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E-Recruitment Market Assessment 2003
Key Note Publications Ltd, April 2003
DotCom Bubble? - What Dotcom Bubble?:
Since 2000, the dotcom bubble has well and truly burst the deflation of that bubble has left in its wake a stream of failed start-ups, stock market failures and investors that got their fingers badly burnt. The Internet business model has taken severe knocks in many markets, but has seemingly gone from strength to strength in the recruitment market. In contrast with many other Internet sectors, online recruitment has a number of profitable jobsites - such as monster and, the example to them all, Jobserve - although it would be wrong to see the sector as awash with spare cash and financial reserves. Indeed, consolidation is badly overdue in this industry and is expected in the future.
However, online recruitment is now firmly recognised as a strategically important medium to fulfil vacancies both by recruitment agencies and, more recently, by employers. The use of electronic recruitment (e-recruitment) is also expanding by industry sector. Originally largely limited to IT, graduate and senior management roles, the Internet is now utilised at every level, across all industry sectors.
The Infant Has Started to Talk:
For many companies, e-recruitment is still at an early, even infant, stage of development, with the imperative largely driven by a desire to cut recruitment costs. In addition, most recruiters using the Internet are pursuing piecemeal initiatives rather than having a guiding strategy and the Internet has not yet broken into the total jobs market. Instead, it targets a particular type of jobseeker.
However, greater sophistication and maturity in the market are emerging, with companies seeking to use e-recruitment as part of a wider shift of their human resource (HR) operations to an electronic basis. We expects the Internet to penetrate the wider jobs market in the next 5 years. A growing proportion of recruiters are now seeking to develop e-human resources (e-HR) and e-recruitment strategies.
In the early stages of the market, the main priority for recruiters was generating applicants for their job advertisements. Today, the focus is shifting towards improving the quality of candidates that apply for jobs. As e-recruitment becomes part of e-HR, so the focus of recruiters is shifting towards accurately evaluating and comparing the relevant skills of candidates, i.e. screening, filtering, sorting, and ranking of candidates. This, in turn, is reshaping the services and functionality offered to recruiters by jobsites.
Jobsites must increasingly develop services and solutions to help recruiters throughout the recruitment value chain and across the broad areas of human capital retention and development, such as training and career development. In response to recruiter pressure, jobsites are also becoming more sophisticated in the types of jobs they offer and in their geographic targeting. Jobsites are, therefore:
- providing value-added services to jobseekers, such as services and information, to aid the jobseeker in his/her career management and development
- diversifying overseas to attract jobseekers in other countries, reflecting the global operations of major employers and the search for in-demand skills overseas
- providing value-added services to recruiters, especially services along the recruitment value chain, leading sites to vertically integrate, often by buying in solutions or partnering with companies with the relevant software expertise or intellectual capital
- consolidating by developing new site functionality and services, which require substantial investment. Only those players that reach the critical mass to generate substantial profits will have the capital base for long-term survival.
Clicks and Mortar - the Dominant Business Model:
UK national and regional newspaper groups, trade publication publishers and traditional offline recruitment agencies have all moved strongly online since 2000. Today, pureplay Internet jobsites are only a small minority of the sites available, although some still hold strong market positions. Of the top 15 jobsites, as measured by average unique users per month in 2002, only five are pureplay companies, with the rest ultimately owned by traditional offline companies.
In the recruitment market, it is increasingly the norm for agencies to run/use online and offline operations. For these operators, going online was part defensive and part opportunism. Many agencies entered the online market out of a fear that jobsites would effectively cut them out of the recruitment value chain, but, to their delight, this has not happened. Instead, agencies have realised that online operations cannot replace the traditional agency online has complemented offline activities. The combination of the traditional people skills of the agency and the automation skills of an online operation enhances the total offer an agency makes to a client.
Moreover, since mid-2001, major employers have made a significant move online and are increasingly offering jobs via their own corporate websites. We would argue that, far from this being a threat to the traditional recruitment agency, it is the jobsites that have the most to fear. This development increases the pressure on jobsites to offer a wider portfolio of services, including recruitment software and solutions for corporate websites.
The clicks-and-mortar business model also works because offline services still have a significant role to play in the recruitment industry: online jobsites are not suitable for targeting all sectors of the jobs market. Our research shows that online jobsite users are typically:
- male
- affluent (ABC1)
- from London and the south east of England.
They are not, therefore, representative of all employees in the UK.
In addition, offline is still a prime channel for brand building by recruiters: online is used to `sell' jobs (e.g. below the line), but offline builds the recruiter's brand (e.g. above the line).
The Growth Driver:
Online recruitment is a candidate-driven market and, in February 2003, there were around 7.5 million jobsite users in the UK out of approximately 27.8 million adults with access to the Internet. On average, over the whole of 2002, around 6.2 million adults visited jobsites, of which 670,000 found jobs through the Internet.
Jobfinding remains the key motivation for using jobsites, including the availability of job-related information, such as information on recruiters and on an industry. However, a range of other factors also drive site traffic, especially career-associated information such as training/careers advice and employment news. Jobsites are therefore expanding the range of career-related information and services that they offer the jobseeker. Such services help build, and maintain, site loyalty and ensure repeat visits by jobseekers as they change their jobs/careers throughout their working lives.
The Future is Bright, But Not All Will Survive
In the next 5 years, we expects e-recruitment to continue to grow in popularity among both employers and employees. By 2007, 10.3 million adults will be using jobsites and all major companies will be using the Internet to advertise their jobs.
Clicks and mortar will remain the most successful business model: a symbiotic relationship between online and offline recruitment methods will be the norm. Jobsites will grow in sophistication and expand along the recruitment value chain. However, the investment required for this will demand greater consolidation in the industry. By 2007, we expect the number of jobsites to have fallen by a half, as employers increasingly advertise jobs via their own websites (plus the surviving jobsites).
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