HRM Software Development: How To Build A Perfect HR Solution For Your Needs

by Inna M. & Nikolay P.
Created: Apr 27, 2023 | Updated: Nov 15, 2023

The world is going digital at a rapid pace, and the HR industry is quickly adopting the changes. We’ve recently talked on our blog about digital transformation in HR and trends that will define the HR industry in 2023. However, the biggest change is probably the shift to digital solutions for HR management.

But what exactly does HRM software do? Should you go for custom HR management software or use one of the many tools available today? And how to build a reliable HR application for your company? These are the questions we are going to discuss today.

What is HRM software and why do you need it?

HRM software is a broad term that includes all forms of software designed to help with day-to-day HR management. This can include anything from an applicant tracking system for smarter recruitment to an application that evaluates employee performance and offers AI-based suggestions to improve it.

For decades, HR departments managed their operations manually, resulting in vast amounts of paperwork and a high probability of errors. Things began to change in the 1970s, with the first HR software products becoming available to the general public. Since then, the HRM software development industry has given us some outstanding solutions. And the transformation doesn’t stop there, as new HR solutions are getting more advanced by the year.

So why should you consider using human resource management system software? Besides the obvious benefits of going digital in a corporate setting, such as reducing the amount of paperwork and making things easier for the HR department, a switch to human resource management software has other sizable advantages:

• The work of the HR team will become efficient and error-free
• Every HR process, from hiring to offboarding, will be streamlined and optimized
• Payroll will operate faster and without errors
• New positions will be filled faster and by the most suitable candidates
• The onboarding process will result in better employee retention
• The HR team will be able to better monitor and manage employee performance
• Employees outside of the HR department will be able to also use the software when needed

And that’s not all! It’s safe to say that by investing in HR software development, any organization can unlock a new level of productivity, streamline HR processes, and boost employee satisfaction while keeping up with the industry transformation.

The rise of HR management software in numbers

HRM software may have been a novelty only a couple of decades ago. Since then, however, the world has caught up on the importance and vast benefits that HRM systems offer. Here are some statistics to give you a better idea of where the HRMS market stands right now:

• 80% of businesses currently use HR software to fill the gaps in their HR management needs.
• By 2028, the HR software market is expected to reach the size of $33.57 billion by 2028, achieving the CAGR of 10.10% in the process.
• By the end of 2023, mobile HR software is expected to reach $7.15 billion in market size.
• Learning and career management software is the fastest-growing segment of the HR software market.
• 74% of businesses plan to spend more on HR technologies in the upcoming years.

How to know you need a new HRMS

HR management software is designed for a wide range of businesses and business needs. As statistics show, most companies out there have already experienced the benefits of a strong HRMS solution. However, sometimes your old system is no longer enough. Here are the signs that you need to consider updating to a new HRMS solution:

1. The solution provides inaccurate data. One of the goals of developing HRMS is to make sure that all data is accurate and foolproof. So, when your existing solution delivers inaccurate data that you have to double-check in order to avoid errors, it can mean the old system is up for an update.
2. Your HRMS creates problems instead of solving them. An easy way to spot an inefficient HR software solution is when it creates an additional administrative burden on HR team members instead of making their job easier. For example, when there is a need to maintain several large spreadsheets with data in addition to an HRMS, it means the current solution is no longer capable of fully meeting the company’s business needs.
3. Your employees avoid using it. Most companies invest in HRMS software with the goal of providing self-service opportunities for all employees, not just the HR department. When the employees are refusing to engage with the solution, it usually means that it leaves a lot to be desired.
4. There are limited customization opportunities. Businesses can have varying business needs, and standard HRMS solutions won’t always cut it. If you often find yourself in need of features your HRMS does not offer, consider switching to a custom solution that can incorporate a whole range of software features.
5. You cannot integrate it with other software. One of the signs of an adequate HRM system is when it can easily integrate with other business tools: payroll software, learning management tools, surveys, job posting add-ons, and so on. When that is not the case, an update may be on the cards.

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Types of HRM software

Human resource management system software has come a long way since its inception, when users were offered standard, often limited functionality. These days, HR software is designed to manage all kinds of a company’s HR needs. It comes in all shapes and sizes and can fit even the most unusual needs of an organization. Here are the most popular types of HRM tools.

