RedThread Research’s 2024 annual study on the People Analytics Technology (PAT) market shows the industry continues to grow—reaching $10.4 billion—but with notable deceleration. Year-over-year growth dropped to 28% from 41% in 2023, signaling that while demand persists, vendors face new challenges in scaling and delivering value.
Market Trends: A Shift from Rapid Expansion to Strategic Retrenchment
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Declining Growth Projections:
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Only 32% of vendors expect growth over 31% in 2025.
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This is down from 37% (2024) and 39% (2023), marking a consistent downward trend.
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Price Adjustments and Service Cuts:
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~50% of vendors raised subscription prices across customer tiers.
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Fewer vendors bundle consulting or implementation support.
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Strategic partnerships are now essential for support and services.
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“There’s more pressure than ever—vendors want profitability, buyers want value,”
– Stacia Garr, Co-founder, RedThread Research
Technology Investments: Generative AI Surges Ahead
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Gen AI Gains Momentum:
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16-point increase in vendors investing in generative AI features.
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Majority (71%) use both Gen AI and traditional machine learning (ML).
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Traditional ML Declines:
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New non-LLM/ML feature development dropped 30 points.
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Focus has shifted toward AI capabilities that drive automation and insights.
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Vendor Strategy: Emphasis on Profitability, Not Just Features
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Revenue Generation Tactics:
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Price hikes and trimmed services as cost-management strategies.
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Emphasis on ecosystem partnerships (referral partners, consultants, etc.).
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Support Infrastructure at Risk:
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Internal ethics policies are rising (80% of vendors),
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But external customer support for data ethics has dropped to 47%—a steep fall from 71% two years ago.
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“Pulling back on consulting and ethics while pushing Gen AI is risky,”
– Priyanka Mehrotra, Senior Analyst, RedThread Research
Key Takeaways for Buyers and Vendors
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For Buyers:
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PAT solutions are increasingly complex; demand clear value and ethical use guidelines.
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Evaluate vendor partnerships and support quality before purchasing.
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For Vendors:
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Growth is still possible with smarter service models and Gen AI investment.
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Avoid underinvesting in areas critical to customer trust, like implementation support and data ethics.
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Full Report:
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About the RedThread Tech Consortium
This research was sponsored by the RedThread Tech Consortium—a coalition of leading PAT companies focused on funding independent, high-quality market research.
Members include: Microsoft, LinkedIn, Workday, Oracle, Culture Amp, Cornerstone, and others.
As the PAT market matures, the spotlight shifts from rapid expansion to sustainable innovation. Generative AI leads product evolution, but cuts to services and ethics guidance could challenge trust and usability. Strategic partnerships and thoughtful investments will be critical to navigating the next chapter in HR technology.
