Across the HR landscape, economic forces are pushing employers to rethink and retool old systems. High inflation and low unemployment have assisted in boosting labor's position relative to capital in the job market, driving human capital related costs up and adding strain on companies. Additionally, issues such as employee wellness, lack of employee recognition, and low engagement have lowered productivity. This is because HR departments, lacking the right tools, are struggling to turn disorganized data into actionable insights.

Employee Engagement Software is focusing on solving this market need using new technologies to help employees feel more connected and engaged. Among the key trends and drivers catalyzing growth in the space are the rising popularity of remote work, employers shifting their focus towards retention and employee demands, and the increasing use cases of AI within HR. Growth investors have noted these tailwinds and infused over $7B of capital into the ecosystem since 2021, and consolidation is tracking at a record high in 2023 driven by PEs looking to buy and build platforms and strategics looking to gain market share and realize synergies with complimentary offerings.

With over 330 companies identified in AGC's Employee Engagement Software landscape, this industry is growing rapidly with leaders engaged in an "arms race" to bolster their offerings and startups forcing significant disruption at the frontier.

Employee Engagement Software

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