Interpersonal interaction between individuals forms the basis of Human Resources as a field. It is important for companies to have a robust HR department in order to manage their body of employees. For ever-expanding organisations such as successful start-ups, Human Resources assume even more importance. In fact, such organisations will feel the need to go beyond traditional methods used to organise their workforces and seek support from new software.

Now that work-from-home has gained traction – dispersing workplaces and diversifying the workforce – it has become even more difficult for HR personnel to conduct day-to-day activities. HR software serving the growing needs of workplaces are evolving now. However, the process of perfecting HR software tools has been underway for decades. This gave rise to a number of versions of these tools and, with it, a confusing glossary of terms describing these terms. Three terms, in particular, stand out –

  • Human Resource Information System (HRIS)
  • Human Resource Management System (HRMS)
  • Human Capital Management (HCM)

The evolution of HR software tools

HRIS, HRMS and HCM are pretty similar in terms of the purposes they serve. Three different terms are used to describe an HR tool that is, at its core, the same thing because of its swift development and upgrades.

The definitions of these terms vary depending on the vendor or service provider describing them. Considering that HRIS, HRMS and HCM are the product of the evolution of the same tool, here's how we describe the function of each tool and trace the values added to it with each upgrade:


HRIS is considered to provide the narrowest range of solutions. It was created to allow HR personnel to focus on new responsibilities like recruitment and talent acquisition. Here's what HRIS traditionally seeks to achieve—


The term HRMS came to describe on-premises HR systems that offered a more rounded suite of HR software. The primary functions of HRMS involve managing the following:


Perhaps the most popular type of HR tool in use today, HCM also offers a complete suite of services. The key difference is that these are built on the cloud. HCM offers:

Evidently, there is an overlap in the services offered by all three HR tools. This is because the difference between these products has shrunk. Today, developers are creating HR software that offers an integrated suite of tools in one place. This helps companies streamline their management efforts. However, this also means that each of these three terms has coalesced into a catch-all for all HR software tools.

HRIS vs HCM vs HRMS: Strategy or tool?

HRIS is an older software tool with limited applications. HCM and HRMS, on the other hand, are terms used more frequently and interchangeably today. However, it is interesting to observe that HCM acts as a strategy or approach rather than an HR tool. HRMS, on the other hand, is a specific tool that aids HR functions.

In common parlance, however, HCM can be used either as a strategy or as a tool. When referring to HCM as a tool, it is understood to be software that performs the same functions as HRMS. The biggest difference between HCM and HRMS is that the former has more to do with a company's approach and the latter refers to a tool that performs HR functions.


While there isn’t much consensus across industry players about the scope of HRIS, HRMS and HCM, a general idea can be drawn from what each of these encompasses. Here’s a look at what each of these tools covers:


The foremost purpose of a typical HRIS is to manage a database of the employees of an organisation. It is the go-to tool for all information pertaining to employees such as:

Features of HRIS

All this information is stored, navigated and utilised through a number of features that are commonly included in all HRIS systems. A typical HRIS tool offers the following features allowing you to make optimum use of employee data:

Applicant tracking: An applicant tracking system (ATS) helps consolidate and streamline the hiring process. It enables recruiters to post about job openings through various channels, shortlist candidates, interview them, and carry out their transition from candidate to employee.

Employee database: This is where an HRIS system stores all employee information such as their name, contact, address, experience, education and skills. It helps HR personnel manage all their other functions such as organisation chart, time-off, performance, payroll, etc.

Onboarding: HRIS digitises the processes of onboarding and offboarding. New hires no longer need to sign heavy paperwork. Employers can establish that their focus is on employee experience right from the get-go by automating the onboarding process.

Time-off: This feature allows HR personnel to keep track of the time requested off by employees. Some advanced tools also allow employees to request days off, approve or decline such requests, and update and report time-off.

Payroll: HRIS also allows personnel to manage payroll as it stores information such as bank details, appraisals, time off, and the employee's role. This ensures that HRIS systems enable error-free payment.

Performance management: This allows employees to set goals, and their managers to track their work, provide feedback and reviews and define appraisals. The performance of an employee can be measured and the results tested to determine the future course of action.

Employee self-service: This feature gives employees control of their own accountability and a sense of ownership as it allows them to edit their information, log time-off requests, set their goals, track them and facilitate a transparent relationship between employees and their managers.

Why you need HRIS

Wondering whether your company needs an HRIS system? Here are some clues that will help you determine whether or not you should invest in HRIS software:


How to select the best HRIS | Freshteam How to select the best HRIS | Freshteam


HRMS systems help automate repetitive tasks performed by HR professionals. They are usually cloud-based systems and focus on the company's relationship with employees and candidates. Here's what an HRMS tool seeks to achieve:

Features of HRMS

The tools that come with Freshteam’s HRMS software are:

Applicant tracking system: This takes care of the process of application -- posting about a job through different avenues, screening applications and resumes, shortlisting and selecting candidates and making an offer.

Onboarding and offboarding: Much like an HRIS, HRMS also facilitates smooth onboarding and offboarding. It monitors tasks of onboarding, emails checklists to new hires, helps send welcome kits and gets e signatures from candidates among a host of other things.

Employee information system: The employee management system ensures that employee profiles are set up with the correct information. This helps understand organisational charts to establish managerial hierarchy. All employee-related documents can also be recorded in one place.

Time-off management: HRMS also allows the creation of custom time-off policies, states the rules of taking leaves and helps manage holidays. It helps keep track of the time off balances and notifies managers concerned about any new requests.

Why you need HRMS

An HRMS tool can help automate and digitize large repositories of employee data to be used by the organisation. Here’s why companies should opt for such software.



Unlike HRIS and HRMS, the term HCM is used for practice rather than a tool. Such a practice is targeted at optimising the performance of employees in order to achieve larger business goals. This can be achieved by:

Here are some of the elements that constitute HCM:

Finally, improvising the plan and maintaining it as and when required is extremely important. This can be done by taking feedback from employees and stakeholders and altering strategies along the way.

HRIS vs HCM vs HRMS - components HRIS vs HCM vs HRMS - components

Why choose Freshteam?

Freshteam's HR solution seeks to meet all of HR analytics' needs while also resolving the challenges that come with using this data. Continue reading to learn more:

1. Automated analytics 

Process any data you require automatically. Find curated reports for talent pool, employee absence, candidate hiring, employee turnover, retention, interview requests, and time-off requests - all in one place. Eliminate the hassles of collecting data from umpteen sources.

2. Reports

Leverage data in a variety of ways to come up with new strategies. Perform better with data that can be depicted in different formats and reported for various purposes. Customise widgets, bars, graphs, charts, and other elements in the software to utilise the data however you want. With Freshteam’s user-friendly interface, data analysis and representation is a no-brainer.

3. Ease of sharing

HR analytics is a time and effort-intensive process, and professionals should be able to share it readily. It's critical to share your reports and conclusions with the appropriate teams, and Freshteam’s HCM makes it easy to do so. Rather than downloading a report every month and emailing it to concerned employees, your HR team may simply schedule sending reports to the appropriate stakeholders at regular intervals.