RedThread Study Reveals People Analytics Tech Market Reached $12.2B in 2025 as Growth Cools and Contracts Unbundle
A new study from RedThread Research finds that the people analytics technology (PAT) market reached an estimated $12.2 billion at the end of 2025, up from $9.7 billion in 2024. But its 26% year-over-year growth rate signals a market settling into a slower, more mature phase — well off its 2022 peak of 50%.
The report, People Analytics Tech Market Trends 2026: Old Market, New Pressures, describes an industry reshaped by unbundled contracts, a sharp rebound in M&A, near-universal AI adoption that rarely moves past "assist" mode, and a widening gap between how vendors govern their own data and the support they extend to customers. Now in its seventh year, the annual study draws on survey data from 47 vendor solutions and maps a broader market of 163 PAT solutions, tracking shifts in market size, vendor strategy, pricing, AI investment, and data ethics.
"The PAT market isn't shrinking — it's maturing, and that changes the rules for buyers."
— Stacia Garr, Co-founder and Principal Analyst, RedThread ResearchContracts Unbundle and Pricing Models Shift
PAT contracts look fundamentally different from just two years ago. Back then, 53% of vendors bundled consulting and 69% bundled implementation into their technology subscriptions. Today, fewer than a quarter include consulting and only about a third include implementation — an average 20-point drop in just 12 months. Meanwhile, nearly 90% of vendors changed their pricing model in 2026, up from 58% in 2024.
According to Garr, the era when a subscription came with consulting, implementation, and a partner invested in the customer's success is coming to an end. Buyers now have to be far more deliberate about what they are actually getting for the price they pay — and what else they may need to purchase to make the technology work.
"The burden of doing this work responsibly is shifting onto the buyer."
— Priyanka Mehrotra, Senior Analyst, RedThread ResearchA Widening Gap Between Vendor Ethics and Customer Support
Mehrotra noted that vendors have invested real effort into getting their own AI and data ethics practices in order — yet they are simultaneously pulling back on the guidance that helps customers do the same. As the market becomes more transactional, she warned, that trade-off carries real risk for buyers who now shoulder more responsibility for responsible implementation.
RedThread Research will host a free public webinar — sponsored by the RedThread Tech Consortium — on July 29, 2026, to walk through the report's key findings and what they mean for buyers. The full report is available to paid RedThread members, while a free executive summary is accessible to anyone who joins RedThread's free starter membership.
Growth is cooling. The people analytics tech market hit $12.2 billion at the end of 2025, up from $9.7 billion in 2024, but 26% growth is well below the 2022 peak of 50%.
Contracts are unbundling fast. Bundled consulting fell from 53% of vendors to under a quarter, and bundled implementation from 69% to about a third — a 20-point average drop in 12 months.
Pricing is in flux. Nearly 90% of vendors changed their pricing model in 2026, up sharply from 58% in 2024, forcing buyers to scrutinize what they are actually paying for.
AI adoption is stuck in "assist" mode. AI is now nearly universal across PAT solutions, but it rarely advances beyond assistive capabilities, even as M&A activity rebounds sharply.
Responsibility is shifting to buyers. Vendors are strengthening their own data and AI governance while scaling back customer guidance — moving the burden of responsible use onto organizations.