The first time I heard about managed service providers back in the 1990s, I remember thinking, “If this takes off, it’s really going to shake things up in the staffing world.” Well, MSPs did take off — and it certainly did change things industrywide, from how we interact with clients and how we’re structured to deliver talent to how we’re able to profit from our services. MSPs also both helped and hurt minority business enterprises competing for business with large employers. MSPs helped large employers focus on diversity spend, but their hierarchical structure favored large staffing firms, making it difficult for many MBEs to compete at tier-one levels. Lately, I’ve been having a sense of déjà vu when I think about talent acquisition platforms.
When was the last time you called for a cab? We don’t really do that anymore. There are apps that connect us directly with drivers when and where we need them. These service platform apps are easy to use and provide a transparent experience for the rider. The transaction is seamless; no money changes hands, and we have full access to all relevant information from who our driver is, how far away they are and how they’re rated by other users.
It’s a platform world. Talent platforms provide a similar user experience for the labor market as ride-hailing apps. They create a structured digital marketplace where hiring managers can directly engage contingent workers. The most inclusive talent platforms offer everything from broadcasting requirements and issuing competency tests to conducting video interviews and rate negotiations. According to SIA, the 2020 marketplace for talent platforms worldwide was about $10.7 billion, and use of these programs grew about 57% from 2020 to 2021. The advent of Covid and normalization of remote work will likely accelerate the growth of talent platform utilization.
From the candidate’s perspective, talent platforms democratize the application process and enable them to market their skills directly to employers. For employers, talent platforms provide greater control over and transparency of the hiring process. These platforms enable employers to better market their brand and represent their culture to applicants. In the area of diversity hiring, talent platforms greatly reduce the cost of finding diverse candidates. Employers will no longer need to pay a premium to staffing firms that specialize in recruiting diverse candidates. The model flips from pushing out requirements to pulling in candidates.
For staffing firms, this emerging model presents some challenges. Talent platforms disrupt the traditional model of using thirdparty specialists to source and recruit talent. Those staffing firms that can’t or don’t wish to invest in talent platforms of their own are going to have to adapt to a changing ecosystem.
However, not all employers will want to use talent platforms, and not all needs are suitable. While convenient, these platforms shift the cost and expertise of hiring from staffing firms back to the employers. Hiring for projects that require candidates across departments may also create opportunities for staffing firms in the evolving marketplace. Furthermore, some candidates will still need help to better market themselves in the new paradigm.
Preserving diversity. Talent platforms also change the landscape for promoting supplier and candidate diversity. Under the current model, large employers identify and engage MBE staffing firms as part of their diversity spend strategy. In the emerging platform model, these MBEs have been removed from the supply chain. Employers need to develop another means of promoting supplier diversity and preserving diversity spend. One way is by employers utilizing diverse-owned talent platforms. Another is by the talent platforms themselves engaging MBEs as part of their offerings, such as payrolling and employer of record services. Talent platforms will also need to incorporate ways to attract and promote diverse candidates into their systems to create fair opportunities for all.
Talent platforms will shake things up in the staffing world, but there will always be new opportunities. As staffing executives, we need to anticipate these changes and look for new ways to benefit from them. As diversity proponents, we need to make sure that these new business models maintain a commitment to diversity throughout the workplace and supply chain.
