The market saw a 50% uptick in HR tech announcements in the third quarter of this year.
By Larry Basinait
Each quarter, new technologies in the HR space are developed and funded. To track the key players in the HR technology sector, and the innovation they bring, HRO Today produces the Human Resources New Technology Quarterly Summary report summarizing the top advancements in the industry and the funding initiatives that support product innovation. This data reveals critical information about today’s industry leaders, new technologies, and their applications.
This quarterly report features new products that hit the market, as well as funding and acquisition announcements for HR tech companies. It covers areas of HR tech including workforce management, talent acquisition, employee engagement, and learning and development.
The third quarter of 2024 saw a boom in new HR technology announcements—a 50% increase from last quarter—as the sector solidified its healthy performance for the year. HR tech companies launched a slew of new products in September, displaying a continued drive to capitalize on AI technology. A rebound in venture capital (VC) and mergers and acquisitions (M&A) continued as well.
There were 298 major HR tech announcements in the third quarter, a sizable increase from 198 announcements in the second quarter, and 111 in the third quarter of 2023. Major announcements included those with at least $1 million in funding, where funding information was available.
Investment in HR tech totaled $1.18 billion in the third quarter, up from $946.20 million in the previous quarter and $638.30 million in the third quarter of 2023. Still, total investment was almost half of the $2 billion invested in the first quarter of 2023. The average investment was $23.57 million, slightly below the $24.90 million in the second quarter, but up from $19.34 million in the third quarter of 2023. There were 62 funding deals in HR tech, up from 40 in the second quarter and 34 in the third quarter of 2023.
However, two funding rounds accounted for more than half of all HR tech investment this quarter. French HR consulting firm, HR Path, landed a massive investment of $527 million, and CloudPay, a UK-based provider of payroll software, won $120 million. Excluding these two outliers, total HR tech investment was only $531.50 million and the average investment $11.07 million.
The trend of consolidation in the HR tech industry kept pace in the third quarter, including a notable merger between major job boards Monster and CareerBuilder. M&A accounted for 46 announcements, the same as in the second quarter and up from 33 in the third quarter of 2023.
The majority of HR tech announcements in the third quarter were for products, with 190 announcements, considerably more than the 112 announcements in the previous quarter and 44 in the third quarter of 2023.
Before the second quarter of 2023, funding announcements accounted for about one-half of all HR tech announcements. But after, product announcements started to account for about one-half. In the third quarter of 2023, funding announcements accounted for 31% of all announcements and product announcements accounted for 40%. Then, in the third quarter of 2024, funding announcements accounted for 21% of all announcements and product announcements accounted for 64%.
This shift happened in response to the swell in funding from 2021 to 2022 that abruptly dropped off in early 2023. HR tech companies have used this funding to invest in product development. New products have also emerged because of the acceleration in AI, which has driven HR tech companies to add AI features to stay current and competitive.
Of the 298 technology announcements, 228 were from companies in the United States, 36 from EMEA, 14 from APAC, and 11 from Canada. There were nine interregional joint announcements: seven between the U.S. and EMEA, one between the U.S. and APAC, and one between EMEA and APAC. Silicon Valley was particularly active this quarter with 52 announcements. London had nine announcements.
Funding in HCM/core HR tech swelled in the third quarter, totaling $652.60 million, most of which came from the large investment in HR Path, as previously mentioned. Payroll software was particularly popular among investors this quarter, as the category received $306.40 million, making up for the mere $16.40 million invested last quarter. Talent acquisition technology once again dominated based on the number of announcements (117), which were primarily for new products. (see Editor’s Note below)
Overall, HR tech maintained a solid trajectory in the third quarter of 2024, showing no signs of slowing. Investments and acquisitions kept pace despite economic challenges, companies pushed the accelerator on new product releases, and the AI boom continued to liven and revolutionize the sector. Given this performance, the future of HR tech looks optimistic, as companies take charge with innovation, advancement, and growth.
To access the entire report, visit hrotoday.com.
