HCM Trends 2025: Digitization, AI, and War for Talents
Digitization in HR Continues to Gain Momentum. We see it every day in our interactions with clients. But what does this mean for the still-fresh year 2025? And what challenges and opportunities lie ahead for HR departments? Jana Voget, Project Manager at sovanta and a experienced member of our HXM Squad, supports the development of HR applications for our clients. Looking ahead to the coming months, she has identified five key HCM trends for 2025:
1. The War for Talents Drives Digitization
The ongoing War for Talents is pushing HR departments to rethink processes and accelerate digital transformation. Companies in 2025 must continue to focus on strong employer branding to win the war for talent. Key enablers include engaging career websites, attractive benefits, strategic and tool-driven talent management, a smooth and efficient recruiting process, and the option to work flexibly – whether remotely or on-site. This also opens new doors: with the option for remote work and a robust digital HR tool landscape, global sourcing becomes possible, helping to offset local skill shortages.
2. Reducing Bureaucracy with Digital Solution
Administrative tasks consume significant time in HR management: vacation requests, parental leave applications, or changes to employee master data. Digitizing and automating these processes with intuitive solutions frees up valuable capacity. This means more time for strategic HR work. There is especially great potential in ESS/MSS scenarios focused on self-services – opportunities that many companies are finally set to leverage in 2025.
3. HR and Workforce Benefit from New Technologies and AI
A clear digitalization strategy for HR functions has become a must-have. The pressure to implement innovative, digital solutions and leverage AI is increasing. Modern HR tools not only enhance efficiency but also contribute to a positive HR image within the company – making the internal customer, the employee, happy. However, in 2025, companies are not only focused on integrating new technologies into their tools. They are also tasked with fostering technological competencies within their workforce. AI and GenAI are now integral parts of daily work, and HR teams must succeed in both using these technologies themselves and making them accessible across the organization. A great example of an AI solution for the entire company is our GenAI DocumentChat.
4. Metrics and KPIs in HR Make the Difference
With the growing number of new developments and tools, HR analytics and key performance indicators (KPIs) are becoming increasingly important. Dashboards are being used more frequently to enable data-driven decision-making in HR. It’s not just about organizational data and hard facts, though. Softer factors, such as employee sentiment, satisfaction with the tool setup, and expectations for transformation, can also be captured through Employee Experience Management. These insights help draw a big picture and provide actionable recommendations.
5. Transition to New HR Systems Due to SAP HCM End of Support
The end of support for SAP HCM (2027 or 2030 with extended support) is approaching quickly, and companies must transition to new systems such as SAP HCM for S/4HANA (H4S4) or SAP SuccessFactors in a timely manner. This requires strategic planning for the system migration, and implementation will pose significant challenges for HR departments in 2025. To effectively manage this transformation and keep the workforce engaged throughout the journey, we recommend using ETX for HXM – an early warning system for the successful transformation process.
Conclusion: HCM Trends 2025 Highlight a Changing HR Landscape
These five HCM trends for 2025 illustrate that the demand for digital solutions in HR will continue to grow. The effective use of technologies and a future-proof HR IT landscape are key to success for businesses. We are excited to tackle these challenges together with our clients and to set new impulses for modern HR practices. Are we missing a critical HCM trend for 2025? Let’s discuss your personal Top 5 list!
