Hiring down, spending on hiring software up

Some firms hope to realize cost savings through new software
By David Brown
|Canadian HR Reporter|Last Updated: 11/11/2003

D

espite a flat labour market and difficult economic conditions, many companies continue to invest in technology to improve hiring processes, according to a new study by IT market analysts, Aberdeen Group.

Surprisingly, recruitment software vendors said the past year was a good one, said Katherine Jones, managing director with Aberdeen Group’s enterprise business applications practice.

“Almost across the board there was an increase in sales at a time when there is a recession and people are laying off.” There are probably two reasons for this, she said.

The first is that companies want to cut costs and expect recruitment software to enable cost-effective hiring.

Second, many employers believe the current labour market will change. Firms are willing to invest in software that will help plan for the future.

“These companies anticipate the future need to hire rapidly, economically, and well — that is, locate top-performing candidates — and they are preparing for that now,” states the report,

The Growth of the Industry: Enterprise Talent Management Buyer’s Guide 2003

. The study offers profiles of 25 vendors including earnings, management team and products.

In the last year, vendors continued making improvements to products to meet the demands of customers, said Jones. For example, organizations continue to refine screening technology to improve the quality of candidates and cut back on the sometimes unmanageable flood of resumes recruiters complain about.

Tech-savvy job seekers had figured out ways to fool screening software. For instance, a job candidate could use the word Java, in print so tiny it was unrecognizable to the naked eye, to create a line under the name and contact information at the top of the resume. A recruiter looking for someone with lots of Java experience could have ended up with that resume on his desk even though the actual Java experience was insufficient.

“The search engines have gotten a lot more sophisticated,” Jones said. They no longer just look for words, but phrases or strings of words.

Organizations are also looking to automate the entire hiring process, from generating the job posting, to sorting resumes, to scheduling interviews and taking care of any of the formalities required between the formal hire and the time the new employee actually shows up on the job.

In fact the market has changed so much that many companies with “recruit” in their name are looking at changing names to better reflect what they do, she said.

Customers interviewed for the study also reported a “positive and often impressive” return on investment, states the report. Allied Domecq Quick Service Restaurants, a customer of Recruiternet, reported cutting recruiting costs by US $1 million in the first year with the average cost per hire dropping 65 per cent, the average time to fill a position decreasing from 83 to 54 days. In total, millions of dollars have been saved in recruiter payroll costs, sourcing fees (newspaper listings, for example), candidate and manager travel and relocation. Data entry tasks were also cut by 50 per cent.

Jones said customers can expect some shakedown and consolidation in the market. “This is a market that has far too many little players out there,” she said. Some of those companies will be bought out for their customer base, while others will be bought for their technology. “There is some good code out there for the picking,” she said. For example, some of the vendors in Europe have a better understanding of international hiring and therefore larger vendors may be interested in buying that expertise.

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