HR budgets and technology investment will remain flat this year

According to a recent report, HR departments will be underpaid and overworked this year. According to The Hackett Group, a management consulting firm, HR budgets will stay constant in 2023 as employee workloads grow and HR tech investment hardly rises.

Hackett polled over 350 HR and business leaders from moderate to big corporations. According to the study, HR budgets are expected to increase by 0.4%, while staff sizes are expected to increase by 0.3%. The study was global in scope, however the bulk of respondents were from the United States.

The expectations placed on HR departments exacerbate the problem of underfunded finances. Workloads have grown as departments have faced higher-than-average resignation rates, increased recruitment needs, and are now dealing with layoffs.According to Hackett’s report, the size of HR tasks has grown by around 10%.

To satisfy demand, HR will need to hire additional people, outsource part of the work, or boost the HR tech budget, according to Franco Girimonte, Hackett’s HR senior consulting practice head. A podcast discusses some of the report’s conclusions.


If the burden grows, something needs to give. The Hackett Group’s HR executive advisory practice head explained that something needs to be given if the burden is rising.

HR technology investment will increase by less than 2% this year, demonstrating that technology is a “higher priority” than personnel in HR. The growth in IT spending was lower than forecast last year, when a comparable study predicted an increase of more than 9%. Such increase in HR tech investment was a response to COVID-19-related trends, such as the transition to remote work, but some observers, like independent HR expert Josh Bersin, perceived a probable bubble in the HR tech venture capital market.

Again, HR tech investment may be more than it looks when only looking at HR budgets. According to the Hackett poll, around 50% of respondents want to enhance meeting and facility technologies to support hybrid work arrangements, however the funds for those investments may come from the CIO’s budget.

Technology to improve hybrid work may fall under the wider topic of WorkTech, which encompasses collaboration and productivity tools and bridges the gap between IT and HR. 

“WorkTech and HR tech have outperformed the larger tech industry through the second half of 2022 and early 2023,”This is an area that may still be expanding strongly.

Global WorkTech venture capital investment, according to LaRocque’s data, outperforms the broader venture capital market. According to him, the total addressable market, or market size, for worldwide WorkTech is expected to rise at a compound annual growth rate of 20%, or from $562 billion in 2022 to roughly $1 trillion by 2026.

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