generation Y/Millennials: born between 1980 and 1994 and Generation Z: born in 1995 or later

[b]. Capterra’s 2025 Tech Trends Survey was conducted online in August 2024 among 3,500 respondents in the U.S. (n=700), U.K. (n=350), Canada (n=350), Australia (n=350), France (n=350), India (n=350), Germany (n=350), Brazil (n=350), and Japan (n=350), at businesses across multiple industries and company sizes (5 or more employees). The survey was designed to understand the timeline, organizational challenges, adoption & budget, vendor research behaviours, ROI expectations, and satisfaction levels for software buyers. Respondents were screened to ensure their involvement in business software purchasing decisions.

1. Jenn Tardy, LinkedIn

2. Capterra software pricing data: The pricing analysis includes only products with publicly available pricing information and qualified software products within the category as of the production date. Currency conversions are based on the rate of the day of publication and may differ from current currency rates. Read the complete methodology here.

3. Market Share Analysis: Human Capital Management Software, Worldwide, 2022, Gartner

4. Capterra reviews data: Capterra reviews are collected from verified users for individual software products. For this report, we analysed reviews from the past year as of the production date. Read the complete methodology.

5. Capterra advisor call notes: Findings are based on data from telephonic conversations that Capterra’s advisor team had with small-to-midsize businesses seeking HR tools. For this report, we analysed phone interactions from the past year as of the production date. Read the complete methodology.

6. HR Employees Say Half of Their Software Systems Perform Overlapping Functions, Capterra

7. Top 5 HR Trends and Priorities That Matter Most in 2025, Gartner

8. A third of employees would take a pay cut to work fully remotely: What would encourage a return to office?, Capterra

9. Report finds 60% of Australians work with employees in other countries: how to ensure a collaborative workplace across locations, Capterra

10. AI in recruitment: How to find the balance for successful implementation, Capterra

11. Two-thirds of Aussie job seekers harness AI to ‘level up’ in recruitment processes, Capterra

Researched by content analyst Laura Burgess and edited by Lindsay Page

Last updated on 26/06/2025

Navigating the New HR Landscape in Australia

HR is changing fast. Finding and keeping top talent is harder than ever in today’s unpredictable world. Rising costs, skills gaps, and the rise of artificial intelligence (AI) are forcing HR leaders to rethink how they manage people. In this high-stakes environment, technology isn’t just helpful—it’s essential.

Capterra’s 2025 HR Software Trends Survey—featuring 3,200+ HR professionals in 11 countries, including 278 Australians—shows how tech is shaping the future but also helps face the challenges. Four trends stand out: AI is driving smarter hiring, upskilling is a must, tech boosts engagement, and AI brings new risks.

With insights from Founder and Chair of The Institute for Working Futures, Dr Marcus Bowles, and Gartner experts and research, we highlight what’s working and what to watch out for.

The bottom line: Adopting new HR tech isn’t enough. Success depends on building AI skills, protecting data, and keeping people at the centre. This report shows how HR leaders can act now to stay ahead.

Key Insight 1: AI Powers Talent Acquisition

The challenge

Finding the right employees in complex times requires innovative approaches. With recruiting costs rising and a demand for skilled professionals, organisations must adapt their strategies using technology enhanced with AI, which aids in talent analytics, volume of applications, candidate experience, and better recruitment outcomes.

Dr Marcus Bowles [1], a global expert in workforce development, explains that today's hiring difficulties stem not just from high applicant volumes but from a deeper issue: adaptive capacity. It's no longer only about identifying skilled professionals; it's about engaging and retaining them through the evolving process. He emphasises that while AI helps personalise the experience and improve outcomes, success ultimately depends on how people use the tool.

What Australian HR leaders tell us

• 44% identify hiring skilled professionals as one of the top HR challenges in the next 12 months.
• 69% expect to increase their workforce in the next 12 months.
• 60% foresee recruiting costs increasing compared to last year.
• 31% think that HR analytics is the process that benefits most from AI.

Why it matters

Efficiency is critical when you have less budget and fewer resources, and that's where software can help. Just over two-thirds of Australian HR leaders anticipate that their organisation’s workforce will grow in the next 12 months, but only 30% consider recruiting software critical, despite the process being one of the top challenges for organisations.

However, it is not only about having the technology. HR tools with AI features can help organisations recruit more efficiently and enhance the recruiter-candidate relationship, but soft skills are also needed to engage, connect, and provide a personalised experience to candidates.

The opportunity

AI-driven recruiting cuts costs and improves hires by automating routine tasks and freeing recruiters' time to build quality candidate relationships. It optimises the identification of effective job posting sources and the selection of compatible candidates.

