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HRMS, HRIS, HCM – key differentiators and how to choose


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Know what to expect from HRMS, HRIS and HCM

With the vast array of HR technology being available in the market, it has become extremely confusing for businesses to identify the right one. Understanding what these technologies are and how they can help is the most crucial step towards finding the best fit. The terms like HRMS, HRIS, and HCM are quite loosely used in the industry and hence spell a lot of confusion.

One most significant factor for this dilemma could be- there are no standard rules for configuring an HR system, unlike in a Finance & Accounting module where there are defined rules for configuring a system. In an HR system, it largely depends on what a company needs. For example, some companies would have outsourced their talent acquisition or payroll functions entirely but need other functions like data management, leave and attendance, record management, etc. They would still prefer to call their system an HRMS or HRIS. As compared with a standard accounting system, one cannot say I do not need journal vouchers in there and still try to call it an Accounting module. Though there is no carved-in-the-stone definition for (HRIS), human resource management system (HRMS), and human capital management (HCM) software, we have explained what each of them encompasses. 


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HR, as a function, has a series of tasks & procedures to be performed. Therefore, for a system to be called a proper HRMS or HRIS tool, the following modules are highly recommended.

Recruitment and Onboarding portal

Allow HR to post JDs, candidates to review and post their resumes. Interview scheduler up to the hiring stage. Complete onboarding process of a hired candidate up to completion/assessment of probation period.

New employee data sharing

All downstream systems to receive new joiners data – Payroll, finance, HR Services, IT, Administration, Security, external service providers, etc. for their further processes.

Leave & Attendance 

Regular tracking of attendance, data on LOP / Reversal of LOP to Payroll, workflow for leave application, approvals, updation of leave records, quota management, leave encashment, etc.

Salary/data changes 

Ability to make changes to employee data regarding pay or personal information, such data to be automatically shared with relevant departments such as Payroll or benefits provider.

Payroll process 

Payroll is the heart of any HR system where employee salaries are computed, disbursed, accounted & communicated in a timely & accurate manner. Most importantly, statutory compliances are managed by linking the HR system to appropriate government portals for both remittances and filing of returns electronically at a click of a button.

HR Services 

The system would support HR's administrative tasks, such as retaining policies, procedures, company/government rules, FAQs, employee queries, chats, tax support, employee letters, record management, and reminders.


Standard HR reports such as headcount, data validation reports, salary costs, MIS distribution to relevant stakeholders, audit schedules, and reconciliations, can be managed.

So, what additional features does HCM offer?

To start with, we treat our employees as assets, and obviously, a system that enables the management of employees is called the Human Capital Management system. So, apart from whatever features are available in HRMS or HRIS, some additional sensitive and critical modules like learning and development, performance management, career growth/pathing, counseling, and demographic analytics are included in HCM. 

Learning & Development

Capturing specific L&D needs of employees, enhancing their skill sets, tracking mandatory training, counseling, and emotional support programs

Performance management

Setting up and tracking of short-term and long-term employee goals, outstanding achievements, recognition, promotions, salary changes, feedback, surveys, opinions, etc

Demographic Analytics

Perform critical demographic analytics to make informed decisions to help with the right balance on hiring or relocation, upskilling or pay scales, and many other employee-related decisions.

We hope this article could help you get an understanding of HRIS, HRMS, and HCM and what to expect from these technologies. Let us know in the comments!



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