What was the state of HR technology market in Q2 2025? According to HRO Today’s recent report, the market is booming. Venture funding has increased, M&As are occurring, and new products are being announced. In fact, spending during the first half of 2025 is about 40% higher than spending during the first half of 2024.
From a birds-eye perspective, that seems like a positive sign, but let’s look a little closer at the data. Within the top 5 areas of HR spending in Q2, Payroll and Talent Acquisition took 2nd and 3rd place (not a surprise there based on recent labor market trends). But interestingly, Workforce Management and Employee Engagement & Experience areas took the 1st and 4th spots respectively. And investments in those two categories was $200 million more than Payroll and Talent Acquisition.
The proof is in the cold, hard cash: companies understand that employee success and experience aids in employee retention. The market for improving employee experiences is growing. HR teams are looking for resources to help, and they’re backing it up with money—it’s not all sunshine and AI.
People are the heart of any company. Sybil F. Stershic wrote, “The way your employees feel is the way your customers will feel. And if your employees don’t feel valued, neither will your customers.” Customer retention starts with employee retention and success, and it’s great to see HR funding trends working in concert with this principle.
It appears the future (and funding) is bright moving into Q4. You can take a closer look at HRO’s report for yourself to see the data on new trends and products. Here’s to finding new ways to improve the employee experience and increase retention while also doing good in the world.
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