People Analytics Technology Market Overview
The people analytics technology (PAT) market is currently experiencing significant fluctuations. A recently published study sheds light on the market's performance, revealing that it reached an impressive estimated $10.4 billion in 2024. However, the growth rate has notably slowed, dropping from an earlier 41% in 2023 to 28% in 2024. This shift reflects changing dynamics within the market, as vendors adapt to new business realities.
Strategic Adjustments by Vendors
With growth cooling, companies are reevaluating their tactics. A significant number of vendors—around 50%—have increased subscription prices across various customer segments. Additionally, many vendors are cutting back on bundling consulting and implementation services, leading to a noticeable decline in these offered categories compared to previous years. Instead, collaboration with referral partners and other vendors is becoming the norm as businesses search for alternative pathways to enhance revenue.
Complexity of Purchasing PAT Solutions
Purchasing a people analytics solution is not as straightforward as it might appear. As Stacia Garr, a co-founder and principal analyst at RedThread Research, notes, the pressures are mounting on both sides of the table. Sellers prioritize profitability while buyers seek clear, demonstrable value from their investments. This essential balance can often lead to a complex purchasing process that requires careful navigation.
Investments in Generative AI vs. Traditional Machine Learning
One of the more intriguing aspects highlighted in the report is the shift in vendor investments towards generative AI (Gen AI). Recent findings show a 16-point increase in the number of vendors investing in new Gen AI features, suggesting a growing recognition of its potential benefits. In contrast, traditional machine learning investments appear to be waning, with a sharp decline of 30 points noted in the number of vendors developing new non-LLM ML features. Today, approximately 71% of vendors are leveraging both Gen AI and traditional ML, showcasing a hybrid approach to technology integration in their products.
Issues with Customer Data Ethics
Amid these adjustments, a concerning trend has emerged regarding customer data ethics. While nearly 80% of vendors have established an internal code of conduct—an increase from the previous year—external support for clients has sharply declined. A startling 47% of vendors now provide guidance on data collection and usage, a significant drop from 71% just two years ago. This retreat from a commitment to data ethics raises important questions about the ethical landscape of PAT.
Risks Posed by Market Changes
As the market growth slows and investments shift toward Gen AI, the risk associated with withdrawing support in critical areas increases. Priyanka Mehrotra, a senior analyst at RedThread Research, points out that backing away from essential services like implementation and consulting may widen the disparity between what vendors promise and the actual experiences of their customers. Such discrepancies can lead to a misunderstanding of the product's value, undermining customer trust and satisfaction.
Join the Conversation in the RedThread Community
The evolving landscape of people analytics requires organizations to stay informed and connected. By engaging with the RedThread Research community, both companies and individual professionals can gain deeper insights and share knowledge essential for adapting to ongoing changes. This dynamic exchange will enable better decision-making and foster an enriched understanding of market trends.
Frequently Asked Questions
What is the current size of the people analytics technology market?
The people analytics technology market is estimated to be around $10.4 billion in 2024, though growth has slowed compared to previous years.
Why are vendors raising subscription prices?
Vendors are raising subscription prices as they adjust their strategies in response to a cooling market and increasing pressures on profitability.
What are the main areas of investment among vendors?
Most vendors are currently prioritizing investments in generative AI, while traditional machine learning investments are declining.
What is the status of customer data ethics in the industry?
Support for customer data ethics is decreasing, with many vendors now offering less guidance on data collection and usage compared to previous years.
How can professionals stay updated on industry trends?
Joining the RedThread Research community offers individuals and organizations access to valuable insights, research, and networking opportunities to stay informed about the latest trends.
