Businesses Cite ‘Monumental’ Losses When They Choose Wrong HR Software

According to Capterra’s 2025 Tech Trends Survey, 62% of businesses that regretted their HR software purchase describe the financial impact as “significant or monumental”

ARLINGTON, Va.--(BUSINESS WIRE)--Businesses are increasingly investing in HR software to streamline operations, manage their workforce, and enhance productivity. The HR software market is one of the largest B2B software categories, with nearly 2,000 products listed on Capterra alone. This volume can overwhelm buyers, leading to poor decisions that have lasting negative impacts on their businesses. According to Capterra’s 2025 Tech Trends Survey, 54% of businesses cite increased costs and 47% report productivity losses due to regretful HR software purchases.

“Compared to function-specific software confined to a specific department, HR software is unique in the sense that most employees in a given organization, and sometimes even job candidates, interact with these platforms,” says Brian Westfall, principal HR analyst at Capterra.

“This raises the stakes for businesses to invest in the right HR software. Beyond the financial impact, poor purchase decisions can also lead to operational and reputational consequences, since the efficacy of these HR platforms can have downstream impacts on the employee and hiring experience.”

Capterra’s report outlines key factors that lead to regretful HR software purchases:

Relying solely on vendor information means buyers may miss critical details
Regretful HR software purchases are primarily driven by where buyers get their information. A staggering 90% of regretful HR software buyers say they are likely to make their purchase based solely on vendor-provided information. This approach often leads to overlooking critical insights from independent and unbiased sources, which could help buyers make better decisions.

Successful buyers of all types of software are 56% more likely to factor in recommendations from experts and 52% more likely to consider information from product review and comparison sites when making their software shortlist, compared to regretful buyers. This balanced approach helps ensure that the software meets the actual needs and expectations of the organization.

Valuable perspectives are ignored when software purchase decisions are made alone
Nearly two-thirds (64%) of regretful HR software buyers were the sole decision makers in the purchase. This highlights the critical need for well-rounded and informed decision-making in the HR software selection process.

There are many factors to consider when evaluating software, from functionality and usability to security and compatibility with other systems. Successful software buying teams should include a mix of stakeholders such as prospective users, HR management, and IT.

Neglecting total cost of ownership causes misalignment in budget expectations
One of the top product-driven reasons businesses regret their HR software purchase is because the total investment is more expensive than they expected. Many buyers focus solely on the subscription license cost, neglecting other associated expenses such as setup, data migration, customization, user training, and customer support. This oversight can lead to significant budget overruns and financial strain.

“As a whole, recent trends, such as the rapid advancement of AI, have added pressure for businesses to buy new software just to have the latest functionality or stay ahead of competitors,” Westfall adds. “This external pressure might seem benign in theory, but it often leads to regretful software purchases. That makes it all the more important for businesses to thoughtfully define their goals, involve a well-rounded purchasing team, and consider third-party information sources in the software buying process.”

Read the full report here for more insights on how to successfully evaluate software purchases, and visit Capterra.com to review recommended HR software on Capterra’s Shortlist. Capterra is a free platform that enables businesses to browse software reviews, compare features, and get pricing information.

About Capterra
Capterra is the #1 B2B marketplace for organizations to find the right software and services. Our platform connects buyers to over 2 million verified user reviews about products and services spanning 1,000 categories and offers actionable, objective insights and recommendations to help them find the best product or service for their specific business needs.

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