The Recruitment Industry Could Be About To Face Its 'Uber' Moment

Photo: Joe Raedle / Getty Images.

There have been a bunch of tech startups springing up attempting to solve a range of different issues in the recruitment sector: a trend that sometimes indicates a number of things, including the old way of doing business isn’t meeting consumer needs or there’s just a better, faster or smarter way to complete the task.

It’s being coined as the “Uber” moment: a point in time where an existing industry gets flipped on its head by an up-and-comer with a streamlined, user-friendly way of doing something.

It’s happened in the taxi industry with companies like Uber and Ingogo popping up, as well as in the real estate sector – more on that here.

IBISWorld estimates there are more than 7000 recruitment businesses in Australia, employing 22,200 people. Most charge between 15 and 25% of a candidate’s annual salary for a successful placement.

Even online jobs classified site, which accounts for about 20% of the 2.5 million jobs filled each year in Australia, has turned its attention to help businesses find the right worker rather than employees finding employers. Its Send Job services allows employers to directly contact potential candidates with online profiles rather than waiting for job seekers to respond to ads.

Another contender for the employment Uber-disruptor is Expr3ss.

Creating an algorithm which automates candidate selection, Expr3ss founder Glyn Brokensha told Business Insider the number of recruitment startups is growing and they’re reducing friction across the hiring process.

“We’ve got [recruiters] on the ropes,” he said.

However, the recruitment industry doesn’t agree.

PageGroup regional managing director, Japan, Australia and New Zealand Phillip Guest told Business Insider he completely disagrees this industry is about to face a significant structural change.

“I wouldn’t agree with that,” he said. “There will always be a very important place for recruitment in businesses for some time – or forever.

“We’ve seen all sorts of different innovation and change come and go, including if you go back far enough, the creation of the internet.

“I would see [technological change] from my perspective as a real positive for our industry – not everyone in our industry – but for our industry generally.”

Guest said the growth of online databases has enabled recruiters to provide faster and higher quality services as well as enabling them to locate and identify the best talent around the world.

However, he said technological changes will make it difficult for some parts of the recruitment sector to “remain relevant” – especially companies that place less skilled or junior roles.

“As you move down from the CEO of an organisation down to the more transactional, less skilled roles, particularly heading into the blue collar sectors… technology will make it easier to find the less skilled workers and that will increasingly put more pressure on the organisation that service that market,” Guest said, adding it’s the roles that “are not necessarily complex or as senior as the roles that we recruit in.”

Having a highly engaged workforce is fundamental to the success of a company, so being able to hire and the right talent is critical.

“If anything it will become more and more important as the world becomes more and more global,” Guest said. “Any recruitment company that cannot demonstrate that it can actually add value to its client and its candidate will struggle to survive.

“Those that can demonstrate they can add value, they will continue to exist and get stronger given the ever increasing demand for highly skilled people.”

But tech companies are starting to crowd out the recruitment sector – increasing competition and raising the bar.

In February Linkedin acquired – a site dedicated to job matching – in a $120 million deal. is designed to help employers find the right applicants and is just one of many talent solution software products now available on mass.

Even dating site eHarmony is getting in on the action, entering the professional recruitment space by playing career matchmaker as it expands to become a “relationship company”.

Its careers platform, called Elevated Careers, is expected to be launched in December and will use algorithms and assessment tools to match applicants with the right company culture. More on that here.

The company has been working on a solution for the last three years, according to its founder and CEO Neil Clark Warren.

A 2012 survey by Harris Interactive found that eHarmony had led to 600,000 marriages since starting in 2000, with a divorce rate of 3.8%. The company now wants to extend that matching rate to the professional world.

“If we can do that for jobs, we will save companies enormous amounts of money, and save the person a lot of strain and stress, too,” Warren told MarketWatch.

Like eHarmony’s new algorithm-based jobs platform, Expr3ss software identifies and matches applicants with the right skill-sets and attitude with jobs, helping employers manage their own recruitment process – getting rid of the middle guy.

“We make sure the people preferred for a job are the people most suitable for the job,” he said. “When you open up the transparency, it’s just like Uber if you like, the customer can talk directly to the provider. In this case the employer is talking directly to the applicant.

“By doing it directly you don’t need recruiters. The tools that were expensive and available only to recruiters are now available on the internet for a tiny, fraction of the price.”

The road to cutting out big recruitment companies started when Seek automated and digitised job posting. Job aggregator sites took that a step further – pooling jobs from sites all over the net.

“Employers who used to have to use recruiters to find people are discovering they’ve got the internet for that,” Brokensha said.

“For a long time they’ve basically said we are the only way to get to all the good people in the market – that’s simply not true. These days with the job aggregators putting jobs onto the internet…any job that is available is findable on the internet by anybody so we don’t need the recruiters to find the people.”

There are a few tech startups trying to solve the various hassles which come with recruitment.

Online middle man, Search Party, allows recruiters and employers to access databases of resumes without identifying candidates.

While RecruitLoop has turned the sector’s pricing structure around, enabling employers to hire recruiters by the hour rather than paying a percentage of salary.

There are plenty of ideas floating around but they all point towards a changing recruitment sector.

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