Staffing Firms and Technology In 2012: “Apocalypse Now” or “A Time of Transformation?”

In my last post, "Will 2012 Mark the End of "Irrational Ambivalence,' ", I suggested that there might be “no time like the present” for staffing firms to begin taking a serious and in-depth look at what is happening in relevant technology.  In this post, I will hazard to develop my argument a little further.

The maturation and near-ubiquity of game-changing electronic platforms on the demand and supply sides of staffing firms (i.e., VMSs, on the one hand, and job boards, social networks, and other talent exchange platforms, on the other) only suggest a part of the explanation of where we are today and where we may be heading.  There are other (possibly less visible) trends that also need to be considered in order to make progress toward some informed perspective. 

Consider this:

Severe and prolonged recession can be accompanied by inhibiting effects that are unevenly distributed throughout the economy.  Peculiar to our situation, in past years, application-user firms’ IT spending was down and their investment in transformative (vs. efficiency automation) technology applications was constrained.   However, technologies continued to develop and mature even without being fully applied in specific solutions, to the point of where in 2012 there is a large inventory of information technologies and technology platforms that are only now beginning to be applied in transformative solutions. 

Cloud technology has only recently arrived on the scene, but adoption is verified and accelerating, making possible the deployment of technology applications and solutions that are more economical and consumable and more flexible, integrative, and connectable than ever before.  Cloud technology is the integrating platform for other technology platforms, including those that have evolved to support integrated communications (VOIP, smart mobile, video, etc.), social networks and electronic identity, big data analytics, and more.  Something that is unique in the economic recovery unfolding in 2012 (relative to past recoveries) is the extent of pent-up, not-fully-applied technology, the attractive economics of deploying it, and the rapidity of adoption across the broad population (including, and significantly, the workforce/talent population)

For better and/or worse—and more than ever before-- very powerful technology is (rapidly, efficiently, and pervasively) inundating, restructuring, transforming human behavioral and economic patterns—resulting in rapid shifts, disruptions and innovations.  Cost and availability of technologies are no longer the gating factors for adoption and penetration of applications and solutions.  Now the constraints are more (1) our ability to innovate, discover, invent precise value-adding solutions and (2) our human and management capacity to absorb so much change (both through value-adding successes as well as application failures) day to day, week to week, month to month—not to mention year to year.

The evidence suggests that a tsunami is at our door step, and no businesses will be shielded from this deluge.  Certainly staffing firms and other business intermediaries (that deliver service outputs primarily by acting on information) must increase their attention to what is happening and respond appropriately. 

The end is approaching?  No, I’d like to leave you at this point with two sets of observations to consider

The first of these is my own, perhaps over-simplified, historical perspective on the absorption of technology by the staffing industry (which I see a series of waves):

  • The first wave (a quite benign encounter with new technologies and applications) took place starting over a decade ago with internet email, application tracking systems (ATS), and online job boards—all of which was, with enough time, fairly easily digested by the staffing industry.
  • The second wave of technology applications, streaming in over the last half decade, was much more disruptive than the first wave--even though it really didn’t involve the application of many new underlying technologies:  this was the emergence of VMS, which radically altered the supply chain/value chain relationship between buyers and staffing firms, imposing more demand for process control and efficiency on staffing firms.
  • The third wave, that is starting to crest now, is a tsunami of an accumulating inventory of new underlying technologies that are cheap, flexible, and will be deployed through an almost trial-and-error process across the whole staffing industry value-chain -- not just across buyers and staffing firms, but stretching even further out to the remote reaches of hard-to-find and hard-to-compete-for “motivated and suitable individual talent” (in social networks, talent communities and possibly co-ops). 

Ok, so that’s just my own, perhaps overly apocalyptic, vision of potential changes and challenges at hand in 2012.  And you—not knowing me that well—may have every reason to think I’m a bit tilted. 

So let me move on to the second set of observations, which have been made by Sarah White (certainly one of the leading and most well-known Talent Acquisition Technology experts one can find).  In a recent blog post, “5 Reasons VC Firms Love Recruiting Technology in 2012 #HRTech,” Sarah documents the recent refocusing of “smart money” (venture capitalists) on innovative “talent acquisition technology” (“TA”) businesses/start-ups:

More than any other segment of the HR Tech industry, the innovations, drive and risk taking in the TA world is amazing – although as a former recruiting pro, I could be biased… Even more fun than the Vendor calls, are the various VC firms trying gauge what has happened the 3 months and why it was happening “all of a sudden”.  The funding and acquisitions of tools like Jobs2Web, Rypple, and Smart Recruiter has made them do a double take in terms of Talent Acquisition the last few months.  As SmartRecruiter Founder & CEO Jerome Ternynck points out “Recruiting is $400bn problem that affects every business in the world. I guess that makes it attractive to both entrepreneurs and VCs.”

And she sums it up:  “This year is going to be even more active in terms of investments, start-ups and growth in the space – being led by the recruitment marketing, video interviewing and recruiting CRM marketplace.”

While Sarah White also has reservations about the pace and extent of adoption of these new technology solutions (“VC’s and Vendors need to remember to stay out of Silicon Valley Mode and assume that the rest of the country hires and recruits like you do.  They don’t.”), she is certainly very clear that these technology applications and solutions are now being pushed to market by massive flows of private capital. 

And this is what I interpret as a “cresting wave” of talent acquisition technologies rapidly coming on-line in unprecedentedly easy-to-procure and easy-to-consume forms. Certainly the rate of absorption of these new technology applications and solutions remains to be seen, but the wave is certainly there. 

I believe the rate of absorption and adoption may be more moderated among corporate enterprise buyers, but necessarily faster and more extensive for staffing firms, due to where staffing firms are positioned in the value chain. As information-driven, “service intermediaries” in a fiercely competitive environment (and where sourcing of candidates/workforce is the essence of the business), I believe that successful adoption of new technology applications will likely be a critical factor of success for staffing firms in the near future.  It will also be a major challenge—especially at an organizational and human level.  But if approached with eyes-wide-open and clear thinking (and the right expert support), it need not be an “Apocalypse Now” (“The horror, the horror”), but rather an active time of positive business transformation.

More to come, so stay tuned. 

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