Recruitment in Australia: Will History Repeat Itself?

The recent acquisition of Peoplebank by Recruit Holdings brought a few memories from the days I joined the recruitment industry in 1999.

You see, around that time, Andrew Banks – being the consummate recruiter he still is – disarrayed me from my cushy job at IBM and fuelled my interest and – dare I say foresight – about the impact of the internet on the staffing and talent management verticals.

It was kinda my doing too. I remember reading in the Fin Review circa 1998 about how this company called TMP Worldwide, from which I had never heard of before, was romancing Morgan & Banks. After reading that article, I found myself writing to Andrew and Geoff sketching a business strategy plan, which in hindsight was effectively my job application for what would be my first gig at M&B.

In ’99 as part of a whole stream of acquisitions around the world, M&B joined the TMPW family of which Monster.com was the crown jewel. Even though the TMPW agencies never stopped from offering recruitment services, the implicit strategy was to ‘feed the monster’ and ensure that it became the largest provider of online recruitment products (resume search, ATS).

If memory serves me right, Monster launched in Australia in late ’99, supported by a large CV bounty exacted from the acquired agencies. All the TMPW businesses in Sydney went to live happily together at Angel Place around that time.

The conviviality did not last for long. If you are too young to know or too old to care to remember, Monster closed shop in Australia after a fairly aggressive and long marketing campaign. A few reporting periods later, the recruitment agencies were spun out of TMP eventually creating the Hudson Federation.

Don’t get me wrong: Monster’s platform was pretty good at the time. But the market killed its potential via three different ways:

– Seek was already strong and very much on the up and up
– The internal TMPW offering conflicts (e.g. tell me again why do I want to liaise with an agency if Monster has all the candidates I need?),
– The fact that no agency wanted to buy Monster because of its close relationship with M&B and the other acquired agencies

I think the last reason above was the critical factor to bring about Monster’s demise the first time around. As you know, Monster co-owns CareerOne, which is already a longer-lasting, better-traction exercise in Oz compared to the first attempt.

Bring the clock forward to 2015. Recruit Holdings, owner of Indeed has Peoplebank on the portfolio and on the way to acquiring Chandler Mcleod. The press release expectedly guarantees independence and autonomy for the group’s companies moving forward, etc.

There seems to be little downside for Recruit Holdings at first sight. Peoplebank and CMG are two professionally run businesses, with significant market and brand share, poised to capitalise on a market upturn.

However I see a few risks, especially for Indeed, based on what I saw happening with Monster. True, the market has changed, matured even. Nevertheless, let me outline how I think things can get difficult:

So far, I am only hearing good vibes from Indeed; Their intent to dominate the market is palpable; from the marketing, through to their hiring, to the ever-improving search engine and dedication to SEO.
The risk for them is that now that Peoplebank and CMG are part of the Recruit stable, it will become harder for them to acquire/keep customers like Hays, Page, Hudson or Talent International. At least for now, agencies are the customers that matter.

In all likelihood, agencies will look for direct replacement products (e.g. other search engines like Adzuna) or other sourcing tools like LinkedIn, CareerOne or Seek. For the latter, this would continue to solidify their market leadership position.
If history repeats itself, Peoplebank and CMG may also come across hurdles:

– Indeed clouding their own value proposition to customers
– PB and CMG being “cordially invited” to use Indeed as their preferred source of candidates.
– Technology being deployed “on” them in order to generate ‘synergies’ with Indeed and across the group
– Seek, LinkedIn or other important sources of candidates changing their “commercial attitude” given these companies’ connection with Indeed.

Again, I agree the market has changed. Recruit might be culturally and strategically a totally different organisation compared to TMPW in the noughties and it may run a very different ship. Similarly, Peoplebank and CMD have the potential to be serious innovators in terms of redefining talent services with a strong services, supply-chain philosophy IF they are left to do their thing.

Last Friday’s announcement made this year so much more interesting for the recruitment industry. Can’t wait to seeing things unfold.

Hope you all had an amazing start of the year.

Come on, be social :)

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