(The information contained in this blog will be more relevant to Tech staffing firms.)
"Anyone can find workers online; it's not rocket science so why should I have to pay for it."
Those words were said to me recently by an entrepreneur I was talking to about tech startups that are trying to 'disrupt' the staffing industry.
For anyone who hasn't heard about disruptive technology, it is an innovation that helps create a new market and value network and eventually goes on to disrupt an existing market or industry (over a few years or decades), displacing an earlier technology or established ways of doing something.
An example would be of how ZipCars or GoCars have disrupted the old and established car rental industry, and Avis took notice and recently bought ZipCar.
Most of the people who are on course to disrupt the staffing industry aren’t thinking, 'let's come up with a better business model so we can put all of today's recruiting firms out of business.' To them, they're just trying to find a better/easier way for themselves and other businesses to hire tech talent, and of course a way for them to make money.
It's not the technology that staffing firms use that these innovators are targeting - it's the core of what we do and how we do it that they want to change. Because they don't want to have to pay anything to find and hire people. They want to do it themselves with web/mobile technology.
Here's something ponder: Many of these young entrepreneurs don't even know what a staffing firm does. They assume we find full time jobs for people seeking them. If they do understand that we provide workers on an as-needed basis, they consider us to be their grandfather’s business model that needs to be reworked.
Startups often have pain in regards to hiring developers or designers, and they need a fluid workforce until they are fully funded or until they 'grow up.' Where do they go for help? Not staffing firms.
They go online to sites like Elance and Guru, or post jobs online, but they find each of these things to be a frustrating exercise, especially when they need someone right away. It doesn't occur to them to call a staffing firm (like their grandfathers did). Hell, I'd even be willing to bet that most of the 20 and 30-something tech entrepreneurs don't even know we exist to do exactly what they need - hire a qualified, experienced contingent worker quickly.
So I'm seeing new businesses popping up that act as a job board and resume depository, and some who even say they ‘match’ freelancers with companies who need to hire them.
But they don’t consider themselves staffing companies.
Also there are several adult tech training businesses around the country who are now offering job placement after graduation. Of course they do not guarantee placement, but 'placing' people is now part of their business plan. They charge companies a fee of 20% to 25% if they hire one of their students. They will hire an entry-level salesperson to call around to other tech firms to see if they want to hire one of their graduates. Some offer to rebate part of the student’s tuition if they are able to place them and after they collect their placement fee.
Again, they don’t see this as staffing.
Of course I see flaws in these business plans, and all of us recruiters know that getting a company to hire someone for a fee, and getting a candidate to accept any particular job, while it's true it isn't rocket science, is HARD.
But keep your eyes open! Right this very second someone in the U.S. is thinking about disrupting the staffing business and dumping their grandfather's business model for something new, innovative, technical, and either free or cheap.