Why 'free' HRMS isn't usually free

It’s often said, ‘if it’s too good to be true it usually is.’ Free HRMS can sometimes fall into this bucket. Some HR systems are free at the point of access, like open source or lower-tier SaaS subscriptions, but have other costs associated with them. As you consider free HRMS options, keep in mind these areas that have hidden costs.

Installation

Installation is the first point where a free HRMS can begin to cost you. Many free HRMS can be installed locally from your usual internal IT resources. If you are low on technology resources or the software’s details such as setting up the mail server are sending you in circles, vendor IT resources are usually available to get you up and running. These, however, come at a cost.

Support

Many free HRMS do not come with extensive documentation, and while open source allows you the freedom to discover, a developer may need to review thousands of lines of code to find some field logic. Most free vendors are serving small to mid-sized companies so you won’t find much of the support structure that you have from some of the larger vendors such as user conferences, customer discussion boards or support included in licensing fees.

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You may find that development or functional topics like open enrollment or payroll questions will require paying for support from the vendor for timely resolution.

Increased employee count and removing data

A number of free cloud HRMS providers offer a cost model where a certain number of active employees are held for free and then it builds in a tier cost structure so that as you grow you begin to pay for the use of the HRMS. The removal of data is another topic that may cost you. Whether you have a mistakenly entered employee or if you decide to move your entire company to another system, both scenarios will require the vendor’s assistance. Most companies have no choice but to pay due to data privacy concerns and the need to remove the data.   

New modules

Some free HRMS offer a good core product that will get you started with basic HR tasks. Once you’re up and running you may want to expand into some of the product’s other modules like time and attendance or financial modules such as expenses. These add-ons are considered as extras so will require additional payments to get the licenses.

HRMS training

Many free HRMS vendors are small companies who put much of their effort into developing functionality. Backend tasks like creating training documentation are often secondary considerations. I’ve seen some free systems that do not even have basis documentation for the core setup, instead depending on the strength of their usability. If you are in the market for pre-built training guides it is usually an additional consulting cost to get the vendor to create and release those to you.