Rise of the machines

On-demand platforms are potentially disruptive forces for the recruitment industry. Felix Wetzel explores what advantages these new entrants have over traditional recruitment agencies.

Thu, 25 August 2016 | By Felix Wetzel


On-demand platforms are potentially disruptive forces for the recruitment industry. Felix Wetzel explores what advantages these new entrants have over traditional recruitment agencies.

Venture capitalists have invested substantial amounts of money into so-called on-demand staffing platforms: Atomico put $42m (£31.8m) into Jobandtalent, Accel led a $10m (£7.5m) investment round into JobToday, while Goldman Sachs Private Capital together with One Peak Partners injected €20m (£16.6m) into Stafffinder (now re-branded as Coople). Will these platforms dis-intermediate the recruitment agency, as predicted when job boards first came onto the scene? Will they eradicate job boards by combining matching technology with the business model of recruitment agencies?

On-demand staffing platforms
Jobandtalent, Coople and JobToday focus predominantly on temporary and shift jobs in hospitality, logistics and retail in specific locations. All three see themselves as a ‘mobile first’ offering and follow the same charging model, yet at a lower value, as recruitment agencies. But instead of human recruiters, it is technology that matches people with jobs, and worker and employer communicate directly via the platform.

At Coople, employers can rate workers and vice versa. “It is a self-cleansing system, where good people and good employers rise to the top,” explains David Klein, managing partner of One Peak Partners.

“Managers spend 40-50% of their time interviewing and handling administrative tasks such as payroll. We make this more efficient for them: workers are paid via Coople, and the employer only receives one invoice at the end of the month instead of having to pay each worker separately.”

Yann de Vries, a partner at Atomico, says: “These mobile marketplaces can optimise flexibility and productivity for workers and employers as [they display] jobs by proximity, location and availability.”

Traditional recruitment agencies will be disadvantaged when it comes to growth. “The new players can scale much faster than traditional recruitment businesses as they are not reliant on branches,” explains Klein. De Vries agrees: “With the matching technology in place [and] the product and platform developed, they can become truly global players. Workers and employers in London and Sao Paolo face the same difficulties.”

Marketplaces for tech talent
While Coople and company serve a candidate-rich market and focus on minimising the pain for the employers, other platforms such as Hired.com and LandingJobs.com, work in candidate-dry markets such as IT. Their focus is on improving the candidate experience.

Sophie Adelman, head of sales EMEA for Hired.com, outlines their model: “Candidates apply to be part of our marketplace. We select the top 5% through a combination of human curation and machine learning algorithms. Then we allocate a talent advocate who acts as their personal career coach.”

Expanding job boards
Some job boards are also offering recruitment agency services.

“At eTeach, schools can choose if they want a light-touch service of advertising a job and dealing with the applications on their own, or if they want us more involved. Our latest product release is an applicant tracing sysytem (ATS) that helps schools take the worry out of recruitment by better tracking and improving time management,” explains Paul Howells, chief executive officer and founder
of eTeach.

It’s not only job boards that are evolving but also aggregators. Indeed launched Indeed Prime, which appears to be modelled on Hired.com.

In the words of Bill Richards, managing director, Indeed Prime is “a speciality job site that provides employers with top talent based on coding skills, education and work experience”.

According to Richards, Indeed Prime’s services should be available to clients in the coming months.

This indicates that, suddenly, recruitment agencies are finding that their candidate suppliers have become competitors. 

Enhancing recruitment agencies
Obviously, recruitment agencies are evolving, too.

“We see a lot of interest in our just-in-time delivery platform from start-ups and established recruitment agencies,” says Roderick Smyth, chief executive and founder of Tempbuddy. This company sells an on-demand staffing platform to recruitment agencies, “especially in markets of high-frequency staffing like education with supply teachers, and health care with nurses and doctors”.

In his view, existing recruitment agencies have an advantage over new entrants as they enjoy worker and client relationships. Also, most crucially, existing agencies are compliant with existing legislation and have compliance integrated into their workflows.

What was never seen as a competitive advantage can suddenly prove a barrier to entry. But it won’t last for long, and Smyth urges agencies to be fast in embracing new technologies, updating their platforms and adjusting their approaches and cultures. “My advice is: move fast, leverage your existing assets, and take the market.”

But will it be enough? According to investors and industry commentators the impact of new technologies in recruitment has only just begun. According to De Vries, “the recruitment space will see a lot of disruption over the next 10 years. With interactions moving to mobile, and artificial intelligence enhancing the matching, it will be easier for workers and employers to engage and do it
without any middleman.”

Bill Boorman, founder of the recruitment unconference community (tru), agrees: “The real challenge to the recruitment sector will come from tech. This is real disruption… if the biggest taxi company in the world owns no cars, the biggest retailer no stock, the biggest hotel company no rooms, who is to say the biggest recruitment business won’t have any candidates. Be warned.”

POWER POINTS: on-demand platforms

  1. It will be easier for workers and employers to engage without any middleman
  2. VCs have invested substantial amounts of money into on-demand platforms

  3. Job boards and aggregators will compete with recruitment agencies, all the way to head-hunting & RPO services

  4. Recruitment agencies that stick to the old ways will ultimately fail

Felix Wetzel is a recruitment industry analyst & adviser.

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