1. Recruitment management systems

Recruitment management software can come with robust and diverse functionality. From predicting the hiring needs of a company in the upcoming months and specifying the list of requirements for a new vacancy to identifying the most suitable candidates or suggesting current employees with a relevant skill set for the position, HR teams can count on recruitment management software for a lot of their daily tasks.

2. Applicant tracking systems

An Applicant Tracking System is designed with the sole purpose of improving the recruitment pipeline and making it faster, more efficient, and more comfortable for everyone involved. ATS HR software solutions offer a wide range of features, from importing candidate information from LinkedIn and other platforms and scheduling interviews to measuring the efficiency of the company’s current recruitment practices.

3. Talent acquisition software

Talent acquisition software is a specialized tool designed to streamline and enhance the process of finding and hiring the best candidates for job openings. This software automates various stages of recruitment, from posting job listings and managing applications to screening resumes, scheduling interviews, and even conducting initial assessments. By leveraging features such as resume parsing, profile matching, and collaborative evaluation, talent acquisition software significantly improves the efficiency and effectiveness of the hiring process. Effective HR software helps teams and recruiters save time, reduce manual errors, and ensure a more organized and data-driven approach to finding the right talent for the right roles.

4. Workforce management systems

Workforce Management System is a broad term that can include different types of HR software. Specifically, the most popular types of workforce management software include performance management software, allowing HR managers to evaluate the performance of the employees and track it across periods of time, and employee engagement management software, which deals with the way employees feel about their job and steps needed to improve their engagement.

5. Learning management systems

Proper employee engagement and performance are downright impossible without sufficient training. To keep track of employee progress, create personalized training plans, and set the goals for this process, HR departments frequently use learning management systems. They can be particularly invaluable for companies that operate as distributed teams or have a lot of front-line employees in addition to in-office teams.

6. Payroll and benefits systems

Payroll and benefits management systems allow the organization to speed up the payroll process and avoid many of the issues linked to human error. Well-developed payroll software can calculate the wages for hundreds of employees with a couple of clicks and transfer the information further for the employees to get paid. Some solutions can also calculate taxes and manage employee benefits, such as sick days and vacation.

7. Onboarding and offboarding systems

Companies are now investing a lot of effort into onboarding and offboarding their employees, and for a good reason, as it helps make the employees more productive, improve company culture, and strengthen employer branding among prospective employees. Onboarding and offboarding software can streamline this process by consolidating the training materials, guidelines, questionnaires, and other essential information in one place.

8. Scheduling systems

For companies where employees work in shifts or have different schedules, scheduling software can bring a welcome transformation. With the help of a scheduling system, which is typically available to each eligible employee on a self-serve basis, employees can not only set and change their own schedules, but also access other people’s schedules and make decisions accordingly.

Custom software development for HR vs. an out-of-the-box solution: What you should consider

Custom human resource development software implementation is the preferred solution for thousands of organizations. However, many companies are also pretty satisfied with out-of-the-box HR solutions. So which one should you go for? Here is a detailed comparison of the two options.

Out-of-the-box solution

Out-of-the-box HR management solutions can include both traditional software and Software as a Service products. These are their biggest advantages and drawbacks.

Pros

• Quick start. Out-of-the-box solutions are called that for a reason. This software offers little to no additional setup, which is why it doesn’t take long to implement the software within an organization.
• Low cost. Whether you are purchasing a lifetime license or opting for a monthly/quarterly/yearly subscription, the cost of ready-made software will always be lower than the cost of custom solutions.
• Support and training. Depending on the conditions of the software purchase, the vendor can offer additional training for your employees and provide extended customer support for as long as you need. 

Cons

• Limited customization. Typically, ready-made HR software solutions are distributed as-is, with customization being limited or not available at all. This means that even the most suitable software may not have all the features you need or can come with extra functionality you don’t have use for.
• Dependence on the provider. The situation where a company has been fully relying on a software solution for years only for the provider to no longer offer support for the product or discontinue the software altogether is more common than you may think.
• Vendor lock-in. When you’re using software that is distributed on a regular payment basis instead of a one-time purchase, there is a risk of encountering vendor lock-in — a situation where switching to another provider is not financially feasible.

Custom HRM solution

Developing custom human resources management system software can be the single biggest upgrade to the way your HR department operates. Here are the key pros and cons of a custom HR solution.

