Despite persistent economic headwinds, global investment in workplace technology accelerated in H1 2025, said George LaRocque, founder and chief analyst at WorkTech, a global market intelligence and HR technology advisory firm in New York City.
And H2 2025 looks to be on a similar trajectory to the first half of the year, he said, speaking at HR Tech 2025 in Las Vegas.
"Global investment in H1 reached $3.55 billion across 119 deals," LaRocque said. "This surprises people, because it didn't feel like that was happening this year."
To put that in perspective, H1 2025 beat H1 2024 by 60% and H2 2024 by 10%, he said. "H1 2025 included 11 mega deals each valued at greater than $100 million. This puts the year on pace with the 2018-2019 gravy train years."
However, the resurgence wasn't uniform, he added, with investors favoring human capital management (HCM) suites and payroll platforms while talent acquisition (TA) and learning technology faced investor hesitancy.
"TA tech investment is falling victim to the economy and job market headlines, while HCM, payroll, benefits, the core HR categories tend to carry the HR tech market," LaRocque said.
Macro Factors
A persistent theme across trends is that "things feel differently to different people depending on where they sit," LaRocque said. "At a high level, the macroeconomic numbers look pretty good. We're looking at 3% global GDP growth projected for 2025, and about 78 million net new jobs by 2030. But it doesn't feel good to a lot of people right now."
He said that front-line, care-economy, education, and technology roles are expected to see the largest growth in the years ahead, while some knowledge-worker roles will be displaced by automation and AI.
"AI is having a huge impact in job trends, with 22% of current jobs expected to be either displaced or newly created by 2030, rapid expansion in roles like AI and machine learning specialists, and a major shift to skills-based pay, with AI upskilling delivering a 20–30% salary premium," he said. "It's not all bad, it's not all good — it's hard to make sense of it."
AI Adoption
LaRocque said that it may feel like every organization is adopting AI and you're falling behind if you haven't, but only certain sectors have been aggressive to implement AI tools.
"High-volume front-line hiring was ripe for conversational AI and agents," he said. "That's not the case in most knowledge-worker hiring, where employers are still skittish about bias or building complex skills ontologies. AI adoption is happening faster than the normal 10-year cycle we typically see, but not as quickly as we think it is. That said, waiting is not a strategy, it's time to experiment with trusted partners and learn."
Breaking AI adoption down by HR domains, it is mostly being used in talent acquisition. About 40% of U.S. enterprise organizations use AI to screen applicants, reduce bias, and optimize candidate experience, LaRocque said. About 25% use AI for workforce training and personalized upskilling. AI-powered predictive analytics are rising, with 70% of large companies saying they will deploy these tools to track attrition risk over the next 18 months.
"I believe in the AI hype," LaRocque said. "We're getting there, but we're not going to all get there at the same time, in every category, in every HR department, in every industry. It will take longer than the window of time that we have been told to expect."
Market Moves
Some of the more significant or interesting deals that happened in 2025 so far include:
- Payroll platform Paychex acquiring its competitor Paycor.
- Recruitment marking agency Shaker acquiring programmatic solution JobAdX and employer brand consulting firm exaqueo.
- SAP acquiring SmartRecruiters, an applicant tracking system with AI applications.
- Workday going on a buying spree, acquiring Paradox, a leader in conversational AI designed for high-volume, front-line hiring; Sana Labs, an AI development company; and Flowise, a platform for building AI agents and AI-enabled workflows.
"AI is driving hype in the market, but it is also driving market consolidation," LaRocque said. "After the launch of Open AI, every big platform I talked to said 'we can build it. We can move fast.' A couple of years later, there's more of 'we need to buy it, we need to partner.' We're seeing that now."
LaRocque added that Workday's acquisitions will put pressure on the other big HCM vendors to make similar moves from an AI perspective. "I think we are about to see more aggressive M&A and incredible innovation happening, especially around the frontline, deskless workforce," he said.
Jason Corsello, founder and general partner at Acadian Ventures, an early-stage venture capital firm specializing in Future of Work technology, said that this is the best time to be an investor — and the hardest time. "It's hard because we have a lot of capital flowing through the system, and valuations have gotten crazy," he said. "But we will see amazing new HR technology companies built over the next 10 years. I'm looking for pioneering technology that I haven't seen before, and teams that are creating something completely new and defining the next category."
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