A new study fromRedThread Research reveals that the people analytics technology (PAT) market continues to grow-reaching an estimated $10.4 billion in 2024-but at a significantly slower pace than previous years. According to the research, the year-over-year growth rate dropped to 28% in 2024, down from 41% in 2023. Vendors are adjusting their strategies in response: raising prices, trimming included services, and relying more heavily on partnerships to drive revenue.
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Now in its sixth year, the annual study draws on vendor survey data and includes trend comparisons. It highlights that only 32% of vendors expect to see over 31% growth in 2025, compared to 37% and 39% of vendors who said the same for 2024 and 2023, respectively. As growth cools, around 50% of vendors report raising subscription prices across all customer sizes. Fewer vendors are bundling consulting and implementation services into their offerings, with sharp declines in those categories from previous years. Instead, they are relying on partnerships with referral partners, consultants, and other vendors to provide support.
“Buying a PAT solution is still complex,” said Stacia Garr, Co-founder and Principal Analyst at RedThread Research. “There's more pressure than ever on both sides-vendors are chasing profitability, and buyers are demanding clear value.”
The report also highlights a strategic pivot in product investment. While excitement around generative AI (Gen AI) continues to surge-with a 16-point increase in vendors investing in new Gen AI features-traditional machine learning (ML) investments are losing steam. This year, the number of vendors building new non-LLM / ML features dropped by 30 points. Today, 71% of vendors say they use both Gen AI and traditional ML in their products.
One concerning trend: support for customer data ethics is on the decline. While almost 80% of vendors now have an internal code of conduct-double from last year-external support and guidance has fallen off. Just 47% of vendors support customers with guidance around data collection and use, down sharply from 71% just 2 years ago.
“As the market slows down and vendors continue investing in Gen AI, they're pulling back on support around key areas like implementation, consulting, and data ethics,” said Priyanka Mehrotra, Senior Analyst at RedThread Research. “It's a risky move that could widen the gap between vendor promises and customer reality.”
Explore the Insights Further: Sign up for RedThread Research membership to access a free infographic based on the findings from the report. The full report, also available now to RedThread Research members, includes an in-depth analysis of vendor strategies, growth forecasts, and buyer behaviors in the people analytics tech market.
Join the RedThread Community: In a landscape defined by rapid change, staying ahead requires access to the right insights and expertise. Companies and individuals can explore these findings further by joining the RedThread research community or the Tech Consortium. Visithttp://www.redthreadresearch.comor emailhello@redthreadresearch.comfor more information.
Research Sponsored by the RedThread Tech Consortium
This research report was sponsored by the RedThread Research Tech Consortium, a growing community that remains focused on underwriting high-quality, unbiased market research. Consortium member organizations collaborate with RedThread to push the boundaries of people analytics technology and contribute to cutting-edge research. Current Tech Consortium members include: Absorb, Betterworks, Cornerstone, Culture Amp, Degreed, Eightfold, Hi Bob, Lightcast, LinkedIn, Medallia, Microsoft, OneModel, OpenSesame, Oracle, Perceptyx, Qualtrics, QuestionPro, Revelio Labs, Schoox, TechWolf, UKG, Visier, Workday, Workera, and ZeroedIn.
About RedThread Research
At RedThread Research, we get it.
Sure, we're experts in performance, people analytics, learning, and D&I – and we're well-versed in the technologies that support them. But we're also truth-seekers and storytellers in an industry often short on substance, and too full of #!%. Our mission (indeed, our very reason for existing) is to cut through the noise, and amplify what's good. We look for the connections (or red threads) between people, data, and ideas – even among seemingly unrelated concepts. The result is high-quality, unbiased, transformative foresight that helps you build a stronger business.
To learn more, visithttp://www.redthreadresearch.com
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