Pros

• Virtually unlimited functionality. As long as you have a reliable development partner, ample development time, and the right tech stack, no HR feature is out of reach for you. You can create a solution that only includes the features you actually need.
• Wide customization opportunities. Developing a custom HRM system doesn’t mean you are stuck with the same selection of features forever. HR software solutions allow endless customization both right away and as the solution matures. Whether you have an in-house development team or an outsourced partner, you can further customize the solution and add new features as you go.
• Close team collaboration. When the whole HR department has a say about what to include in the software solution, and the rest of the organization is encouraged to contribute to the discussion, the end result is going to satisfy everyone.
• Long-term financial benefits. Sure, developing a solution from scratch costs more than purchasing a ready-made SaaS solution. However, in the long run, you won’t face any additional expenses when you own the software, whereas every month of using a SaaS product costs money.

Cons

• Choosing the vendor. Unless you have a whole in-house development team with the required expertise, you’re going to need an outside development team. And that may be one of the most important decisions you make in the course of the project.
• Waiting time. HRMS software development is not something that happens overnight. A few months will typically pass from the moment you conceptualize the future application to the moment you complete your first task using the new solution.

Popular HRM tools: The ultimate comparison

If you are still thinking about whether your organization needs a custom software for human resource management or you will be fine with a ready-made tool, the points above should help you make the decision. And in case you decide in favor of using a solution that is already available in the market, here are the top ten tools for managing various HR-related processes.

If you are still thinking about whether your organization needs a custom HR solution or you will be fine with a ready-made tool, the points above should help you make the decision. And in case you decide in favor of using a solution that is already available in the market, here are the top ten tools for managing various HR-related processes.

Key features of HR software development

One of the biggest advantages of developing HR software from scratch is that you get to include all of the functionality you consider important. Needless to say, the HR department should actively participate in the process of designing the requirements for the software product. This is why, in the end, each HR software solution will turn out to be unique in its own right. Still, here are the software features that most HR products include in some form:

• Attendance management. This is the basic feature of HR software. At the very least, it can help monitor the number of days or hours an employee has worked in a month. The attendance feature can also be more advanced and allow workers to punch-in and punch-out for more precise daily reports.
• Project management. With the help of this feature, employees can record the time they’ve spent completing a certain task. The data can be entered manually, or the application can be integrated with other time tracking tools to make automatic records.
• Employee records. This feature allows to minimize the use of paperwork in an organization and store all human capital data in a digital form. This can include personal information, track records, payroll data, medical insurance, development plan, and more.
• Payroll management. The payroll feature can calculate employee salary based on rates and attendance, but it can also do more than that. The payroll feature in HR software can also be responsible for bonuses, benefits, health insurance, taxes, and other finance-related issues.
• Talent management. Also known as human capital management or employee management, this is an essential feature that allows companies to use their human capital potential to the max. The management process can involve hiring the right specialists, training and development, and working on employee retention.
• Reporting and analysis. One of the key advantages of HRM software development over HRIS software development is that HRM software is far better equipped to not just record information, but also to analyze it and generate reports based on all kinds of data selected by the HR team member. This allows HR specialists to produce even the most intricate reports in a matter of seconds.

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HR software development process: Step by step

Human resource management software development is a complex process but, as is the case with many complex processes, it can significantly benefit from being broken down into smaller steps that are then included in the project plan. These are the steps you need to take to build your own HRMS solution.

1. Identify the specifics of the solution

At this stage, you need to develop your general HR software idea into a detailed concept. Obviously, the HR department is going to actively contribute to the process, as HR managers are the ones who will use the software the most. Together, you will need to identify the necessary human resource management software features of the end product, as well as list the current challenges the product is going to address.

2. Find a tech partner

Unless you are developing the project with the help of your company’s software department, which is fairly rare in today’s HR world, you will need to find a reputable outsourcing software development company that will bring your project to completion. There are several factors you need to consider when choosing a professional development team, including the company’s relevant experience, available technology stack, rates for the services, and testimonials from former customers.

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3. Further outline the solution

When you already have a tech partner, you need to work together to give your HR management system software concept an even more complete look. For example, you can discuss whether you want the product to be available only as a web application or you want mobile availability as well. Another important feature to discuss with your tech team is security, as HR software is known to work with a lot of sensitive information, which means software providers must adhere to the security standards and compliance of the HR software market.

4. Create the UI/UX design

This is the stage where the UI/UX designer and, ideally, the business analyst, should be heavily involved. Taking into account all the requirements you’ve collected within the HR department and from other stakeholders, the designer will find the best way to include all the features in a convenient and easy-to-use interface. This is especially vital if the product is going to be used not only by the HR department, but also by other people at the organization who may not have the necessary experience.

