George LaRocque recently published some great data on his site detailing recent investments in HR technology. If you don’t follow George or listen to his podcasts, you are missing an opportunity to be smarter about HR technology.

There have been a bunch of deals lately, and the summary in George’s post is worth reviewing. I wanted to understand the nature of these investments relative to the┬áHR Tech Landscape published here previously, so I took the list and allocated deals into the program areas in the framework. A few notes about this:

  • I threw out deals/investments that don’t have a clear focus on providing a service to companies. If it’s all about you finding a job, I excluded the deal.
  • One deal/company can fall into multiple disciplines. For example, Namely is a relatively broad HR Management platform that has capabilities in that area plus performance and onboarding. Yello is squarely in Talent Acquisition, with capabilities in Marketing, ATS, and modestly in Assessment. In these cases, I allocated the investment roughly in order of where I thought the value is derived. Yes, it’s a little arbitrary, and admittedly based on about 2 minutes of research and thinking per company.
  • I don’t believe George’s list intended to represent all elements of the framework I’m using. So we shouldn’t say that because the list didn’t include any investments in data visualization that there hasn’t been any. Consider the list most applicable to the Programs and Services tier of the model.

As a reminder, here is the model:

When you look at the list of deals and allocate them against this model, you get a very skewed picture (visualization done in Tableau; shades of blue denote the discipline area within HR Programs and Services):

If you are unable to view the interactive viz, click here for a static image.

Remember… this is an estimate of investment based on my judgment. The founders, investors, or even George LaRocque who built the list might disagree with the allocation. But I don’t think anyone is going to disagree that Talent Acquisition technology is where the money is flowing.

Why is TA getting all the cash?

Of course we shouldn’t make too much of a six month sample, but the following are likely the drivers of this investment:

The Talent Acquisition market is huge. All companies need to find talent, and there is constantly money being spent in that space. More than 5 million hires occur every month in the United States – just pretend that each hire has a cost per hire of $1,000… and that’s $5 billion in hiring costs per month. That’s just the transaction costs (not wages), so nearly all of that spend can be captured by new technologies. That market opportunity likely dwarfs most other areas of HR management. Google doesn’t get into the game on small market opportunities, so consider their Jobs initiative a validation of the market opportunity.

The pain associated with recruiting is a two-sided problem. Finding a new job is hard. You are bombarded with headhunters and recruiters when you have a job, but when it’s time to look for one you have a hard time getting noticed. You apply for that “Rewards Manager” job to find out it isn’t what you really thought. From the company perspective, you have to sift through dozens of resumes hoping to spot one that is the perfect fit. You are asking a diverse set of people to have high standards but fill a lot of jobs. You want to keep track of and engage the 200 people you met at a recruiting event, even though you don’t have a job for them to apply for at this time. There is inconsistency and inefficiency. Where there is a lot of pain, innovation follows.

Relatively recent and emerging technologies can have a direct impact on both sides of the problem. Everything can be mobile now. Web technologies can discover more about you when you engage with content. Online platforms like LinkedIn expose our pasts, connections, and interests in new ways that make it simpler to target jobs or candidates. Machine learning can parse through text and prioritize a match. Computing power has expanded, data science has exploded, and all aligns to help address a classic “matching process” problem faced in the Talent Acquisition sphere.

So what do I do with this?

The big takeaway: If you aren’t rethinking your TA tech strategy, now is the time to do it. Understand your process and tools, and devote some time to understand how the market is evolving. The next big thing might be out there.