Over the last three years we’ve witnessed the rapid acceleration digital transformation in the recruitment sector. Back in 2019, only 21% of firms claimed to have a clear strategy for digitalising their business.

However, as Bullhorn’s annual Global Recruitment Insights and Data (GRID) report reveals, this figure drastically increased last year to 43% and again to 81% this year. This correlates with a rise in optimism across the sector – more than two in three UK recruitment firms now see year-over-year revenue increases as highly likely.

Overall, four in five firms now view investment in technology as a top priority. To answer the question of why this is, we must examine the factors that contributed to this change taking place.

Evolution in the job market

Since 2020, two main challenges have affected the labour market – the pandemic and the current talent shortage. COVID-19 had an understandable impact on recruitment firms, with 44% reporting losses in 2020. For some, this may have further delayed investment in technology, as diminished turnovers forced companies to make cutbacks.

 The labour market itself has lurched from one crisis to the next. The fallout from the pandemic and subsequent lockdowns may have dominated recruitment discourse last year, but this year’s topic is the record number of job vacancies, exacerbated by the so-called Great Resignation.

But the days of such heavy losses may have passed. Just one in seven recruitment firms reported losses in 2021, three in five saw revenues grow and the remainder managed to break even. As a result, companies now have free funds to invest more heavily in technology that will foster further growth in the near future.

Two years of suppressed demand is also putting pressure on recruitment firms. It would be a challenge to come back from the pandemic’s economic consequences alone, but the labour crisis adds an extra layer of complexity to the issue. Now more than ever, companies are looking to recruitment firms to provide capable talent to compensate for their previous losses.

Practically all firms have integrated a basic level of digitalisation, mainly in back-office areas. But if companies wish to overcome the challenges they currently face, they must consider technology as an opportunity for transformation, not just an auxiliary for admin..

Almost half of firms (48%) cite the talent shortage as their number one issue, and any solution to this problem must champion efficiency. This means that the implementation of technology and the necessary training to fully harness it must be a priority for recruitment firms.

Automation: moving beyond a “nice to have”

Most firms will have adopted some form of automation within the next few years – and those that do not will simply be left behind. The race for automation we are currently seeing is proof that this change is happening fast. Before the pandemic, firms may have been content to automate a few key processes. However, shifts in the labour market, the need to cut operating costs and changes in candidate expectations have all caused the trend towards automation to accelerate.

There are clear benefits to this. Many repetitive, administration-based tasks can be automated, meaning employees can focus more on work that will add value to the company. More automation will also lead to a faster, more intelligent recruitment process. This can be achieved, for example, by leveraging algorithms for the initial “matchmaking” stage and then automatically parsing each shortlisted CV for key information, before passing the compiled data over to a human for review.

We can already see how this trend is taking hold in the recruitment sector. Our data indicates that almost half of firms have automated processes for sourcing (48%), screening (45%) and calendar submission (44%). Although the numbers for payroll (28%) and vendor management systems (22%) are lower, it is a clear sign that firms are serious about integrating automation into their operations.

Technology and candidate experience

The recruitment market is highly competitive as a result of firms pushing themselves to meet changing candidate expectations. Candidates will not look favourably on sluggish, inefficient processes – they are often considering a variety of positions simultaneously and do not always have a lot of time. This means that a quick, intuitive and digital experience is now essential if a recruitment firm is to stand out and attract the right candidates.

Moreover, candidates are paying increasing attention to various digital aspects of their experience. The recruitment process now spans multiple channels, including email, social media, mobile apps, advertising on third party job sites, and more. Recruiters must make positive, consistent impressions on candidates across all these channels, thereby reducing their drop off rate and helping them source a larger number of qualified candidates.

Closely related to this is employer branding. Candidates will often research potential employers across various digital channels before applying for a job as they are now placing more value on workplace culture, benefits and values than ever before. Recruitment firms will often have more expertise in this area than their clients, with the latter often looking to them to market their employee experience. This is another strong incentive for firms to invest heavily in digitalisation, as they will be able to provide more engaging employer branding and recruitment marketing services to their clients.

A dynamic solution

Recruitment firms must acknowledge that a digital transformation will need constant review. As the technology continues to evolve, so too will the market’s expectations of those who use it. The first step towards this transformation will always be the hardest but beating the competition will require companies to stay on top of the latest developments and integrate them into a dynamic, technology-driven business.

Of course, firms that embrace the coming changes early on will reap the benefits. They will have access to a larger pool of candidates, becoming industry trailblazers and early adopter of new trends and innovations. So far, we have seen a strong commitment from recruitment firms to embracing technology and this a sign that companies are willing to respond to market changes in a dynamic way. Overall, this is fantastic news for the industry.