The rise of the internet has changed the game for recruitment agencies. In the face of such a big challenge, many have enthusiastically jumped on the bandwagon. John Stokdyk reports.

As HR Zone reported two weeks ago, the internet has revolutionised recruitment in the past decade and undermined the role of traditional recruitment agencies. As networx director Andy Pierson puts it: “The net gives accessibility and speed – do you need the middleman?”

Yet many agenices, including networx, have seen the bandwagon coming and enthusiastically jumped aboard. Agencies themselves rely heavily on web job boards, and will often provide hybrid services in which they build and run sites on the employer’s behalf, or install software to manage recruitment processes.

Hot Lizard, for example, grew out of the Voyager recruitment agency and now operates as a supplier of recruitment management software and consultancy services to both employer organisations and agencies.

“Having worked in recruitment, we knew what made a good recruitment system, and if we could develop a viable web system, we knew it would be reusable,” explains Claire Grover of Hot Lizard.

It’s all about the internet

Like networx, EasyWebRecruitment.com continues to see itself as a recruitment agency, according to special projects executive Andrew Tybjerg, but its focus is 100 per cent online. “We’re all about the internet,” he says. “Everything we do is online through job boards and database searches – it’s all tech-driven and we do it to reduce costs.”

The cost model to justify going with an online recruiter depends on what you were doing before, Tybjerg adds. “If you are paying thousands for each individual hire, the savings can be 90 per cent.”

For EasyWebRecruitment.com and its customers, the latest buzz is applicant tracking software, which is supported (for an extra fee) by the company’s online software system.

“Lots of people use Microsoft Outlook folders and Excel spreadsheets,” says Tybjerg. “But people who have applicant tracking know how good it is. It’s also better for candidates. They can log on and see see where their application is and their progress. You haven’t got them phoning up the HR department.”

Online tracking

Even if you continue to rely on agencies, an online tracking system can be used to maintain control over them, he explains: “You can have them sign in and track when they send CVs, so you can stop the bunfights about who sent the CV first from two agencies, because you’ve got time-stamped proof.”

Online tracking is suitable for companies of almost any size, except perhaps for those who only make 2-3 hires a year. “Anyone else will save a reasonable amount of time,” he says.

Tybjerg does acknowledge that online agencies may not work for everybody. While the company has grown rapidly since it set up in business in January 2006, some clients do occasionally move on from EasyWebrecruitment.com. “When they do, it’s usually a case of net recruiting not working for them, either because of people shortages in their geographical area, or they’re recruiting for hard-to-find roles,” he says.

Andy Pierson of networx reports that many of his clients see recruitment agencies as “a necessary evil”. Agencies have got access to candidates and more and more of them are moving into online advertising to broaden their reach. But in the face of online competition, they may not always justify the percentage rates they charge on the annual salaries of each position filled, he argues.

While running an online recruitment management system called appoint, networx still thinks of itself as a recruitment consultancy and derives most of its business from providing fully managed services to clients.

“We’re not CV sellers, but consult with our clients on how best to recruit. Getting ads is one thing, but we try to take that time element away from clients,” Pierson says. “For HR directors and managers, recruitment should not take more than 10 per cent of their time. If they do it themselves through press, agencies and their own websites, it takes a lot of work. We try to be their recruitment department.”

Breaking down those barriers

In spite of the internet revolution, the recruitment spectrum continues to stretch from outsourcing at one end to the fully self-managed, in-house approach at the other. What internet technology has done, however, is break down some of the barriers so that smaller organisations can take advantage of facilities that would previously only have been available to large in-house teams or agencies.

Self-managed recruitment has not disappeared, but as companies like networx and EasyWebRecruitment.com have prospered, big internal recruitment teams have thinned down.

Even though Hireserve is a supplier of corporate recruitment systems, having originated as an in-house recruitment database for Oracle HR system, managing director Jeremy Ovenden says outsourcing is central to the company’s web-based business model.

What he calls online recruitment “software as a service” (SaaS) has been Hireserve’s principle delivery channel since 1999.

“SaaS isn’t new, but it’s big,” Ovenden explains. “It is so quick to implement, it’s maintenance-free and clients always benefit from any improvement in the product.”

Ovenden argues that recruitment remains an ideal function for SaaS outsourcing for two reasons. First, the net has been changing the rules so rapidly that going with an online provider allows you to take advantage of new services more easily. And second, many companies do not see recruitment as a core function they need to control, so it’s better suited to outsourcing.

“A lot of people want to keep HR and payroll in-house because it involves personal information,” he says. “But for large numbers of people, there is no need to keep the information in-house, or to capture it into your HR system – the two can remain successfully disconnected.”

The exception would be high-volume industries such as catering and retail, where the numbers of people involved mean employers can reap savings if they transfer candidate information automatically. Big employers such as McDonald’s (a recent adopter of the Peopleclick online system), Boots and Superdrug (both Jobpartners customers) also have strong enough brand identities to prosper in the wider internet recruitment market. But there’s still room for agencies, Ovenden argues.

“Many people have suggested that e-recruitment will be the death knell of recruitment agencies, but it doesn’t appear to have altered the recruitment industry as far as I can see,” he says.

“If organisations manage recruitment effectively they can reduce dependency on agencies. But if you don’t have a strong brand, you will still need some help from agencies.”