Designing and executing impactful talent initiatives without embedding HR tech tools, solutions, and platforms often feels like a thing of the past. The present is increasingly tech-driven. Advancements have reduced barriers to adoption, such as skills and costs, leading to quicker uptake of newer technologies. As a result, the HR tech landscape has expanded over the years. Today, HR tech plays a crucial role in engaging a multigenerational workforce, raising productivity, and enhancing experience—all while making leaders more effective and providing organisations with a competitive edge.

 

However, for Asia Pacific and the Middle East, the potential of technology to enable HR to drive business results remains largely untapped.

 

The SHRPA 2024 Global State of the HR Industry Report found that identifying and implementing tech solutions, as well as adopting newer solutions with AI and analytics capabilities, are top challenges across the region. On average, eight in ten CXOs and HR leaders surveyed state that overcoming these challenges will have the highest business impact.

 

This leads to a key question shaping the HR industry in 2025: How can technology become a true enabler of the talent function?

 

The Investment Conundrum

 

CXOs and HR leaders across APAC and the ME are betting on their growth story. In a region that is diverse, ambitious, and boasts a multigenerational workforce, it is not surprising that talent and labour market shifts are seen as the key inflexion point that will determine business growth. Alongside the business application of newer technologies and shifts in consumer spending, talent and labour market shifts are the top factors influencing the business outlook for 2025.

 

The focus on skilled, engaged, and high-performing employees as a direct driver of business growth has led HR and business leaders to invest more in tech solutions in these areas. The top three areas where investments are set to grow in the coming year are:

 

  • Talent development and upskilling
  • Raising productivity through Gen AI and automation
  • Building a high-performing culture

 

Surveying HR tech partners in the region, we found that the top areas of innovation are well aligned with investment trends and priorities. HR tech partners are acutely aware of HR priorities and have identified the growing demand for better GenAI solutions, the need for a high-performing culture, and skilling demand as the major driving forces behind the evolution and expansion of the HR tech landscape.

 

 

Despite growing investments across major HR functional areas, which signal intent, a closer analysis reveals other roadblocks that need addressing. Business-critical and challenging areas, such as hiring and attracting the right talent and increasing HR effectiveness through AI and analytics, have seen a decline in investment appetite. Other strategic areas, such as personalising the employee experience and creating impactful onboarding programmes, have stagnated in terms of investment.

 

For CHROs and HR leaders, this highlights the need to improve their effectiveness, skills, and ability to leverage technology solutions, as well as negotiate with business leaders for their implementation. To create the right impact, many today also need to focus on overcoming alignment challenges.

 

The Problem of Misaligned Priorities

 

Misaligned priorities between HR and HR tech partners during both the selection and implementation phases of HR tech utilisation emerge as a major challenge to driving tech ROI.

 

When evaluating their HR technology, we found that data security is the top priority for 90% of CXOs and HR leaders. The next important criteria are user experience (82%), followed by cost optimisation (76%), the ability to measure business impact (74%), and change management and adoption support (72%). These are the top five tech evaluation criteria prioritised by HR and business leaders.

 

 

Cost savings from HR technology portfolio optimisation remain a key expectation for HR. However, this is missing from HR tech partners' priorities when delivering targeted solutions. HR tech partners will need to offer more cost-effective solutions to meet HR demands more effectively. Additionally, they must demonstrate greater ROI and ensure the scalability of their costly solutions.

 

HR leaders are also missing the mark by overemphasising cost and failing to prioritise analytics and reporting as key selection criteria. We also observed that placing data security at the top without end-to-end analytics and reporting will result in a disintegrated HR dashboard.

 

However, this misalignment isn't limited to the selection phase. Even during the implementation stage, HR and HR tech partners show differing perceptions of the challenges HR leaders face while leveraging HR tech. This directly impacts how responsive HR tech partners are to HR and business demands, influencing their current focus areas.

 

The two biggest perception gaps between what HR leaders prioritise during the implementation stage and what HR tech partners think is key for HR leaders are:

 

  • Lack of configurability and compliance – 29% of HR leaders agree that this is a challenge, while none of the HR tech partner respondents surveyed identified this as an issue.
  • Lack of system compatibility and integration – 36% of HR leaders cite this as a challenge, compared to only 20% of HR tech partners surveyed.

 

 

To foster successful HR tech implementation, HR technology providers must proactively understand the evolving needs and concerns of HR leaders. This involves identifying unique organisational contexts, anticipating changing tech evaluation priorities, and recognising potential utilisation challenges. HR tech partners must also play a strategic role in guiding the entire decision-making process.

 

As companies become increasingly digital, HR leaders must embrace analytics and AI to strengthen the entire talent function and focus on robust change management.

 

HR Imperative: Build Sustainable HR Tech Infrastructures

 

Despite its challenges, technology remains a key enabler for the HR function. Leaders across the board unanimously agree that technologies like AI, automation, and analytics will play a major role in the coming year.

 

To succeed in today’s evolving job market, businesses need to attract, engage, and retain skilled, adaptable, and tech-savvy employees. This requires clear investment strategies and better-aligned expectations between HR, business stakeholders, and tech partners to optimise technology use and achieve both business and talent goals.

 

Building a sustainable HR tech infrastructure will be necessary to fuel the next step in the evolution of the HR tech landscape. For a region as multifaceted as APAC and ME, this has emerged as one of the three top talent imperatives. To achieve this, 59% of HR leaders across the region plan to anchor investments in 2025 in responsible and scalable technology with maximised business value.

 

To overcome investment doubts, both HR and HR tech partners must play crucial roles in strengthening HR's ability to deliver business impact. HR leaders must keep pace with the maturity curve to invest in the right technology, but it is equally critical to raise their appetite for experimentation, execute a robust change management process, and enhance their own functional effectiveness and skills to stay ahead of the tech evolution curve.