RedThread Research Unveils New Insights and Big Disconnects on AI in HR Tech

RedThread Research has unveiled its latest report, "AI and People Analytics Technology: Insights from the Starting Line," offering a comprehensive look at the evolving role of artificial intelligence (AI) in HR technology. The report explores the evolving role of generative artificial intelligence (Gen AI) and machine learning (ML) across people analytics technology, highlighting both opportunities and challenges for organizations seeking to leverage these tools. It synthesizes eight months of quantitative and qualitative research — drawing on surveys from 48 vendors and 171 customers, vendor briefings, practitioner roundtables, and ongoing discussions with RedThread members. HR Tech Insights: HR Strategies for Retaining Top Talent in Tech Companies

Sponsored by the RedThread Tech Consortium, this research finds that AI is primarily being used to address workforce management challenges, improve efficiency, and enhance decision-making. Vendors are using Gen AI to improve access to data and insights through natural language processing and analyze employee feedback and comments — but there are also critical shortfalls in areas such as risk management, ethics, and customer understanding.

"Generative AI is transforming HR technology in ways we're only beginning to understand," said Stacia Garr, co-founder and principal analyst at RedThread Research. "There's no doubt that it is poised to tackle some of HR's most persistent challenges — but right now, we are seeing a lot of talk about AI in these technologies and less clarity on how AI is solving leaders' critical business challenges." Key Takeaways from the Report: HR Tech Insights: HRTech Top Voice: Interview with Wendy Gonzalez, CEO at Sama

• Broad AI Adoption — and Customer Skepticism: While 90% of vendors report using AI (ML and Gen AI), only 40% of customers recognize AI within their solutions, highlighting a significant disconnect in communication and implementation.
• Use Cases Align. Usage Perceptions Don't: Vendors and customers agree on the top use cases for AI — like NLP and attrition analysis, but customers are less likely to say they're seeing them in action.
• Traditional ML vs. Gen AI: Vendors prioritize Machine Learning for workforce management challenges like retention prediction, while Generative AI is more frequently applied to data accessibility and interpretation and optimization tasks.
• Innovation is Strongest Among Small Vendors: Companies under $1M in revenue are leading experimentation with AI, leveraging agility for faster adaptation.
• Ethics and Risk Management are Lacking: A notable gap exists in vendors addressing ethical concerns or creating the frameworks necessary to ensure internal and external ethical use of AI. Similarly, only half of vendors are ensuring SOC 2 certification for security and risk management.

"Our findings here highlight a gap between vendor capabilities and customer expectations," added Priyanka Mehrotra, co-author and analyst. "We see the need for more transparency, risk management, and practical applications of AI if vendors want to deliver more meaningful impact to employers and their employees." Explore the Insights Further: RedThread Research invites you to join Stacia Garr and Priyanka Mehrotra for a Tech Consortium-sponsored webinar on February 4, 2025. This event will delve into the report's findings, offering actionable strategies for leaders across the HR tech ecosystem. Register for the webinar here.