Finding jobs online—the modern professional world couldn't function without online job marketplaces and career listing websites. It's the technology that allows you to apply to a dozen jobs over a cup of coffee in your apartment without putting on pants. A spate of recent acquisitions in the human resources (HR) tech space have begun to show us the quantifiable value these online networks and cloud-based recruiting services have in the enterprise landscape—and the figures are staggering.
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Last week, Dutch HR services conglomerate Randstad Holding bought US recruiting giant Monster.com for $429 million. This came only a month after Monster announced it was acquiring mobile job discovery app Jobr (which has been called the "Tinder for jobs") for an undisclosed amount. But the Monster deal is only the most recent example of the big money consolidation happening in HR tech right now.
Earlier this summer, SimplyHired—a popular online job portal with more than 30 million monthly users and more than $34 million in funding—was acquired by another mega-HR conglomerate, Japanese firm Recruit Holdings. Recruit, which owns a slew of recruiting websites worldwide including Indeed.com, is syncing the Indeed and SimplyHired websites as "publishing partners" under its HR banner.
Then there's the biggest deal of them all: Microsoft's landmark acquisition of LinkedIn. The $26.2 billion LinkedIn deal eclipses Oracle's $10.3 billion acquisition of PeopleSoft in 2005 for the most expensive HR tech deal ever, and ranks fourth on the list of all-time biggest tech acquisitions.
We've talked about all of the possibilities of what Microsoft could do with LinkedIn but, from a revenue standpoint, LinkedIn Recruiter and the company's underlying HR pipeline are the moneymakers. Underneath the business social network, LinkedIn has a goldmine of HR data and functionality including a job board, recruiting tool, and an applicant tracking system (ATS).
In all of these deals, the theme is consolidation—not just in assets and market share but from a holistic technological standpoint. Each of these moves gives the acquiring company a more complete, cloud-based portfolio of HR services and recruiting websites, each coming with substantial user bases to bolster the companies' overall cloud footprints.
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Breaking Down the Wheeling and Dealing
Monster had been searching for a buyer for a few years. Once valued at more than $8 billion in the early 2000s, Monster's market cap at sale was around $310 million, on approximately $667 million in revenue. Monster is still the second-most popular job board, ahead of Indeed and behind CareerBuilder according to web analytics company Alexa. Though, as Raghav Singh comments on in HR and recruiting news outlet ERE Media, a successful HR tech business can no longer subsist on a job board alone.
"Job boards today provide a commodity service, so there's little to distinguish one from another, and they can mainly compete on price," wrote Singh. "Having a large volume of online traffic is not enough value to command a premium. In a race to help employers win the war for talent, job boards like Monster lost the leadership position a long time ago."
Tech companies and cash-strapped startups are finding it harder to raise capital or satisfy post-IPO Wall Street expectations in general (see Twitter). So, as Rolfe Winkler in The Wall Street Journal recently explained, seeking a buyout or acqui-hire represents a path of least resistance. Look no further than Walmart's $3 billion deal to buy Jet.com for a fresh example.
At the same time, cloud-based software-as-a-service (SaaS) platforms are hot right now. Oracle dropped $9.3 billion for NetSuite just last month. Microsoft's plans for LinkedIn also play prominently into this idea of a one-stop SaaS cloud for the whole gamut of HR, recruiting, training, and applicant services on top of an integrated enterprise platform.
LinkedIn did a lot of the consolidation work for Microsoft, buying up several HR tech companies including Careerify, Connectifier, and popular online learning website Lynda.com in the last two years. Now Microsoft can take all of LinkedIn's services and integrate them with enterprise platforms such as Microsoft Dynamics to tie HR and recruiting, customer relationship management (CRM), and enterprise resource planning (ERP) into a powerhouse command center for business operations.
The current state of the tech market and this era of integrated cloud platforms go a long way toward explaining the last few months in HR tech consolidation. Peter Yoon, Managing Director at Berkery Noyes, an independent investment bank focusing on mergers and acquisitions (M&A), told PCMag he sees several trends coming together to drive increased M&A in the HR tech sector.
"As the unemployment rate continues to improve and it becomes more difficult to hire qualified personnel for key positions, corporations are increasingly utilizing human capital management [HCM] software to source and hire candidates in an efficient and cost-effective manner, as well as helping to improve retention of the employees that they do have," said Yoon. "In addition, consolidation and market growth is being spurred on by players who can provide the full breadth of HCM software and services, including core HR, workforce management, recruiting, training, performance reporting, compensation, and other functions."
Job boards such as Indeed/SimplyHired, Monster, and to a broader degree LinkedIn, will all now serve as key cogs in larger HR machines. John Sumser had an interesting analysis of the Monster deal in HRExaminer. Sumser said Monster's comparatively low sale price had more to do with the company's longstanding struggles than the value of job boards, explaining that the deal is indicative of a new era in "full spectrum recruiting."
"Any company of scale has to be great at a lot of things to do recruiting," wrote Sumser. "Any company that hopes to serve those companies requires even greater effectiveness. All recruiting operations require job board functionality, sometimes inside the operation and sometimes outside of it.
"There is an important quiet revolution happening in the recruiting world," he added. "The market-facing functions like job boards, employment branding, candidate acquisition, pipelining, CRM, drip marketing campaigns, and all the rest of the marketing influence are shaping the public conversation. The internal processes, characterized by ATS workflows and team construction, are the next frontier."