Study: Half of Organizations Say They May Switch Talent Acquisition System Providers

Want another sign that we’re slowly but surely recovering from the Great Recession? It’s when companies and their HR departments indicate they’re ready to spend to upgrade or replace systems they already have in place.

That’s my takeaway from a new study released this week by Bersin & Associates, the Oakland, CA.-based research and consulting firm. The study shows that nearly half of the organizations it studied say they will switch talent acquisition system providers “as providers introduce enhanced capabilities that enable organizations to better manage the candidate life cycle.”

The report — Talent Acquisition Systems 2011: Market Realities, Implementation Examples and Solution Provider Profiles — included responses from HR practitioners and recruiters from organizations of all sizes and across all industries. It found that the traditional talent acquisition systems market grew 11.1 percent to $837 million last year, revised downward from $861 million due to the slower-than-anticipated economy in 2010.

Growth estimated at 12% this year

More importantly, Bersin predicts that the market for talent acquisition systems will continue growing — by an estimated 12 percent more in 2011. That may not be Silicon Valley start-up-type growth, but it is a solid and stable, double-digit increase.

“This market is going through a revolution as organizations replace their recruiting systems with modern software-as-a-service-based technology that allows them to become more strategic and efficient in their talent acquisition process,” said Josh Bersin, chief executive officer and president, Bersin & Associates, in a press release about the study. “As a result, we expect the traditional talent acquisition market to grow 12 percent to an estimated $937 million this year as it consolidates on the high end and expands in the middle and at the low end of the market.”

Bersin added that the same market forces are driving growth of the Learning Management Systems and the Performance Management/Succession Management systems markets, which are growing at rates of 10 percent and 12 percent respectively.

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According to Bersin, solution vendors of all sizes are benefiting from market churn as they provide replacement solutions for organizations leaving their current providers. Meanwhile, the mid-market is growing at a much faster rate as the economy gains steam and small-to-mid-sized organizations start to purchase their first systems.

“Many organizations are moving to providers that deliver better integration and support,” said Sarah White, principal analyst, Talent Acquisition, Bersin & Associates, and the author of the study. “The market also is growing thanks to a new group of providers that offer an array of solutions. Applicant tracking is now seen as the core part of an ecosystem of technologies that include candidate relationship management, video interviewing and social recruiting.”

Key finding of the study

The key findings of the Talent Acquisition Systems 2011 study (and you can get a free copy of the executive summary here) are interesting as well, and offer more insight into this market:

  1. The sales cycle for talent acquisition systems is taking much longer. From the Bersin study — “Despite a strong demand for talent acquisition systems, organizations are still hesitant to make a long-term commitment to one solution provider over another. In many instances, the sales cycle can take up to three years, a significant increase from only six months a few years ago … Organizations need to clearly define their ‘must-haves’ and ‘nice-to- haves’ early in the selection process, and create clear use cases involving every group before engaging any solution provider in the process.”
  2. Mobile solutions have transformed how organizations identify and attract talent. Bersin — “Mobile is the latest craze to hit the talent acquisition market. Job candidates, recruiters and hiring managers have become accustomed to managing everything through their mobile devices … Customers recognize that mobile solutions will increase user adoption and improve the user experience. As a result, they are including mobile as a key criteria in their requests for proposal and in their solution provider evaluations.”
  3. Partnerships are driving innovation. Bersin — “Innovation is a major theme in today’s talent acquisition market. … Most of the innovation is provided by supplemental products versus the traditional talent acquisition solution. These supplemental solution providers are partnering and often integrating with traditional talent acquisition systems to offer innovation in areas, such as video interviewing, social media, search engine optimization (SEO) and résumé sourcing.”
  4. Video interviewing is going mainstream. Bersin — Video has become a popular vehicle for improving any talent acquisition strategy. Both employers and job seekers are experimenting with ways to enhance résumés, employer branding, job postings and onboarding. … More and more organizations are demanding integration from their talent acquisition systems with video-interviewing providers…”
  5. Market consolidation will continue to play heavily in the talent acquisition system landscape. Bersin — “Market consolidation is a reality in today’s talent acquisition systems market as solution providers are looking to either expand their global footprint or build out the talent management suite. … As organizations embrace the idea of one platform for their talent management needs, fewer standalone talent acquisition systems remain. We are likely to see more acquisitions as solution providers look to gain market share.”
  6. The LinkedIn profile will be interchangeable with a résumé. Bersin — “LinkedIn has become one of the most effective tools for both job seekers and recruiters. It offers a way to strengthen employer branding, engage both active and passive candidates, and build a talent pipeline. Every solution provider included in this report offers some level of integration with LinkedIn.”
  7. Integration with social networking sites needs to engage passive candidates. Bersin — “Organizations at both the enterprise and mid-market levels are looking for some type of integration from their talent acquisition systems with social networking sites, such as LinkedIn, Twitter and Facebook. … True differentiation in this area can be found with those providers that offer ways to engage passive candidates and even to refer candidates. Talent acquisition systems will need to include application programming interfaces (APIs) and bidirectional integration with social networking sites as a standard in the future.”
  8. Source analytics are becoming a key differentiator. Bersin — “Source analytics can show organizations where candidates are coming from and how they are spending their sourcing dollars. … Through customized dashboards, SEO keyword analysis and custom reports, organizations can improve employee referrals and communications. While there are still some technical limitations, the benefits of sourcing analytics extend beyond talent acquisition. and can help improve marketing and communications departments.”
  9. Solution providers have a huge opportunity to address contingent labor. Bersin — “With workforce demographic shifts, recent economic conditions and more baby boomers seeking work post-retirement, contingent labor is the future of our workforce. … Organizations typically manage this workforce through a vendor management system – but few talent acquisition system providers offer solutions to address this growing market and fail to take a holistic view of their talent.”

