Prediction: 3 Mega Deals That Will Reshape HR Tech

A year ago I wrote that “2016 was a watershed year in recruitment tech” with a flood of investment, new entrants and mega M&A.

I deliberately avoided predictions, but did wonder about potential responses from other big players following Microsoft’s $26B acquisition of LinkedIn.

We didn’t have to wait long, as Google has quietly but ominously entered the fray with Google for Jobs and Google Hire.

I won’t add to the analysis already written about the impact of these products. But in summary I think it’s the biggest move we’ve seen in HR Tech in the last 5 years or more, and accelerates an existential threat for several categories — notably job boards and ATS software.

As a result, it will trigger a wave of consolidation as various players seek alliances and defensive lines against this monolithic shared threat.

Specific predictions can be risky but fun. Nevertheless, I’m going to have a crack, inspired by recent conversations with friends in the space. Consider this a thought experiment.

Note: while I know people at most of these companies, I have zero inside knowledge about anything that follows, which is pure speculation.

I predict one or more of the following in the next 12 months.

1. Indeed merges with Glassdoor

Indeed is the dominant global job site in most western markets (excluding Asia-Pacific where Seek and its affiliates rule). In the US, it’s currently the source of 65% of hires and 72% of interviews from job sites. It claims to get jobs for more people than all other job sites combined.

It achieved this dominance through an elegantly powerful strategy of (1) aggregating all job ad inventory from sites across the web, (b) capturing jobseeker traffic through SEO and a better search experience, then © monetizing that traffic on a cost-per-click basis by redirecting jobseekers to the original source of the ad.

Google for Jobs is now borrowing a version of this exact playbook.

Indeed started as a job aggregator rather than a job board. It ‘borrowed’ ad inventory from other sites to earn jobseeker traffic. It has since evolved its business model to become a direct job board itself (charging employers for ads), and is currently testing a range of alternative models (eg Indeed Prime).

However, a big portion of Indeed’s jobseeker traffic is still driven by SEO and organic search. I would guess this is in the range of 20–40%.

This search traffic is now directly under threat from Google Jobs, which is already dominating search results (see images below). Indeed has the most to lose in this battle, and if Google captures even 10% of its jobseeker traffic will see a huge blow to its dominance.

Job search before Google for Jobs:

Job search BEFORE Google for Jobs

Job search after Google for Jobs:

Job search AFTER Google for Jobs

Glassdoor also dominates the job search experience, but in a different way.

According to a Silk Road survey, it contributes roughly 2% of hires coming from online sources. That’s not much by volume. But candidate engagement on Glassdoor is incredibly strong, with multiple surveys finding 50–60% of jobseekers research Glassdoor reviews and ratings before applying for a job.

In short, Glassdoor has become the go-to source for company review data, and a fixture in most jobseekers’ search process — at least in the US market.

Glassdoor is obviously working hard to monetize this data dominance, and drive a greater share of qualified candidates to its corporate customers. But it appears to have a long road ahead, and the battleground just shifted completely.

So, we have two significant players that dominate different parts of the job search process. Both now facing a shared threat in Google for Jobs.

A merger makes complete sense for both companies, despite their current competitive stance.

Indeed was acquired by Recruit Group for roughly $1B in 2012.

Glassdoor is also privately owned, having raised a total of $200M at a recent valuation around $1B, and delayed an expected IPO to show more revenue growth and international success. Interestingly, Google Capital is also a significant investor in the company.

Both companies have strong technology roots, and brought innovative new models and data to the job search experience.

A combined platform with dominance in jobseeker search traffic AND company review data would be in a far stronger position to compete against Google for Jobs.

2. Salesforce acquires SmartRecruiters (ATS)

Salesforce is the only enterprise cloud leader without a recruiting suite.

Oracle has Taleo. SAP has Successfactors (which has a recruiting module). Microsoft has LinkedIn (which has quietly launched an ATS tool). And Google just built its own.

Does Salesforce need a recruiting module? We know it was bidding against Microsoft to acquire LinkedIn — so it has interest in the space. And it has aspirations as the clear cloud enterprise leader, so the lack of recruiting and HR suite relative to its competitors appears an obvious gap.

Let’s assume for a minute Salesforce is looking to add an ATS (applicant tracking system) to its suite of cloud services. What would it acquire?

SmartRecruiters will be the most likely target, with Greenhouse a close second. Both are leaders in the ‘new wave’ of ATS platforms.

Why SmartRecruiters?

  • SmartRecruiters is based in San Francisco (vs NYC for Greenhouse).
  • Its foundational ‘app marketplace’ has strong philosophical alignment to the Salesforce AppExchange.
  • Salesforce Ventures invested in its B round.
  • Its former COO (now Chief Strategy Officer) Brett Queener was a Salesforce exec.

Oh, and SmartRecruiters just announced the (re)launch of a free version of its product for companies with less than 250 employees. In my view this signals recognition of the threat posed by Google Hire and LinkedIn Hiring Manager. It also signals SmartRecruiters’ confidence in its enterprise product, and relative size of the opportunity with larger customers.

This may not class as a mega deal ($500M+), but would be a big win for both sides, and would be another blow to the many remaining independent ATS companies.

3. Google acquires Namely (or another HR platform)

Google made an offer to acquire Namely in 2016, so in some ways this is an obvious prediction.

Google is already building its own recruiting tool, which seems almost like an afterthought compared to Google for Jobs. But HR software is a bigger beast than just recruiting, and fits neatly alongside Google’s push into cloud-based enterprise services.

Imagine a module for HR alongside Drive, Docs and everything else inside your G Suite.

Namely is the leader in mid-market HR software, and is rapidly expanding its product set. It claims to be on the path to IPO, but is still the most likely target for a Google buyout (in my mind).

The other likely candidate would be Zenefits, which could be its best outcome after the turnaround (but at nowhere near its previous $3B+ valuation), or a player like BambooHR at a distant third.

Will any of these actually deals happen?

Again, I have zero inside knowledge other than watching the space closely. I would not be surprised to see at least one of these deals within the next 12 months. I also won’t be surprised to see several other mid-sized deals in the sub-$100M space.

It’s also more likely that none of this will happen — in which case I look like an over-informed idiot. But I’ve timestamped these predictions to put some minor skin in the game.

Either way, I feel safe predicting that Google’s push into the space will drive a major wave of consolidation in HR Tech. One other certainty you can bet on: we’re in for another interesting period in HR Tech!

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