RecruitmentTech will redefine EdTech
What do employers want? To solve the skill gap! But what is the skill gap? Is it that employers don’t have the right people or is it that they have the right people but they don’t have the right skills? Maybe it’s both, it’s probably not neither.
Originally the question was almost exclusively decided at either: the policy level as governments shifted Education curriculums and apprenticeships to meet employer needs, the firm level — firms trained in the skills they required or the educational institution level, universities adjusted taught courses. Edtech began to change that by bringing scale and digital delivery to skills. MOOC platforms, specialist platforms et al are teaching millions and in doing so have created a new, fluid market for education, one that commoditises and reduces education to an MVP that can match the very specific need (and budget) of employees and would-be job seekers — I’m talking learning about Data Science, Programming, Digital Marketing so people can pivot to new jobs or get their first job.
The world of MOOCs, Treehouse and Pluralsight are all targeting the same market, (FutureLearn, Udacity et al are the same) professionals looking to re-skill or upskill.Their answer, to the question ‘What do employers want?’ is people with the right skills and until recently that was the only answer anyone was able to give. But what if the answer is more ‘the right people’ than ‘the right skills’?
We may be on the verge of finding out which is the more appropriate answer — and by extension where the more of the money is. In October this year, ZipRecruiter an AI-driven marketplace for job seekers and recruiters raised $156m taking their valuation to over a billion. ZipRecruiter are at the fore of the pack but a marketplace of recruiters is emerging. Final Stage pool candidates that made it to interview but didn’t get the job i.e. pre vetted and offer them other companies, Pymetrics use neuro and AI based games to sort candidates, Included Works use referrals (where referees get scored to increase their weighting) to help underrepresented groups. Marketplaces, gamification, crowd-sourced all have one thing in common, RecruitmenTech is bringing scalability to help solve employer problems.
The key problem of hiring is (1) finding the right person and (2) how long it takes to hire such a person. It costs a company in staff time (allocated to find and interview people and productivity lost by not having the person) and costs them even more if it is a poor or wrong fit (lower productivity or restart the whole process). RecruitmentTech in its various forms will aim to do both, marketplaces should increase the pool of candidates (better chance of finding people quickly and with the right skills) and gamification/referral aim to improve the chance of the right fit.
Are they really in tension? It depends. Consider the following scenarios:
Upskill vs hire — A company requires a lead data scientist for its data science team, it has an internal candidate who would take x months to reach the same level of productivity (right skills) or it could hire a new lead data scientist who already has the skills (right person) but would take x months to hire. Edtech added some weight to the former — thanks to Edtech it is now possible to take the courses(e.g. Data Science Specialisation or Nanodegree), where previously someone may have had to enrol in a Masters degree which make upskilling unrealistic (given cost and timelines — firms can’t wait for the new academic year). RecruitmentTech adds more weight to the other side — if done correctly it reduces the recruitment time and/or increases the probability of a good fit (i.e. de-risks hiring) and like Edtech can do it at scale so it can have an effect across the labour market so even firms who previously struggled to find people would now have automatic access to larger pools of people.
Replacing permanent jobs with gigs — RecruitmentTech, if it can improve on current hiring processes could drive the gig economy. Many companies that have a project e.g. website redesign that takes more than 6 months would probably make a permanent hire — but if RecruitmentTech can reduce hiring time or improve the fit they may find it feasible to hire on a fixed term contract basis. This could work well for some employees who could develop specialisation and permanently live off it — confident of finding the next short term contract — much as some developers do already e.g. those that bounce around doing mobile app developments etc.
For the patient, Edtech — Conversely there are scenarios where Edtech will still hold the advantage; companies with more patient horizons can take the time to focus on upskilling and can reap the rewards via employee engagement, experience and company culture.
Complementarity — Intriguing is where the two reinforce each other. Bootcamps are the emblematic example of this in the offline world — whereby the camp teaches an MVP curriculum tailored to a set group of employer needs and then the candidates get hired. Bootcamps and last-mile programmes only scale as a marketplace (any one bootcamp is relatively small e.g. 60–100 people) but Udacity and Linkedin are both examples of where they are trying to vertically integrate the two. LinkedIn aims to provide a genuine marketplace of Education providers to its users so they can upskill (and it will help them identify skill gaps) and then be the sole marketplace for linking job seekers and employers.
Reading this one may ask — Who cares? Edtech is far away from its total addressable market and this is perfectly true. But the margins matter (at least for valuation) and so too does the strategy — RecruitmentTech will pose new challenges for Edtech, fighting it in some scenarios, complementing it in others and likely as not both will redefine each other as companies vertically integrate both.
