Technology talent search turns enterprises to outsourcers

For many human resource departments, the current economic downturn is anything but a blessing. Faced with increasing demands, limited resources and a growing pool of potential workers, many HR managers are looking for outside help to hire, manage and fire staff.

That’s great news for electronically enhanced recruiting firms, who can expect an explosion in demand over the next few years. And a stalled economy has made smaller players ripe for takeover, observers say.

Ottawa’s E-Cruiter.com is a case in point. In the past year, the “e-recruiting” company has acquired six firms as part of its strategy to offer a wider range of HR services, according to Michael Mullarkey, president and chief executive officer.

E-Cruiter sells services and software to help recruit, interview and hire employees. In September, the company bought out 6FigureJobs.com, adding advertising, resume database technology and research services to its fold.

Despite the growing numbers of unemployed IT workers, e-recruiters have to work harder to meet their clients’ demands, Mullarkey says, calling the process a “war for talent.”

Employers are becoming much more selective about how and who they hire, according to Mullarkey. The days of hiring large numbers of technology workers in the rush to develop IT and business infrastructure are over, he says.

“They’re starting to see that two years ago, it was just a warm body.”

But E-Cruiter isn’t alone. E-recruiting firms in general are gearing up to the fight for HR contracts, according to Julie Kaufman, skills development research manager for IDC Canada in Toronto.

“They’re being very aggressive right now,” she says. “We’re hearing a lot of noise from the big companies, like the Monsters,” she says, referring to online job boards like Monster.ca, HotJobs.ca and Workopolis.com.

In Canada, the e-recruiting market was worth about $65 million in 2000, says Christopher Boone, senior analyst for IDC’s recruiting and staffing research. That number is expected to jump to $470 million by 2005 — a compounded annual growth rate of 48 per cent, he says.

The current downturn has made it easier for some companies to acquire others and broaden their services, according to Boone. For instance, e-recruiters are now offering outplacement and resume processing services, and aren’t just focusing on finding interview candidates, he says. And if they haven’t developed particular services in-house, they can always get them through acquisitions.

For E-Cruiter, that broader strategy means becoming an end-to-end provider, Boone says. Services will include creating job requisitions, posting openings, sorting and ranking candidates, scheduling interviews, co-ordinating job offers and ultimately transferring the data to clients’ human resource management systems.

“They’re branching out from just e-recruiting to more traditional recruiting services,” he says.

Industry consolidation and new service mixes could see new forms of partnerships and competition among companies. E-Cruiter may offer services similar to those of large consulting firms, but these same firms use its software Mullarkey’s says.

The key is to offer the right combination of skills and services, according to Mullarkey.

“In technology, computers don’t hire people,” he says.

Ultimately, Mullarkey predicts IT and HR departments will become even more intertwined, as more of the day-to-day staff management duties get farmed out to service companies. Human resource managers may even become “Chief People Officers,” responsible for collecting and managing data on skill sets and business needs, he says. “They need to move away from tasks and into strategies.”

Boone says companies will like what they see — and save — by using outsourcers to manage the hiring process, and it’s still early days for the industry.

“E-recruiting is just starting to become a part of employers’ recruiting mix,” he says.

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