#USA #Woodside #RedThread Research #People Analytics #Vendor Strategies

Overview of the People Analytics Technology Market

The landscape of people analytics technology (PAT) is increasingly dynamic, reflecting the complexities and challenges that come with scaling solutions in today's market environment. A recent analysis by RedThread Research has revealed that this vibrant sector has reached a substantial value of $10.4 billion in 2024. However, this impressive figure comes alongside a notable slowdown in growth compared to previous years, raising concerns about the strategic directions vendors are taking.

Growth Dynamics

In 2024, the year-over-year growth rate within the PAT market has dropped to 28%, a significant decline from 41% in 2023. This shift indicates a troubling trajectory as vendors, facing increased competition and rising costs, are readjusting their business models. As highlighted in the report, roughly 50% of vendors are now raising subscription prices across all customer segments, signaling a critical response to profitability pressures. Furthermore, there has been a noticeable decrease in vendors bundling consulting and implementation services, a practice once deemed essential to their offerings. Instead, businesses are leaning heavily on partnerships with referral partners, consultants, and other technology providers to deliver the necessary support.

Vendor Challenges

Stacia Garr, Co-founder and Principal Analyst at RedThread Research, underscores the growing complexities of purchasing PAT solutions, noting the intense pressure on vendors to demonstrate clear value against rising user expectations. A diminishing number of vendors are confidently predicting robust growth; only 32% anticipate exceeding 31% growth in 2025, a decline from previous years. The reality of reduced bundled services due to higher costs is placing additional burdens on vendors who must now justify their prices through tangible value.

Innovation Amidst Strain

Despite the deceleration in growth, innovation in the PAT market is far from stagnant. The shift towards generative AI (Gen AI) is particularly noteworthy, with a surge in vendor investment in new Gen AI features, suggesting that companies are keen to adapt to the rising technological tide. However, the traditional machine learning (ML) investments appear to be waning. Researchers noted a 30-point drop in the number of vendors developing new non-Language Learning Model ML features, which raises concerns about whether capabilities will continue to meet users’ evolving expectations.

As of now, 71% of vendors are leveraging both Gen AI and ML in their solution offerings. This hybrid approach underscores the balance companies are attempting to achieve while navigating the changing technological landscape.

Ethical Implications

One alarming trend emerging from the report is the declining support for customer data ethics. Although nearly 80% of vendors report having an internal code of conduct—doubling from last year—external guidance on customer data collection and usage has deteriorated, with only 47% now offering support in these crucial areas. This is a stark drop from 71% just two years ago. Priyanka Mehrotra, Senior Analyst at RedThread Research, warns that as market growth stagnates and vendors pivot heavily toward Gen AI, the pullback from essential support services including consulting and implementation may lead to significant gaps between vendor promises and customer experiences.

Conclusion

In a rapidly changing environment, the demand for innovative and ethical approaches to people analytics technology has never been more pronounced. With a comprehensive understanding of these dynamics, both vendors and buyers must navigate this complex landscape strategically. Those interested in diving deeper into the findings of the RedThread Research study are encouraged to explore membership opportunities that provide access to invaluable insights and knowledge. As companies of all sizes grapple with the implications of rising prices and evolving technologies, sustainable strategies that prioritize both vendor reliability and customer trust will ultimately define success in the PAT market.

• ---