The Dynamic HR Tech Market

Technology is dramatically changing the way Human Resources (HR) activities are being performed in today’s environment. And that dramatic change is fueling a dynamic marketplace in the HR technology sector. An already sizable market ‒ current estimates put the HR tech market value at approximately $39 billion ‒ it is expected to exceed $80 billion by 2030, growing at an 8.2% compound annual growth rate (CAGR). 

M&A volume is also on a growth track in the sector. There were 92 M&A deals in the HR Tech space in the first five months of 2025, up 23% from the same period in 2024. At that pace, deal volume for the full year will match or exceed the 10-year of high of 205 deals in 2023. Demand was strong from both financial and strategic buyers, with PE firms involved in 28% of the deals.

There are a number of trends driving this growth. Among them are the growing adoption of Artificial Intelligence (AI) technology, a greater reliance on data analytics, the expanded use of remote and hybrid work environments, and a focus on improving the employee experience. 

Growing Adoption of AI 

AI is playing an increasingly important role in HR. The technology is being used to automate or enhance an expanding set of HR use cases ‒ anywhere from workforce-related analytics, to personalized employee support, to recruitment, to onboarding. For example, AI-powered analytic tools can analyze vast amounts of HR data to identify trends, predict future needs, and optimize workforce planning. In the recruitment process, AI-based software can analyze candidate data, identify potential matches, and even predict job performance, improving the speed and accuracy of hiring.  And AI chatbots can provide answers to employee questions and offer personalized learning and development recommendations.

The market for AI in HR is surging. It ended 2024 at $6.05 billion, is expected to grow to $6.99 billion in 2025, and eventually exceed $14 billion by 2029. And that surge is accompanied by a growing number of M&A deals involving companies that provide innovative AI solutions for HR. Some of these are megadeals valued over $1 billion. For example, recently AI software company Moveworks was acquired for $2.85 billion by service management and business transformation software company ServiceNow. Moveworks offers an agentic AI solution that helps employees build customized AI agents that can automates processes such as employee onboarding or assist employees in performing common tasks such as resetting a password.

In another representative deal, Corum client HIRECLICK was acquired by Asure Software, a provider of cloud-based Human Capital Management software solutions. HIRECLICK offers a SaaS-based all-in-one AI-powered software solution that streamlines the recruitment process for small and mid-sized businesses. The solution provides a seamless experience for creating job descriptions, posting to national job boards, tracking applicants, and hiring talent through a smooth and intuitive process. 

The penetration of AI in HR is expected to increase at a very fast pace. According to a recent Gartner study, 75 percent of the companies contacted are either planning or exploring ways to incorporate AI into their HR functions, indicating a strong trend towards increasing AI adoption in HR departments.

Greater reliance on data analytics 

HR departments are increasingly relying on data analytics to make more informed and strategic decisions in areas ranging from workforce planning, to recruitment, to training, to employee engagement and retention. Data analytics is also being used to help optimize HR processes, reduce costs, and enhance overall HR department performance. And predictive analytics tools are becoming more popular, helping HR departments anticipate future challenges and opportunities, such as employee turnover or skills gaps. 

Companies that provide data analytics tools for HR are in high demand as indicated by the expected growth of the global HR analytics market to $9.89 billion by 2031 ‒ a CAGR of 14.9% over the period 2025 to 2031. 

Some recent M&A deals involving HR data analytics tool providers are indicative of the demand. For instance, Enrich Layer, a unified B2B data enrichment API provider, recently acquired HR Signal, a company that offers an AI-driven SaaS solution for employee retention, workforce analytics, and talent planning. 

Another example is workforce intelligence company Revelio Labs’ acquisition of Salary Board, a Singapore-based provider of real-time compensation data and labor market insights. 

Companies are also looking to acquire solutions that can consolidate and integrate data from various HR systems and other business data sources for a more comprehensive view of their workforce. This is driving M&A deals for providers of tools that can better integrate these data sources. For example, Corum client PeopleInsight, a Canadian provider of intuitive workforce analytics software, was acquired by HireRoad, a provider of cloud-native end-to-end talent management and insight software.  The deal enhances HireRoad's talent management platform by adding advanced data analytics features and allowing customers to pull in data from other third-party systems to access new insights.

Expanded use of remote and hybrid work environments

The COVID pandemic forced many companies to allow employees to work remotely, accelerating a trend that had already begun toward increased acceptance of remote or hybrid models, where employees work both remotely and in the office. That trend has continued, driven in large part by technology.

Tools such as Microsoft Teams, Zoom, and project management software have made it easier for teams to communicate, collaborate, and manage projects remotely. In addition, secure cloud storage platforms such as Google Drive and Dropbox enable safe access to files and documents from anywhere, fostering collaboration. 

The market for tech solutions for remote and hybrid work is experiencing significant growth and is projected to exceed $21 billion by 2032. And companies that offer solutions supporting remote or hybrid work are in much demand as M&A targets. For example, workplace collaboration software maker Smartsheet was recently taken private in an $8.4 billion acquisition by PE firms Vista Equity Partners and Blackstone  Smartsheet helps teams, no matter where they are located, collaborate, plan, track, automate, and report on work.

Another example is cloud-based talent management software provider Engagedly's purchase of Corum client theEMPLOYEEapp, a company that provides an all-in-one employee app, company intranet, and unlimited employee texting solution that give employees ‒ whether they work in a hybrid, remote, or deskless environment ‒ fast and easy access to the information, documents, and tools they need to succeed.

Focus on improving the employee experience

Technology is playing a key role in improving the employee experience throughout the employment lifecycle. Companies are using technology to do things such as streamline onboarding, enhance engagement and feedback, simplify communication and collaboration, and personalize training. Companies are also turning to employee experience (EX) platforms to improve various aspects of the employee experience, from recruitment and onboarding, to performance management, and offboarding. 

The market for EX platforms is experiencing significant growth, driven by an increasing recognition that employee well-being and engagement is important in meeting business objectives. The market ended 2024 with a value of $7.42 billion and is expected to reach almost $11.5 billion by 2030, growing at a CAGR of 6.70%.

Companies that provide solutions geared to improving employee experience are attractive acquisition targets, especially for strategic buyers. One example is Germany-based remote-working software provider TeamViewer SE’s purchase of U.K.-based digital employee experience company 1E for $720 million. 1E is focused on Digital Employee Experience (DEX), aiming to improve the way employees interact with technology in their workplace.

Another example is HR technology company Phenom’s acquisition of Tydy, an India-based HR Tech company focused on delivering streamlined preboarding and onboarding experiences for employees.

What the future holds

The HR tech market is robust and is projected to continue growing as companies increasingly embrace digital transformation across their HR departments. Factors such as the adoption of AI, a greater reliance on data analytics, the expanded use of remote and hybrid work models, an increased focus on the employee experience, and the need for more personalized and efficient HR processes will continue to drive growth in the sector.

In parallel with that market growth is an expected increase in M&A deal volume, as both strategic and financial companies continue to target companies that provide creative solutions that meet HR’s evolving needs.