A foundation of outsourcing, technology continues to be a key consideration in organizations’ use of recruitment process outsourcing.
Remember the days when a second mortgage wasn’t needed to gas up your car, air travel didn’t require getting intimate with security screeners, and recruitment process outsourcing (RPO) was more concept than practice? You know, a whole FIVE years ago?
Five years might not be a lot of time in the evolution of BPO—after all, early adopters of ITO made their mark decades ago—but it is in the development of HR technology, particularly applicant tracking software, which is just now entering into its second generation. As any recruiter can attest, the first generation was clunky, difficult to use at times, and mostly standalone applications that nevertheless helped recruitment specialists—whether internal or external—better manage candidates. Though far from perfect, the software packages were a much-needed improvement over the old method of managing people: the filing cabinet.
Today, ATS systems have matured, and improvements go well beyond functional bells and whistles. While the first generation was developed with the staffing industry in mind—focusing more on sourcing services—the latest incarnation takes ATS in a new direction. Although still imperfect, according to some RPO providers, they are moving in a more integrated fashion to address an organization’s workflow. So while many of the applications still don’t integrate well into the rest of an employer’s HRIS or ERP platform, they are getting closer.
“The big thing we feel companies will need is moving [the technology] away from islands of automation,” said Tim Giehill, president and CEO of StarSearcher ATS, a Minneapolis-based vendor of applicant tracking solutions that’s part of the Bond International Software Group.
Giehill said new iterations of ATS handle candidate recruitment as part of the human capital supply chain. Much like movements that took place in manufacturing (the development of ERP systems and other automated tools in 1980s) and sales and marketing (which started the CRM revolution in the 1990s), the evolution of automated HR tools is unfolding this decade. Learning from the experiences of early adopters, developers now better understand the needs of the recruiter and are reacting accordingly.
By making ATS technology more integrated, software developers are also helping to minimize the disconnect between different silos within HR, said Kevin Marasco, vice president of marketing for Vurv, formerly known as Recruitmax. He said as the software helps consolidate more services—from candidate tracking to on-boarding to performance management and compensation planning—managers in different parts of HR will become more familiar with each other’s functions, injecting a more holistic element in HR workflow.
“We’re forcing people to work together. The head of recruiting is talking to the head of compensation, who is talking with performance review. For HR to make progress to get a seat at the table, everyone has to talk to each other to empower and drive the organization,” he added.
IMPACT ON OUTSOURCING
Unquestionably, in this age of internet sourcing and job boards, automating candidate management has become big business. One estimate tallied 63 ATS packages on the market, although broadly used commercial systems account for only a fraction of that. Today, household names such as BrassRing, Taleo, Vurv, and others have built solid client bases.
The ATS market, like that for other HR software, is divided into two groups: commercial, off-the-shelf packages adopted by most users, and home-grown versions developed internally or by outsourcing service providers. Both have advantages and shortcomings, and there is continued demand for both types of solutions, although some observers say the days of proprietary solutions are numbered, and those organizations currently using them will eventually give up and switch to one of the industry standards.
A number of RPOs and staffing firms offer their own systems. Companies such as Kenexa, RES, and The RightThing have proprietary platforms for their clients and invested significant dollars to provide an automated solution to buyers seeking both technology and outsourced services. Job boards and staffing firms also offer their own suite. In addition, a number of employees have invested in internal ATS to complement their ERP or HRIS systems.
Some RPO provider point out that clients, even a few Fortune 1000 firms, either don’t have ATS capabilities or are unhappy with their system. This is one of the reasons why they seek the services of an RPO provider— to gain access to more robust recruitment technology.
Pam Berklich, the group leader and vice president at Kelly Services’ Outsourcing and Consulting Services Group, pointed out that prospective clients often ask about the ATS implementation. “If they don’t have it (ATS) or they have an antiquated systems, one of the criteria they ask about is what tools are you bringing to the table, what reporting capabilities does it have, and how will it affect the price,” she said.