Recommendations:

• Upgrade recruiting software/ATS with AI features to refine and speed up the early stages of applicant screening.
• Implement AI features in HR/talent analytics to enhance data analysis and candidate evaluation.
• Focus on candidate experience by continuously training your recruiters in soft skills.
• When implementing AI in recruitment, consider:
  • Using AI to support the process, not replace it: candidates still value human interaction and decision-making.
  • Being transparent about how AI is used in the hiring process.
  • Prioritising candidate experience by offering the option to connect with a human recruiter.
  • Learning How To Find The Balance For Successful Implementation of AI in Recruitment.

Key Insight 2: Interconnected Work Requires Continuous Upskilling

The challenge

Upskilling is critical in an increasingly interconnected work environment, and 40% of Australian HR leaders say they expect to face this challenge in the next 12 months. Moreover, organisations will also have to deal with complex software integration and enhance employees' AI skills.

According to Gartner’s report “Quick Pulse: Leader Sentiment on Skills Gaps,” [2] organisations are increasingly concerned about emerging skills gaps and their potential impact on performance and growth goals. 78% of HR leaders are worried about skills gaps at their organisations, and 56% are most concerned with deficiencies in digital skills. So, part of the challenge is also to identify where these gaps are.

What Australian HR leaders tell us

• 40% cite training and upskilling current employees as the main operational challenge in the next 12 months.
• 50% indicate training new users on HR software as the main software-related challenge in the next 12 months.
• 71% expect that their training/upskilling costs will increase this year compared to last year.
• 44% highlight insufficient AI skills on staff as a challenge when adopting AI features.

Why it matters

Effective integration and skilled staff are crucial as companies juggle multiple systems, and typically use three HR tools. With AI boosting productivity, out-of-the-box software integration, and HR and AI expertise are essential for competitiveness.

Over half of the surveyed Australian HR leaders indicated that their organisations already use AI features in their HR software, and their expectations of AI contribution to HR software have also increased, indicating a growing need for AI-specific skills. In “Agentic and AI Kick-Starter for CHROs”, [3] a Gartner report, HR leaders estimate that generative AI (GenAI) will impact 37% of the workforce and the way people work in the next two to five years.

However, only 35% of HR leaders in Australia consider training resources critical when researching software, even when the majority foresee an increase in costs in this field and are aware that they have to upskill their employees.

The opportunity

Organisations can address skills gaps and enhance productivity by focusing on upskilling initiatives and making sure they have effective software integrations, leveraging AI to support these efforts. In the current volatile and uncertain context, upskilling employees can be more productive and faster for companies than looking and hiring for specific roles.

Recommendations

• Ensure current or upgraded software integrates with the company's HR tech stack.
• Leverage talent management/analytics to ensure smooth software integration and optimise AI capabilities.
• Develop comprehensive training programs: collaborate with leaders and software users to create ongoing upskilling initiatives.
• Invest in workforce training technology, focusing on integrations and AI features, and upgrade the software if needed.
• Regularly monitor the effectiveness of integrations and employee performance/skills.

Key Insight 3: Technology Boosts Employee Engagement

The challenge

Boosting employee engagement and retention is a top HR priority for HR leaders. Identifying the employee experience areas to improve is key, as it drives engagement and, in turn, increases retention.

Using and efficiently integrating tools like compensation software, employee engagement, and benefits administration is crucial for creating a motivated and committed workforce.

What HR leaders in Australia tell us

• 40% identify improving employee engagement, and 39% cite retaining employees as HR challenges for the next 12 months.
• 38% of AI features users in HR software report that they help increase employee satisfaction or engagement, compared to 30% of non-users of AI features.
• 41% of AI features users in HR software report that they help increase employee retention, compared to only 28% of non-users of AI features.

Why it matters

Retaining and engaging skilled employees is key as they are valuable assets who not only perform well but can also train others and drive organisational success. Losing them would mean incurring additional recruitment and training costs and efforts. It is essential to focus on strategies that keep key employees motivated and committed by enhancing their overall experience within the organisation.

The opportunity

By leveraging technology, organisations can significantly enhance employee engagement and retention. Adopting HR software has led to higher satisfaction and retention rates, while AI features enable the software to provide better insights and, ultimately, enhance employee experience.

Recommendations

• Conducting surveys regularly to assess engagement levels, pinpoint areas for improvement, and continuously monitor the employee experience (benefits, learning, and growth opportunities) can help develop plans to enhance employee engagement.

• According to Gartner’s “2025 HR Technology Employee Experience Bullseye” report [4], to improve employee experience, HR leaders should:

  • Identify which HR tasks employees prefer to handle in person versus through self-service platforms to better meet their needs and enhance their experience.
  • Invest in internal career sites and talent marketplaces to support career growth and retention.
  • Focus on user-friendly HR tech to conveniently gather employees' sentiment.
  • Promote well-being tool adoption by tailoring offerings to generational preferences, with a focus on mental well-being tools for millennial and Gen Z employees.

