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E-cruiters: Their Career Prospects Are Promising For investors, the field is still small, but the market for online job recruiters could quickly soar If you haven't looked for a job lately, you might not realize what a tremendous tool the Internet has become. Online career sites are proliferating, with leader Monster.com currently offering a searchable database of 216,000 job listings and 1.6 million resumes. And job boards are just the first step. Online recruiting technology that can help corporations target candidates, sort resumes, and evaluate prospects on the Web is being developed. Online spending on hiring-related advertising was only $105 million in 1998, but that number should soar to $5 billion by 2003, estimates Forrester Research. For corporations, which are finding it harder than ever to hire the right people, Web ads are cheaper than print outlets, can be published more quickly, get faster responses, and can be highly targeted. "Speed to hire is critical in this labor-short economy," says Perry Boyle, an analyst with Thomas Weisel Partners, which held a standing-room-only investor conference on "E-cruiting" on July 20 in New York. He estimates that the total potential market for online recruitment services in the U.S. could be $30 billion. THREE MAIN CANDIDATES. Investors looking for a way to play this burgeoning online industry don't as yet have many companies to choose from. The three main publicly traded stocks are TMP Worldwide (TMPW) -- which runs Monster.com -- CareerBuilder (CBDR), and Webhire (HIRE). There are also several new offerings in the pipeline, including HotJobs.com and Headhunter.net, and some publicly traded staffing companies that are making big Internet pushes, such as Interim Services (IS). All these companies have very different business models -- which are still evolving as competition and technical sophistication increase. "None of the current E-cruiting companies have fully exploited the 'Power of .Com," wrote Boyle in his May 25 White Paper on the E-cruiting industry.
One criticism of job boards such as Monster.com is that they return too many resumes, often from unqualified applicants. "Filtering is going to become more important as the masses come online," concedes Linda Natansohn, senior vice-president for ventures at TMP. "It's going to be our job at the end of the day to make sure our site is delivering the right candidates." The company continues to add features and services to the site. On July 4 it launched Monster Talent Market, which allows independent contractors to auction off their services online. "HUNDRED-TO-ONE PROBLEM." CareerBuilder, much more of a pure Internet play than TMP, has a business model that President and CEO Robert J. McGovern believes will get around what he calls the "hundred-to-one problem" -- that companies receive only one good resume out of every 100. Rather than offer one job board, CareerBuilder has created a network of career boards on more than 20 sites, including USAToday.com, MSN.com, and CNET.com. (Business Week Online is also in the network.) Partner Web sites get an easy and inexpensive way to enter the online recruiting market, and CareerBuilder gets to offer its clients (companies that pay a fee for each ad on each site), a targeted audience. For example, a company seeking an Internet developer can run an ad on Internet.com, while a company seeking a bond dealer can post one on Bloomberg.com. Using this strategy, CareerBuilder also avoids having to spend millions to build its brand. It just leverages traffic growth on network sites. "People say: 'Why didn't they run a Super Bowl ad?'" says Friedman Billings Ramsay analyst Rob Martin, referring to television spots run last year by Monster.com and HotJobs.com. "That's not their way." Rather than trying to become the top job-destination site, "they are betting on their ability to aggregate a larger audience across multiple brands," he says. Still a tiny company, CareerBuilder had 1998 revenues of only $7 million and a net loss of $12 million. One negative cited by some analysts: CareerBuilder shares some revenues with partner Web sites as well as with ADP, a payroll company that sells the service to corporations. That cuts into gross margins. CareerBuilder reports second-quarter earnings on July 26, and that could give its stock a lift by proving that its network is working, says Martin. The market for Internet stocks was choppy in mid-May, when CareerBuilder went public at $13 a share, and by July 21, the stock was only at $16. Martin calls it a "forgotten IPO" that investors are "just starting to recognize and appreciate."
Webhire's business is geared to serving human-resources departments rather than individual job seekers. It helps companies distribute job listings over multiple Web sites, and provides a resume database corporate recruiters can search for candidates. It also provides Internet hosting services for several large job sites, including CareerPath, the second-largest recruitment site on the Web. Another recent choice is TopJobs (TJOB), a play on online recruitment in Europe that just came public in April. Thadhani says it is similar to TMP but a couple of years behind. "Its objective is to replicate the success of TMP," he says. Boyle's top pick is a staffing company called Interim Services. He believes it has built on its deep understanding of the hiring process to create a full-service recruiting option online that can help companies screen the applicant pool and choose the right person for a job. Romac International (ROMC), another staffing company, is working to do the same thing, he says. High-end executive recruiters Heidrick & Struggles (HSII) and Korn/Ferry International (KFY) also bear watching for their online efforts, Boyle says. Clearly competition is heating up. "I think over time there is room for two or three successful companies, not a whole lot more," says Thadhani. Investors who want to profit from growth in the new industry will need to choose carefully among the current offerings and keep a close watch on the up-and-comers. Amey Stone is an associate editor at Business Week Online. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
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 Amey Stone covers the markets and investing for Business Week Online WEB POINTERS To visit some of the sites mentioned in the story, click here: Monster.com TMP Worldwide CareerBuilder Webhire HotJobs.com Headhunter.net Media Metrix TopJobs | ||||||||||||