Indeed, whether an RPO provider can offer its own ATS platform or work with a client’s system is crucial to any RPO relationship. According to Berklich, 80 percent of the RPO she works with already employ a system, so Kelly must be able to deliver service on a broad array of platforms. At the same time, those in need of ATS technology will often seek the consultative expertise of RPO providers to find the best package on the market for their specific needs, she added.
Jason Berkowitz, the president of Los Angeles-based Hyrian, an RPO provider, said his company was mindful not to invest in an ATS platform, knowing that clients have their own preferences. When a client needs a system, Hyrian can make recommendations on the commercial packages or, for its mid-market customers, license technology from a developer partner that is then customized to suit the buyer’s system.
Some clients prefer the provider’s technology platform, despite a proliferation of off-the-shelf ATS solutions. Terry Terhark, the CEO of RPO provider The RightThing, said while his company is capable of interfacing with any number of platforms, some clients adopting RPO for the first time ask that the provider be responsible for implementing the ATS. For instance, the Kellogg Company’s snacks division chose the Findlay, OH-based provider’s homegrown ATS over a commercial package. However, Terhark said all of the software offerings in the market are capable of meeting the buyers’ needs.
He added that his company decided to invest in ATS technology to broaden its offerings to clients, even though most of them already have a system in place by the time they decide to outsource recruitment. He said while he believes there will always be demand for proprietary platforms, vendors must remain flexible to work with any platform or risk losing the account.
In most cases, RPO providers must develop a bolt-on interface to the client’s own ATS as a workaround. In some deals, there are several bolt-ons because the buyer uses a number of systems. Berklich noted that one of her large customers requires Kelly to operate with six different systems, which can add significant complexity to the recruitment process. For instance, she said, some clients use one for drug screening, another for background checks. And when the applicant is hired, another one takes on payroll services.
The lack of integration in ATS software is an area that second-generation technology is addressing. Under the first-generation, users often experienced integration challenges not only on a provider-to-client basis but even between different locations. Recent upgrades are meant to help organizations better manage and source candidates, no matter where they are located, some developers noted.
“A major issue is global expansion. There is a trend towards consolidating processes across entire organizations and doing the same thing across the company using the same systems,” pointed out Judy Duff, vice president of product management for BrassRing, the Waltham, MA-based software developer. “These kinds of capabilities are language support and sensitivity to different ways to doing things in different regions.”
Duff said one of the key desires of global customers is to operate the same system under the same processes, no matter where the location. Building such capabilities into ATS technology improves organizations’ global sourcing efficiencies. If they can’t find appropriate talent in one region of the world, a better ATS system can help track down the talent elsewhere.
Beyond that, added Mitzi Adwell, director of recruitment services for BrassRing, buyers also want interoperability between ATS technology and other outsourced and recruitment services such as screening and on-boarding. She said this is all a part of the complete candidate lifecycle, and buyers want to automate as many of the processes along the way as possible. The goal is to automate everything from the sending and communication of candidate data, trigger of notifications, and populating databases as talent is moved from pre-hire to on-boarding.
While the goals are clear—improve interoperability, increase integration, and enhance global reach—ATS technology still falls short for some RPO requirements. Because the software originally spawned from the staffing industry, many of the commercial packages continue to focus on the candidates and less so on processes and workflow. Furthermore, functionality is still fragmented among the different packages. Features, such as highly customized reporting, are either not available or require advanced user skills. For industries such as staffing, where employee turnover is high, software with long learning curves is just not practical. Additionally, the technology still doesn’t do enough with passive candidates, some critics say.
Hyrian’s Berkowitz lamented that ATS technology seems to fall into two camps: one group with a strong ties into ERP systems and corporate compliance; the other is geared at recruitment functions. What’s really needed, he said, are offerings integrating both.
“We do a lot of manual work around things that the ATS technology doesn’t do right now,” he added. “For some of the bigger clients, we use two systems.”
Still, ATS technology has come a long way from its early use as a staffing tool. With developers paying closer attention to RPO providers and corporate customers, they are sure to help drive functionality that will ultimately help deliver RPO in a more timely and cost-effective manner. And who knows what another five years and a third generation of ATS technology will bring.