Funding and deal activity in the HR technology landscape hit $2.4 billion across 383 deals in 2015. That’s a 62% growth in funding compared to 2014 and a 707% growth compared to 2011. With the growth in HR technology investments comes a natural increase in Talent Acquisition technology investments.
The job market continues to grow as the economy rebounds from our most recent recession period, and the Civilian labor force continues to reach all time highs, according to the BLS. In fact, LinkedIn found that 44% of companies say they will spend more on hiring than they did last year.
While we know the growth has Venture Capitalists chomping at the bit to get a bite of the HR/Talent Acquisition Tech investment pie, what exactly is causing this industry to surge?
Candidate Driven Market
Although this is not a new discovery, it is becoming more apparent that the candidate-driven market is driving increased talent competition, thus lengthening time-to-fill averages. Today companies have an average 52 days to fill open positions, up from 48 days in 2011, according to Bersin by Deloitte. This leaves Talent Acquisition professionals scrounging to improve the entire hiring process’ efficiency. As with any inefficient process, technology is the first thing people turn to in order to make positive adjustments.
[rbmctt cttlink=”http://ctt.ec/k9dTB”]Time to fill positions is only getting longer. How can #TATech improve the #hiring process?[/rbmctt]
There’s a real change in professionals and organizations today. Candidates are no longer simply looking for well-known companies, large pay grades or hefty benefits packages. Of course, there will always be concentration on compensation, but today’s job seeker is far more aware of what it is they want in a work culture. They’re likely to understand what organizational structures don’t fit their lifestyles and what perks are necessary for them to be productive and engaged – and they’re researching who matches it either via Glassdoor or social media.
In all, there’s a movement of individuals who believe work shouldn’t feel like work. Companies are catching on, working to identify what sets them apart and who fits in best with their established values and team. The response is to find those tools that help each other understand one another better prior to the hire and then maintain that discovery and nurture it throughout employment.
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The Millennial Movement
As with most of these big changes, a shift in generations is another root cause. Today’s workforce is largely made up of Millennials, the generation who expects to find most things via a website or app. When in search for, say, a job, this isn’t any different.
Today’s workforce expects to see a presence on the web or be able to track down your open positions via online portals. Organizations looking for these educated and excited workers are going where the applicants are, welcoming technology into their Talent Acquisition practices and even searching for innovative ways to beat competition to talent.
Though Millennials may have set the technology trend in motion, it’s the workforces of the future that will propel it forward. Millennials approaches to communication began with laptops and desktops, but Gen Z, the post-Millennial generation? They’ve grown up in the smartphone world.
Moving the SaaS to the Cloud
More than 40% of companies in Deloitte’s 2016 Global Human Capital Trends report are replacing their core legacy systems with cloud-based HR Technology. This trend further promotes Talent Acquisition Technology innovation, as well as the transition to more robust talent analytics systems to improve recruitment effectiveness and efficiency.
According to Statista, Software as a Service (SaaS) subscription revenue from 2012 to 2016 continues to grow and the entire SaaS market is projected to be worth around 92.75 billion U.S. dollars worldwide when the 2016 numbers are finalized. In addition, Statista also notes that IT spending on enterprise software worldwide rounds out at about $326 billion in the U.S. per year.
Simply put: HR and Talent Acquisition technology is getting attention from investors because there is real opportunity for growth in the sector. It’s new enough to produce enormous potential, but established enough to demand attention. Companies, no matter what adjustments are made to their processes, will always need employees, which means there will be continuous need for more qualified, better educated, harder to find talent.
Investing in HR or Talent Acquisition technology is supporting better business with better business. It’s a win-win.