The AI Agents Are Coming

Artificial intelligence is rapidly transforming the HR technology market and will penetrate every area of HR, including recruitment, learning and development, employee experience, and day-to-day HR service delivery, said industry analyst and thought leader Josh Bersin, speaking recently at the 2024 HR Technology Conference in Las Vegas.

“The power and capabilities of AI platforms are exploding, and they will continue to get smarter,” said Bersin, CEO of the Josh Bersin Co. in Oakland, Calif.

The emergence of agentic AI—an evolution from AI-powered chatbots that answer questions to AI agents that take actions based on those exchanges—will lead to it being increasingly integrated across HR systems, Bersin said.

“It’s a huge transition in the market,” he said. “All AI systems are going to start talking to each other, and you’ll be able to conduct transactions in core systems and across systems. In the last two years since ChatGPT was introduced, HR tech vendors are working harder and faster than I have ever seen to redesign and redevelop HR technology.”

The ‘Next Big Thing’

AI agents talking to one another is “the long-predicted next big thing in AI,” Bersin said. “The large language models we’ve been learning about for the last two years are now turning into large action models.”

As an example, he said Microsoft Copilot will talk to Workday Assistant and Eightfold’s AI agent and conduct transactions across systems. For the employee, this will remove the frustration of having to go through the many HR tech systems, platforms, and applications necessary to find what they need or to accomplish tasks. The capabilities of agentic AI are expected to go way beyond improving HR self-service and the employee experience, however.

Bersin said that very soon, a recruiting AI agent will be able to source candidates based on specific qualifications, engage in candidate outreach, schedule interviews, assess candidates, and present finalists for consideration.

Core HR Systems Are Generating Heat

Bersin acknowledged that he felt that core HR technology—namely HR management systems—was getting stale in recent years, but the AI revolution has jump-started the space with innovation.

“The part of the market that may seem the most boring is on fire,” he said.

What was historically known as the HR system of record—a database of employee information needed to run payroll and maintain compliance—is evolving into an integrated talent intelligence system. Core human capital management (HCM) platforms will start incorporating intelligent agents into their user interfaces, with generative features embedded across many modules, he said.

“Different types of heterogenous data will be brought together into a living, data-intelligent system that is really going to transform business decision-making,” Bersin said.   

All the major HCM vendors—including ADP, Dayforce, Oracle, SAP, UKG, and Workday—are building AI platforms into their core offerings. Bersin focused on a few that were especially impressive:

ADP. ADP’s new Lyric HCM platform, coupled with the ADP Virtual Assistant, is an exciting new offering for midsize and large companies. “It is a spectacular next-gen system,” Bersin said. “Built from scratch with an AI-centric architecture, this new ADP platform provides a highly flexible architecture and easy-to-use interface that makes core HR as easy to use as a consumer application. The product has been in development for more than six years and now comes to market as a role model for others to follow.”

SAP. SAP mapped out dozens of HR use cases and introduced Joule, its enterprise AI assistant, to seamlessly access functionality across the SAP technology suite. “It is one of the most advanced conversational AI systems for enterprise resource planning (ERP) and is quickly becoming more intelligent,” Bersin said. “Imagine where this is going—users can use a single chatbot to inquire about employees, customers, sales, revenue, supply chains, and more.”

ServiceNow. ServiceNow stands apart from the other core HCM vendors as the leading digital workflow technology provider in the market. But it is also all in on AI. ServiceNow’s latest platform release, Xanadu, layers AI features into all elements of the HR service delivery process. “This includes the launch of NowAssist for employees, an AI-driven manager hub, redesigned HR agent workspace, and a new employee center built on the AI skills engine acquired from Hitch,” Bersin said. ServiceNow is applying AI to all areas of employee and manager experience, which is where its workflow offerings really shine.

Workday. Workday has applied AI to its core platform and is now building an infrastructure to enable the Workday Assistant chatbot, as well as new application agents and hundreds of other AI capabilities, to become more intelligent. “Workday is doing forward-thinking design work with agentic AI features to shrink the time it takes to complete HR tasks,” Bersin said.

More Startups Set to Be Acquired

Bersin said a lot of the capabilities organizations previously looked for in smaller vendors are being implemented in HR core systems, often due to savvy acquisitions—examples of the necessity of AI functions forcing consolidation in the HCM space.

Cornerstone, the largest learning technology company, recently acquired SkyHive to expand its platform to provide skills-based learning, career mobility, compliance management, performance management, and recruiting. Workday acquired HiredScore to offer an AI-based assessment and scoring system for recruiters.

Many AI startups, such as Beamery, Eightfold, Gloat, Paradox, Phenom, and SeekOut, have seen significant growth, and it is highly expected that these companies will become acquisition targets within the next year.

“As AI innovations continue to expand, the market is entering a consolidation phase,” Bersin said. “While the major ERP vendors aim to build their own AI applications, many of these fast-growing specialists with AI at the core are likely to be acquired.”