c. 1200, from a Scandinavian source (Old Norse þeir, Old Danish, Old Swedish þer, þair), originally masculine plural demonstrative pronoun, from Proto-Germanic *thai, nominative plural pronoun, from PIE *to-, demonstrative pronoun (see that). Gradually replaced Old English hi, hie, plurals of he, heo "she," hit "it" by c. 1400. Colloquial use for "anonymous people in authority" is attested from 1886. They say for "it is said" is in Milton.
The most important importation of this kind [from Scandinavian to English] was that of the pronomial forms they, them and their, which entered readily into the system of English pronouns beginning with the same sound (the, that, this) and were felt to be more distinct than the old native forms which they supplanted. Indeed these were liable to constant confusion with some forms of the singular number (he, him, her) after the vowels has become obscured, so that he and hie, him and heom, her (hire) and heora could no longer be kept easily apart. [Jespersen, "Growth and Structure of the English Language"]