An investor group led by private equity firm Hellman & Friedman purchased Ultimate Software Group Inc, a cloud-based human capital solutions developer Monday, Feb. 4, for $11 billion, Reuters reported. Blackstone Group LP, GIC Pte Ltd, Canada Pension Plan Investment Board and JMI Equity were also part of the investor group.
Hellman & Friedman took Kronos, another HR management software provider, private in 2007 for $1.8 billion, while Blackstone owns benefits and HR management platform Alight Solutions LLC, Reuters said. Ultimate Software created more than $1.1 billion in revenue last year.
Reuters said that the cloud human capital management industry is expected to be worth $22.17 billion by 2023 — up from $13 billion in 2016 — citing a report by Allied Market Research. The deal is slated to close by mid-2019.
Cloud-based tech has proven its worth to HR professionals in recent years. HR and talent professionals continue to reach for technology in greater numbers to help them work more efficiently and meet hiring, retention and upskilling challenges with greater agility. Cloud-based solutions can also help employers streamline onboarding processes and make better-informed decisions about how to integrate freelancers into their workforce. In turn, the HR tech market, which has exploded with solutions in recent years, is entering a phase of consolidation.
If the skills gap and low unemployment persist, and if workers continue to splinter off into the gig economy, then employers may see an increased suite of offerings from cloud-based HR software developers — and even more capital firms snapping them up. Looking forward, experts have predicted that greater employer reliance on AI recruitment solutions and AR and VR tech could also become trendy, particularly because AR and VR may make it easier to train and connect with a remote workforce.
"Providing opportunities for virtual employees to connect with one another can help them feel a greater sense of belonging within the company, no matter where they work," Kathleen Pai, VP of HR at Ultimate Software, told HR Dive in an interview late last year. "[We] are increasingly moving away from a 'one-size-fits-all' approach to culture, in everything from benefits packages to professional development."