TA Tech: Driven by Hiring Challenges, Recruiting Tech Tries to Take Advantage

During economic downturns, HR technology isn’t nearly as susceptible to the highs and lows of the broader market. One exception to that is recruiting technologies and services, which tend to get impacted by a reduction in hiring demand.

The last decade has seen consistent growth in talent acquisition technology, but starting in the second quarter of 2020, the bottom fell out on the job market. 

Tokyo-based Recruit Holdings, which is one of the few public companies in talent acquisition and has Indeed and Glassdoor under its wings, released its Q1 FY2020 financial reports, which covers April 1 through June 30. Their HR technology division and HR solutions took some of the biggest hits with 27.5% and 32.1% YOY decreases in revenue.

Yet in spite of these challenges, we’re still seeing activity. Well-positioned technologies are putting to work in a number of ways Winston Churchill’s words: “Never let a good crisis go to waste.”

Acquisitions Abound

For companies in recruiting tech in a strong financial or strategic position, now is the time to acquire companies and cut a better deal than you might otherwise get. 

This month, we saw HireVue acquire AI-powered chatbot and workflow automation tool AllyO. To date, AllyO had raised $64M in funding through just three rounds of funding. I’d expect a company to take on more funding and try to build a bigger multiple for investors, but the pandemic may have thrown some cold water on this idea. Still, HireVue makes a smart bet in continuing down the path of AI even if they’ve had some issues with it.

In other acquisition news over the last few months, Jobvite acquired talent analytics platform Talentegy. This is a smart move for their clients that will be more focused on optimizing their recruiting advertisement as they bring it back online. Modern Hire’s acquisition of Ireland’s Sonru shows a global approach to expansion that could help hedge their overall strategy. 

Choosing to strategically expand isn’t the only bet that these firms are making, though. 

Rebrand and Reinvent

Going back to HireVue for a moment, the company is also using this time to rebrand their organization and take a fresh look at what it was presenting to the market. Its previous brand had carried it to this point, but what the new brand gains in timelessness, it loses in the bold vision of the original. 

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While HireVue spent a lot of time on really updating their look while keeping some foundational pieces in place, others moved in a completely different direction. iCIMS, a recruiting brand best known for its red and black color scheme and the Angry Bird-esque mascot named Ike, ditched everything but the name in their reinvention. 

With the release of their new Talent Cloud, they also released a new brand with no hint of birds or red anywhere. Bold in its shift away to a more traditional software look, iCIMS will be playing catch up. Still, RIP Ike the iCIMS bird. I’ll miss our special moments at conferences like this. 

Continuing the Charge

Other companies are using this time to position themselves for the future. CareerBuilder announced a $300m investment into its product, working to improve everything from a redesigned job search app to two-way SMS functionality. 

Even investment activity hasn’t stopped. Conversational AI solution Paradox and employment verification tool Truework pulled down $40M and $30M respectively this spring. According to HRWins research, the second quarter saw nearly $350M in venture investment in talent acquisition solutions, down from previous quarters but still at historical highs. 

Talent acquisition technology isn’t going anywhere, but it will transform, look a little different, and may even have some new arrivals as we start leaning into 2021. And hopefully, we’ll see a world with more hiring and more demand for these tools in the coming year.

Lance Haun is the practice director of strategy and insights for The Starr Conspiracy, where he focuses on researching and writing about work technology. He is also a former editor for ERE Media, broadly covering the world of human resources, recruiting, and sourcing. 
 
He has been featured as a work expert in publications like the Harvard Business Review, The Wall Street Journal, Fortune, MSNBC, Fast Company, and other HR and business websites.
 
He's based in his Vancouver, Wash., home office with his wife and adorable daughter. You can reach him by email or find him off-topic on Twitter.

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