Churn Baby Churn!
Earlier this week Talent Management Research firm Bersin & Associates released the findings of their latest study on the talent acquisition market, citing that nearly half of all surveyed companies are considering switching their recruiting technology vendor. Let it sink in – almost 50% of surveyed organizations are looking to switch their talent acquisition vendor. While the number itself is somewhat staggering, I naturally want to understand why people are looking to switch as much as how many. The churn happening right now makes me think of the business of mobile phones and how people jump from one carrier to another hoping the service, phone selection, reception, price is better.
Just like the transformation happening in the mobile phone market, the talent acquisition market is in the midst of the largest evolution since the advent of the online job application. Technology is radically transforming the way we search for jobs, the way recruiters source candidates, the way we evaluate and screen candidates, even the interview process itself. Having a corporate job site an distributing your jobs to career boards like Monster.com, Career Builder, etc isn’t even scratching the surface of what’s possible, yet that’s the extent of what most organizations are doing.
Savvy recruiters know the advantages of Search Engine Optimization (SEO), Twitter has enabled recruiters to get the message out to the masses for little to no cost, and utilizing Facebook to attract and interact with candidates is quickly becoming the norm. New vendors are emerging daily to address specific shortcomings with the market leaders in “edge” recruiting capabilities, and aggressive recruiters are pulling these capabilities into their organizations often faster than the company can react.
Which brings me back to the primary point regarding the industry churn. Why? I’ll share my two cents on the topic as to why the number of companies switching vendors is so high:
- While there are a whole host of advantages to Software as a Service from a delivery perspective, one of the advantages in the sales cycle is a disadvantage in customer retention. Barriers to entry and thus exit for customers are very low. Much like cell phone churn became much greater with the introduction of number portability (keeping your number when you change carriers), consumers can more easily switch from one vendor to another without substantial financial penalty.
- Many SaaS vendor contracts run 36 months in duration. With the growth in economy in the first 9 months of 2008, many of contracts were signed at that point in time are coming up for renewal this year. 2009 and 2010 were down years from an economic perspective, which would lead one to believe that the lion’s share of the active SaaS-based talent acquisition vendor contracts are due to renew this year.
Why do you think this is happening? Will churning from one vendor address the shortcomings that are driving everyone to look elsewhere? Is technology really the problem or are vendors being saddled with baggage related to broken processes and poor change management activities during and after the implementation? Next month Bersin is prepared to release the results of their Talent Acquisition Systems customer satisfaction survey – I’m curious to see why customers are looking to make the change and how the industry reacts to their findings.
What you your thoughts on the topic? Please add your comments and join the dialogue.