Free HRMS software explained

You’ve heard the phrase, if it’s sounds too good to be true, it probably is? How about, anything free isn’t worth having? On the other hand, ‘they’ do say, never look a gift horse in the mouth… Enough clichés, the real question is, is free HRMS software really free? And if it is, how can the vendor afford to give it away?

So, does free HRMS mean free?

The answer in purely monetary terms is likely to be yes. When the likes of OrangeHRM and FreeHR say their system will cost you nothing, that’s true. Your bank account balance won’t change at all; it’s download and go. Of course, there are costs other than financial… Free HRMS packages tend to be basic and stripped-down (not in all cases, but mostly so). For example, IceHRM is slick, modern and – of course – free, but it only offers personnel recordkeeping, time and attendance monitoring, and leave management. Now it might seem churlish to complain, but if you’d really benefit from a learning and development module, or software to run your payroll then what you’re getting for nothing only meets some of your needs. Factor in the cost of buying those functions elsewhere, and then the lost opportunities from running separate and non-integrated HR software and it might be less pain in the long run to buy a shiny all-in-one package from the get-go.

Why would a vendor offer free HRMS?

As to how these vendors can afford to operate as a charity, the simple answer is that they don’t. The free options are almost always for a limited number of employee records or users, or the ongoing support package is a pay-for added extra. Nothing underhand about it at all; they just use the ‘freeware’ as a loss leader, as advertising, and they make their profits on other products.

Recommended Reading: HRMS Vendor Guide - Find vendors offering free HRMS

Then you need to consider the other costs of implementing new HR technology: training, data cleansing, possible hardware upgrades… long-term, “free” isn’t free; but on the other hand, for the right business with the right needs, these options are still a ‘gift horse’.

Examples of free HRMS providers

OrangeHRM is a well-established free HRMS system which is also open source, so if you’re inclined to software development you can tinker with it to your heart’s content. That said, Orange’s hosted SaaS option carries a fee, so if you want the flexible benefits of a cloud system, you need to reach for your wallet.

IceHRM is well-nigh perfect for a micro-business because if you have less than 10 employees, they’ll even throw in free hosting, which gives you free HRMS in the cloud. That said, it’s unsupported at this point in their pricing model. If you want aftercare or if you expand past a headcount of 10, there’s a fee.

Finally, Zenefits remains fairly unique on the market. With Zenefits, size doesn’t matter and you get HR management, payroll, benefits, and even 401(k) without a price tag. The reason is that Zenefits doesn’t do any of these things, they provide the software interface between you and the outsourcing companies who do; Zenefits get their fees from those providers.

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Dave Foxall

About the author…

Dave has worked as HR Manager for the Ministry of Justice for a number of years, he now writes on a broad range of topics including jazz music, and, of course, the HRMS software market.

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Dave Foxall