5. Build an MVP

This step is usually optional, especially when you are developing a single-purpose tool instead of a large-scale solution. However, for most projects, building an MVP helps better evaluate the project idea and pivot it if necessary. With an MVP as the base software system, you can gather the feedback of real users who will then work with the full-fledged solution and will be able to better tailor the solution to the needs of every stakeholder.

6. Develop the solution

When you already have the completed design of the application and have learned some valuable lessons at the MVP stage, it’s time to build the actual software solution. If you’ve made the right choice of a vendor, your involvement during this phase can be limited to checking the progress and discussing further steps. It’s important to make sure that the team is taking into account all the requirements and that the project is going the right way.

7. Test and maintain the product

The work on HRMS software development is not over once the developer writes the final line of code. In order to work well, handle sensitive data, and genuinely improve the HR processes, the solution requires rigorous testing. And after the product is deployed, there still needs to be a small team that will maintain the newly developed custom HR software, take care of the bugs, and keep the solution in ship-shape.

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The cost of HRMS software development & the factors that influence it

It doesn’t take hours of research to know that the ready-made HRMS software price can start at $3-$5 per month for a basic tool with limited functionality and go all the way to $3,000+ per month for an advanced SaaS product or $5,000+ when it comes to purchasing a lifetime license. But how much does HRMS software development cost when you are building the solution from scratch?

There cannot be a standard fixed price for human resource software development because each HR software project is different. The overall cost of the software depends on three key factors:

• The complexity of the software. This is pretty self-explanatory: developing a custom solution with limited functionality, such as a scheduling application or a payroll system, is going to take significantly less time and money than building a robust HRM system that includes multiple HR software modules.
• The size and seniority of the team. This factor is directly related to the previous one: the more complex your product idea is, the more functionality is required, and the more users the application is going to have, the bigger the team you’ll need and the more senior-level engineers you will need to hire.
• The location of the software vendor. Often, the best option for HR development is to have it done by an in-house software development and testing team. However, that is not always possible, especially if your organization doesn’t work with software development. This is why outsourcing development of an HR system to outside vendors is a popular option among companies of all sizes. You can outsource your project locally or find a partner in other parts of the world.

When it comes to the HR system development team, its composition and size can vary depending on the project specifics. A typical team delivering software development services will include:

• Front-end developers
• Back-end developers
• Project manager
• UI/UX designer
• Business analyst
• Software tester
• System administrator

The key specialists on projects dealing with HRMS software development solutions, of course, software developers. Here are the average hourly rates of software developers across the world:

• The US and Canada — $100-$200
• Western Europe — $50-$100
• China — $50-$100
• India — $25–$50
• Ukraine — $25-50

Let’s say an HRIS software development project will take six months and require the services of two back-end developers and one front-end developer, among other specialists. When working with US-based developers, you can end up paying around $160,000 just for the development services. At the same time, working with Ukrainian software engineers of the same level and for the same amount of time will cost you only around $50,000.

Considering the reasonable rates and the lack of language and cultural barriers with Ukrainian development teams, it’s hardly surprising that Western companies are now actively outsourcing their software development projects to Ukraine. And since the HR industry becomes more and more technologically advanced, we can expect more companies to invest in an HRMS to ensure keeping up with the market trends.

Our own experience with HR software development

Having developed custom software solutions for over two decades, we at QArea have acted as an HR software development company a few times in our history and have fully realized the advantages of human resource management done right. Here are two cases that demonstrate our HRM software development expertise.

Applicant tracking system

This is a project we developed for our own organization: when the number of job openings and hirings at QArea reached a certain threshold, we realized that we needed a better applicant tracking system than the one we had. And since we were already using Odoo, the open-source suite of business applications, as our ERP and CRM system, the decision to develop the ATS using Odoo was a completely natural one for us.

Ultimately, we wanted to help HR managers and other employees cooperate more efficiently. This is why, throughout the development project, especially at the requirement gathering stage, we closely collaborated with our HR department to find out what they were looking for in an applicant tracking system. Turned out they wanted to see a well-thought-out recruitment pipeline, an ability to import data from different sources, including LinkedIn, an interview scheduling feature, and seamless integration with our existing HR software, among other things. 

A little over a month later, the application was finished, and, after in-depth testing, began transforming the way our HR team handled the recruitment process. You can find out more about this project below.