AGC's Insights - HR Technology (2025)

We are excited to share with you our latest report on HR Technology.

The future of HR Tech is being shaped by an increasingly complex workforce landscape – one defined by talent shortages, the rise of AI-driven tools, and shifting employee expectations. The focus is no longer just on automation; it's about creating a dynamic skill ecosystem where AI anticipates gaps and aligns talent with emerging opportunities in real time. This evolution is enabling organizations to foster adaptive cultures and drive meaningful employee engagement.

The HR Tech market, valued at $41B in 2024, is projected to nearly double by 2032, reaching $82B on the back of AI-driven innovations, the proliferation of employee-centric experiences, and the continued shift toward remote and hybrid work models. As organizations look to streamline operations and enhance compliance, demand for personalized solutions, from tailored benefits to predictive workforce analytics, is fueling a new wave of investment and innovation.

On the deal front, HR Tech remains one of the most active software sectors. While M&A deal value in 2024 declined from COVID-era highs, the sector closed 263 transactions totaling $10.7B, including three $1B+ megadeals (Apax's acquisition of Zellis, H.I.G.'s acquisition of Alight, and ADP's acquisition of Workforce Software). At the same time, private placements have pulled back, with activity falling below pre-pandemic levels. Despite market oscillations, one thing remains clear, as 74% of companies planned to increase their HR Tech spending in 2025, underscoring the resilience and long-term growth potential of the sector.

With extensive experience advising across the HR Tech landscape and a deep network of relationships with top investors and acquirers, AGC remains highly active in the space. We hope you find our latest insights valuable and encourage you to reach out with any questions or thoughts.