• To support employee retention, HR leaders can leverage the following strategies:

  • Use performance management software to analyse employee performance, recognise and reward them accordingly with compensation management tools.
  • Use benefits administration software to offer personalised advantages that meet employee needs and maintain work-life balance.
  • Leverage talent management software to provide growth opportunities, encourage skill development, and facilitate career advancement, keeping top talent committed. Employees are more likely to stay engaged with the organisation if the management supports their career paths and helps them develop their skills.

Key Insight 4: AI in HR Technology Demands Risk Mitigation

The challenge

Australian HR leaders cite the assessment of AI value and risk (49%) and effective software implementation (40%) among their top HR software concerns. Aside from having skilled staff, the main concerns regarding AI include addressing privacy concerns and ensuring there is high-quality data for AI to use.

Organisations must understand the security risks associated with AI, as it will handle information provided from multiple sources (e.g., employees, clients, other software). Skilled employees and the right technology and processes will ensure data integrity.

What Australian HR leaders tell us

• 40% say effective HR software implementation is a challenge.
• 49% are concerned with assessing AI's value and risks.
• 50% consider security a critical feature when researching HR software to acquire and implement, while 44% report that security concerns triggered HR purchases last year.
• 48% of AI users say reducing security risks is a benefit of adopting HR software with AI features.

Why it matters

AI features must rely on high-quality data and compliance, making data protection and an understanding of AI decision-making crucial for minimising risks. Successful HR software implementation prevents disruptions and secures data. Efficient integrations protect privacy by reducing vulnerabilities. AI literacy is key to understanding how AI works.

Jonah Shepp, Senior Principal, Research, at Gartner, warns that AI, especially generative AI, poses privacy, intellectual property, and trust risks. HR leaders should address these, as employee behaviour is key to preventing data leaks, which could have serious legal and reputational impacts. [5]

The opportunity

Implementing software properly, maintaining data quality, and understanding how AI works all help mitigate AI risks. HR software with AI features helps reduce security risks, but effective data privacy and management are also crucial for protecting sensitive information and ensuring compliance.

Eser Rizaoglu and Stephanie Clement, both Senior Director Analysts, state in Gartner’s “Agentic and AI Kick-Starter for CHROs” report [3] that cultivating AI literacy—the knowledge and skills to effectively work with AI—is essential for successfully scaling AI within an organisation. Without it, organisations are unlikely to achieve value creation with AI.

Recommendations

• Ensure staff effectively use HR software integrations and understand AI functionalities; implement training programs if necessary.
• Conduct comprehensive data audits to verify data quality, correct usage, and alignment with business expectations.
• Revise data policies to ensure high-quality input and compliance with privacy rules, crucial for both general and AI-enhanced systems.
• Upgrade security features in HR software to safeguard employee data and manage AI-related risks; consider changing the product if necessary.
• Establish clear usage guidelines and regularly assess software functionality and ease of use to improve productivity and reduce user errors.

Adapting HR to Technological Shifts

The future of HR will be defined by how well organisations adapt to rapid technological change and evolving workforce needs. Embracing AI, prioritising upskilling, and safeguarding data are now essential for success. HR leaders who act on these trends will be better equipped to attract, develop, and retain top talent. By keeping people at the centre of every tech decision, organisations can thrive in an increasingly complex world.

Note: The applications mentioned in this article are examples to show a feature in context and are not intended as endorsements or recommendations.

Sources

1. Dr Marcus Bowles, LinkedIn
2. Quick Pulse: Leader Sentiment on Skills Gaps, by Trisha Rai, February 2025, Gartner
3. Agentic and AI Kick-Starter for CHROs, by Eser Rizaoglu and Stephanie Clement, June 2025, Gartner
4. HR Technology Employee Experience Bullseye Report, 2025, by Nini Longoria, April 2025, Gartner
5. HR Leaders Must Understand the Opportunities and Risks of Adopting AI and GenAI Technologies: Act Now to Prepare for the Future of Work, by Jonah Shepp, December 2024, Gartner

*Methodology

Capterra's 2025 HR Software Trends Survey was conducted in April 2025 among 3,256 respondents in Australia (n=278), Brazil (n=300), Canada (n=289), France (n=300), Germany (n=300), India (n=294), Italy (n=300), Mexico (n=300), Spain (n=300), the U.K. (n=296), and the U.S. (n=300). The goal of the study was to understand the HR software that companies are buying, their benefits and challenges, and the impact of AI on HR. Respondents were screened for employment at companies with more than one employee, working in management-level roles or above. Respondents were also confirmed to be at least partially responsible for HR software purchase decisions within their organisation.