The dramatic growth of the people analytics technology market underscores the urgent need for HR teams to utilize data effectively in decision-making.
The ongoing disconnect between vendor promises of AI integration and customer experiences highlights the necessity for improved alignment and practical application in organizations.
Deep dives
Growth of the People Analytics Technology Market
The people analytics technology market has experienced remarkable growth, expanding from $1.7 billion in 2019 to $8.1 billion as of last summer. This significant increase reflects a heightened interest in data utilization and AI integration within organizations, driven in part by the challenges presented during the pandemic. Companies are increasingly recognizing the value of leveraging people data to inform decisions regarding engagement and productivity. As organizations continue to prioritize data accessibility and integration, this market is expected to witness further expansion, continuing to meet the growing demand for analytics solutions.
Key Shifts and Innovations in People Analytics Technology
Several meaningful shifts have emerged within the people analytics technology landscape over the past years. Firstly, the clarity regarding use cases for various technologies has improved, resulting in six defined categories ranging from employee voice to labor market analysis. Additionally, there has been an increase in the democratization of data access, although the anticipated widespread adoption of data usage by 2025 has not fully materialized. Lastly, the focus on ethical considerations and transparency in data usage has gained traction, highlighting the evolving nature of conversations surrounding data collection and its implications.
The Role of AI in People Analytics Technology
Artificial intelligence has become an integral component of people analytics technology, with advancements in generative AI showcasing potential benefits for data insights. However, a notable disconnect exists between vendors and customers regarding the implementation and effectiveness of AI solutions. While 90% of vendors claim to utilize AI, only 40% of customers perceive it being effectively integrated. This disparity indicates that many organizations struggle with the practical application of AI, emphasizing the need for improved understanding and alignment between vendor capabilities and customer expectations.
Future Trends in the People Analytics Space
The future of the people analytics technology market is poised for significant changes, including the potential consolidation of vendors and the growing need for middleware solutions. As organizations seek more interconnected and seamless data experiences, middleware solutions may facilitate better data mapping and integration, further bridging gaps between disparate systems. Additionally, insights from analytics are expected to be embedded into various operational systems, shifting away from traditional dashboard-based approaches. Overall, these trends indicate an evolving landscape where a data-centric approach will continue to shape the future of HR technology.
HR teams have more data than ever, but many still rely on guesswork when it comes to people decisions. In this episode, we unpack the rapid growth of the people analytics tech market, which ballooned from $1.7B in 2019 to $8.1B by last summer.
Hosts Dani Johnson, Stacia Garr, and Priyanka Mehrotra walk through how this market has evolved, what’s driving investment, and why the demand for better-connected, more useful insights keeps rising.
We also dig into what’s not working, like customer frustration, disappointing ROI, and the reality that AI in these tools often overpromises and underdelivers. Whether you’re brand new to people analytics or looking to uplevel your HR tech strategy, this episode will help you move from “hoping for the best” to truly leading with insight.
You will want to hear this episode if you are interested in...
(0:00) Setting the stage: Why people analytics tech is worth revisiting.
(4:31) The market’s growth from $1.7B to $8.1B, and what’s fueling it.
(8:31) Three big shifts: use cases, democratization, and ethics.
(13:40) Pandemic-driven surge: Why execs finally cared about people data.
(14:57) What vendors are getting right: Partnerships and practical AI.
(23:25) Where vendors are falling short: UX, ROI, and unmet promises.
(29:30) The near-term future: Middleware, consolidation, and embedded insights.
(36:00) AI expectations vs. reality: Trust, risk, and what vendors still miss.
