IT software companies that look after and retain their staff are more likely to leverage the opportunities being created in the sector by COVID-19.

Analysis by NN Investment Partners shows that SAP, CRM and Microsoft ranked top among the world’s 10 leading software companies based on human capital indicators, such as recommendations of a company as a place to work, CEO approval rating, human capital development score and human capital risk.

The analysis also showed that Salesforce, Workday and Adobe ranked top based on the expansion seen in their workforces between 2015 and 2019.

Hans Slob, Senior Investment Analyst, NN Investment Partners: “The software sector has been the key digital enabler during the pandemic as the use of technologies to collaborate, such as Zoom, Slack, Microsoft Teams, Citrix and Teamviewer, enabled office workers to easily adapt to the new work-from-home setup.

Strong human capital indicators and high headcount growth do not guarantee alpha generation, but as can be seen, Microsoft and Adobe combine strong human capital KPIs and healthy headcount growth with exceptionally strong shareholder performance.

Microsoft’s Satya Nadella has the highest approval rating among CEOs, according to Glassdoor’s data, with a whopping 98%. Nadella is also a favourite among investors. Our shareholding in Microsoft has delivered a 530% total return, or 33% on a compound annual growth rate basis, since he took over from Steve Ballmer in February 2014.

Being in a strong position to attract, retain and develop human capital can better equip a software company to fight the war for talent. Our core holdings in Adobe and Microsoft score well on human capital metrics. The growth of their “human capital” enables these cloud software leaders to continue to contribute positively to the performance of NN IP’s global sustainable and impact equity funds.”