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Recruitment and disruptive technology

22 May 2017

The growing influence of technology and disruptive innovation in the recruitment industry was discussed at a recent gathering of leaders in the sector.

Organised by NatWest and BDO, the group of around 30 recruitment-industry executives witnessed a lively debate about the long-term challenge posed by new technology, which could help firms bypass traditional recruiters and reach out to potential employees themselves.

In a survey of the attendees, only about a third of the recruiters present said they saw such technology as a leading threat, with most confident that the judgement and personal networks they offered clients would not be replaced by new technology solutions.

James Fieldhouse, a BDO director who specialises in mergers and acquisitions in the recruitment sector, said technology might replace much recruitment work focused on relatively low-skilled labour – but the more nuanced skills of the industry would retain its value and could be enhanced by the use of new technology.

“People are using technology in more and more ways, typically to make business processes more efficient, thus allowing companies to retain their competitive edge and ultimately helping to drive profit margins,” he said.

Andy Ellis, head of strategy and innovation at NatWest commercial and private banking, said he was surprised recruiters were not more concerned about the threat posed to their industry by new applications of technology.

Recruitment seemed to be a sector that was “ripe for innovation”, he said, but the message he heard from many senior recruiters was “absolutely not; it is a people business and all these platforms are overplayed”.

“People are using technology in more and more ways, typically to make business processes more efficient, ultimately helping to drive profit margins” - James Fieldhouse, M&A director, BDO

Ellis said that if it’s about people looking for jobs and people getting jobs, the platforms and the LinkedIn-style intelligence behind it should rationally have the ability to bypass what recruiters are doing: “It feels to me like recruitment is a very tech-heavy business, from processes through to attracting and finding customers, and doing things like interviewing over Skype and finding new ways of interacting with each other.”

He said when he sought to hire people for his own team, the biggest challenge was identifying “soft skills such as creativity… so anything around disrupting and finding a better way of finding those skills” was “quite interesting”.

It did not take “a huge leap of faith” to imagine that industry developments such as Microsoft’s takeover of LinkedIn and Google’s expansion of its own recruitment business could have a dramatic impact on the sector, Ellis said, suggesting recruiters would need to become increasingly agile and build on their core strengths of trust and convenience.

But he added: “I can see margins coming down; just the broad push of technology and transparency squeezes the margins. I can’t believe that, with the pace [at which] technology is moving, it won’t get much cheaper than humans, wherever they may be and however they are organised.”