This report has some good insight and information worth spending time with. It’s something you need to get, read, and immerse yourself in if you are thinking about your talent acquisition systems, and what you are going to do with them, in the months and years to come.

John Hollon is Editor-at-Large at ERE Media and was the founding Editor of TLNT.com. A longtime newspaper, magazine, and business journal editor, John has deep roots in the talent management space. He's the former Editor of Workforce Management magazine and workforce.com, served as Editor of RecruitingDaily, and was Vice President for Content at HR technology firm Checkster. An award-winning journalist, John has written extensively about HR, talent management, leadership, and smart business practices, including for the popular Fistful of Talent blog. Contact him at johnhollon@ere.net, connect with him on LinkedIn, or follow him on Twitter @johnhollon.

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3 Comments on “Study: Half of Organizations Say They May Switch Talent Acquisition System Providers

  1. Great summary John and the first I’ve read that emphasized an integrated approach that included contingent labor.

    I’d love to see in a future post a breakdown of mobile (#2 above) because that’s where most of the action will be. The winning solutions will be mobile, global, and free, and the trick for providers will be in how to monetize.

  2. Great post John. Greg, I agree with you that “the winning solutions will be mobile, global, and free”. Mobile apps have the potential to revolutionize the way in which we recruit. I just haven’t seen anything out there that’s dazzled me yet. I’d also add that video will be key in the future too, both as a marketing tool for companies, and as a screening & interviewing tool.

    LinkedIn is fast becoming a resume database, and our “profiles” are already being used by recruiters for what they are…resumes! It will be interesting to see if they make the jump and job postings start allowing people to apply via the “Connect with LinkedIn” plug-in.

  3. This is such great intel to where the future of hiring and recruiting is heading. Great job John!

    Something that caught my attention was video interviewing. What’s all the hype about when video interviewing is becoming more mainstream? Well, users of video interviewing have come to realize that video interviewing saves time and money. What they are also finding and most importantly is the fact that video interviewing provides the most effective tool to find the candidates who best fit the organizations and will enable growth and push the business forward. Bottom line it’s really about quality.

    •96% of organizations using video interviews for talent acquisition say they can measure quality of hire

    To view a webinar by The Aberdeen Group:
    http://event.on24.com/eventRegistration/EventLobbyServlet?target=lobby.jsp&eventid=285283&sessionid=1&key=851FDC0B437067BCAC4612F837850C3D&eventuserid=47467536

    To view one of the world’s most used video interviewing companies:
    http://www.hirevue.com

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