This article was originally published in The Global Recruiter



TECHNOLOGY — Are recruitment agencies behind the curve? No, in fact they are driving HR tech innovation argues Sergei Makhmodov, CEO Asia, DaXtra Technologies.

Working in technology, I frequently encounter people who wonder how new products come into being. Some think ideas just pop into the heads of tech geniuses, and voilà, after a few months of tinkering a game-changing solution is born. Others assume product invention is the end result of a measured, arduous and expensive research and development initiative.

While both paths toward invention may ring true in some cases, more often than not it’s feedback from the market that drives product development. And who’s the driving force in this feedback loop in the recruitment technology industry? None other than the industry’s old stalwarts: recruitment agencies.

In recent years, whispers across the blogosphere have predicted a slow and inevitable death for the agency business model. These whispers come from multiple quarters, including internal recruiters who balk at the prospect of paying high agency fees, and Internet-worshipping commentators who argue it’s only a matter of time before web-based job boards and LinkedIn put agencies out of business.

But in reality the traditional recruitment agency is very much alive. In fact, the business has adapted to the Internet-dominated landscape, and is searching for new areas to provide the candidate sourcing solutions that so many employers still need. It is here – in the relentless search for new ways to add value – that the fuel for new tech development resides. As the old proverb goes, necessity is the mother of invention and that is certainly true of agencies today.

That’s because the business of finding the best candidates has never been more competitive. In a way, the Internet has ensured that everyone has the same information, commoditising many aspects of recruitment and levelling the playing field. Sources of unique and competitive intelligence are much harder to come by. That reality has left agencies scrambling to secure any edge they can find.

How do they do this? One way is to spend money on the latest search technologies before their competitors do the same, with the hope of lowering costs while improving productivity.

This hunger for new tech solutions is why agencies are best positioned to provide the honest feedback developers need to refine their inventions. You’ve heard it before: “Your product is appealing, but we’d really be willing to pay for it if function A performed task B, or if channel X offered program Y.”  Such feedback is what makes the ears of companies such as mine – Daxtra – perk up. Our developers hear about these needs, and, armed with coding skills, bring new products to life.

Some may ask why it is that agencies, rather than HR departments at larger corporates, are driving the action in recruitment tech. For starters, unlike corporate HR departments, who inhabit a support role inside a much larger entity, finding the best candidates in a massive CV pile is the main business of recruitment agencies. The entire agency lives and breathes recruitment and is thinking about solving new challenges in the industry on a 24-7 basis.

More specifically, agencies are forced to look at the entire talent pool across a range of domains, whereas corporate HR departments are primarily focused on their sector or expertise.

Also, agency budgets are cut and controlled by executives invested in the business of recruitment. They have license to spend capital on cutting edge technologies. Corporate recruiters, on the other hand, have a slew of costs to finance, including retention, training, and work-life balance initiatives, to name only a few. HR departments are also seen as cost centres, and often control much smaller budgets.

To be sure, agencies are working harder than ever to justify their fees because the Internet is making it easier to find candidates. Companies can bypass agencies and connect directly with potential candidates and vice versa in ways unimaginable just a few years ago. And yet, the hard fact remains: Millions upon millions of job seekers are online. The volumes are unmanageable.

That means the need to source and filter viable candidates is still a valuable service – no matter what happens online. Recruitment technology companies would be wise to heed the feedback of agencies. Despite the current challenges, they are still very much leading the charge.

— By Sergei Makhmodov, Founding Director at Daxtra Technologies

This article was originally published in The Global Recruiter