HR recruiting tools get VC funding, as tech wages rise
The HR recruiting tools market shows no shortage of investor interest. In two months, three platforms have launched. Rising tech wages point to increasing competition for talent.
A recruiting platform that launched last week, Uncommon.co, is the third venture-capital-funded startup to announce itself in the past two months. With more new HR recruiting tools likely on the way, the competition for skilled workers may be intensifying, as wages for technology workers increase.
Tech worker salaries, according to job-matching site Hired, increased 5% nationally last year and as much as 7% in some metro markets.
The market for highly skilled workers has always been competitive, and the latest startups show this isn't changing. All these new firms with HR recruiting tools cite similar problems in the recruiting market and all share a key goal: Improve the ability of HR departments to short list candidates.
"It's become so easy to apply for a job that people apply for dozens of jobs without ever checking the qualifications," said Amir Ashkenazi, founder, president and chairman of Uncommon Inc., based in Palo Alto, Calif. The end result is frustration for both job seeker and employer, he said.
Job seekers are likely to never hear back about their application, and the employer will struggle to filter through piles of résumés. It is a "huge inefficiency," said Teg Grenager, CEO of Uncommon.
Words, career path predict skills
It's become so easy to apply for a job that people apply for dozens of jobs without ever checking the qualifications.
Amir Ashkenazifounder, Uncommon Inc.
Finding a candidate from a résumé is far from straightforward, and that's one of the things Uncommon, which received $18 million in venture capital (VC) funding, said it fixes by focusing on a candidate's qualifications. "We actually predict those skills based not just on the words that you've used in your résumé, but also on the career path that you've taken," Grenager said.
Take hiring a product manager. There are a lot of different roles "that would loosely qualify" as product management experience, Grenager said. Someone could have been a chief product officer or held a prior role as a co-founder of a startup. That person likely has product management skills, but a keyword engine would miss that.
People also forget to list the skills they have, but Uncommon's algorithm will glean skills from an individual's career. For example, a sales manager may have presentation and negotiation skills that aren't noted in a résumé. If you worked as an accounting manager, you probably know how to use a spreadsheet.
Grenager said job seekers who use its system are much more likely to appear on the shortlist of prequalified candidates. Employers will get a better list of possibilities. Uncommon said it supports a number of applicant-tracking systems, so employers can easily integrate their system.
Other HR recruiting platforms emerge
Uncommon isn't the only company trying this market or stressing the use of algorithms to sort out employees. In recent weeks, another HR recruiting platform, Stella.ai, launched. Stella.ai has its member employers pool job applicants in a recruitment marketplace. It said it received more than $10 million in funding.
Another recent launch is JobzMall, which creates a "virtual shopping mall" to improve the user experience. It said it raised $1.5 million.
Holger Mueller, principal analyst at Constellation Research, said this VC interest in HR recruiting tools isn't new and is a byproduct of the competition to fill jobs.
"Recruiting is a constant arms race," Mueller said. There are technologies that examine social media sites to find people who are complaining about salary or the length of their commute and use that information to try to poach those people.
Mueller said recruiters, both corporate and independent, are under enormous pressure to produce results. That pushes them to investigate new approaches and platforms, which helps drive investment in HR recruiting tools, he said.
Salary increases point to demand
The problem employers have in hiring skilled workers in high demand is evident from the salaries.
Hired, which was founded in 2012, has been tracking high-skilled wages in an annual State of Salaries report. Technology wage growth can vary by region and occupation. In Austin, Texas, for instance, high-skilled wages increased 7% last year, followed by Los Angeles and Washington, D.C., at 6% wage growth.
Wage increases are exceeding the average in some occupations. Product, user interface and user experience designers earned $118,000 in 2016. That increased 8% to $127,000 last year, according to Hired's report.
Hired, which also uses algorithmic matching to improve hiring, believes "the standard recruiting model is fundamentally flawed," said Mehul Patel, CEO of Hired, in an email. And that's why the recruiting market is getting VC money.
"For candidates, it's time-consuming and frustrating due to the lack of transparency. And for companies, it's costly, slow and inefficient. At the same time, talent is one of the most significant barriers to growth for companies, so the stakes are incredibly high for companies who want to innovate," Patel said. "All of these factors point to a massive need for disruption in the recruiting industry, and venture capitalists are paying attention."
