1st Commercial Credit

Learn About Funding and Supply Chain Finance Solutions, Business Tips, and Industry Related Articles.

Over 18 Years in Business

Recent Transactions

invoice factoring for a trucking oil field hauler

$1.2 Million

Oil Field Hauler

invoice factoring for a po funding valve importer from china for inventory, freight and duty fees


Valve Importer PO funding

Is an Advance Tracking System Bad News for Staffing Agencies?

One of the biggest fears for most workers is that one day technology will advance enough to eliminate the need for human bodies. It appears that advanced applicant tracking systems may pose the same threat to staffing agencies. Currently, this is an employers' market with the high ratio of job applicants for every open position. Data from the Economic Policy Institute shows that as of July 2013, there were three candidates for every job opening. Therefore, employers need a process that narrows their selection to candidates most likely to fulfill their needs.

One tool available to employers is an applicant tracking system. Generally, software for the human resource industry is considered a dynamic and innovative market. On average, the market for talent management systems is more than $4 billion. This includes recruiting, performance and succession management functions. For core human resource management functions, the software industry is over $12 billion.

Within these markets is the applicant tracking system, which started with resume scanning processes. Typically, resumes were compiled in a database that would scan and index them based on keyword assignments. Recruiters could have an online snapshot of job candidates when trying to fill positions. As the technology evolved, more tools were added to parse resumes based on other criteria. Work history and educational level, for example, could be used to segregate candidates that closely matched responsibilities for a position.

What is an Applicant Tracking System?

Basically, an applicant tracking system is a software application that employers can use as an efficient recruiting mechanism. This system can be used to integrate all job recruiting functions. Employers can use the applicant tracking system to post openings on job boards and corporate websites. Once candidates apply, the system can be used to scan resumes and generate email requests for interviews.

Other features of this system used to track applicants include requisition tracking, resume ranking, pre-screening questions, multilingual selections and customized input forms. By conservative estimates, nearly half of all mid-sized employers currently use some type of applicant tracking system. Nearly all large corporations use the system for recruiting and hiring purposes.

One of the primary functions of the applicant tracking system is creating a centralized database for all recruitment efforts. Generally, these systems are built to assist human resources staff with managing high volumes of resumes and applicant information.

Either this data is collected from internal applications, company websites or job boards. Most of the major job boards have partnered with software providers to support the parsing process. This helps to ease the migration of data from the job boards to company systems.

Continued enhancements such as artificial intelligence tools also help to facilitate search capabilities. By interfacing with cloud-based platforms, applicant tracking systems allow employers to score resumes based on job descriptions and skill requirements.

Benefits to Employers

There are a few benefits to employers who decide to use an applicant tracking system. For one, they can use the system to coordinate recruitment efforts and analyze progress. This can help to differentiate cost-effective strategies from ones that are not paying off. Employers are better equipped to manage human capital.

Another benefit for employers is the ability to use the corporate website to present opportunities to internal and external candidates. Preexisting data that is stored for search and retrieval processes can be used to identify potential candidates. Some systems even have off-site encryption methods for resume data collection and storage, which might be required by equal opportunity employment laws.

Possible Downsides to Replacing Staffing Agencies with Tracking Systems

On their face, applicant tracking systems appear to offer employers a cost-effective solution for wading through a deluge of resumes. However, technology cannot replace the advantages of human touch, which employers compromise when replacing staffing agencies with these systems. A majority of reviews point out flawed processes that can create more headaches for job seekers and employers.

While applicant tracking systems can help employers manage job openings and resume collection, they have become a bane to candidates. Submitting a resume through one of these systems reduces the chance of landing an interview by 75 percent according to some estimates.

This flaw creates a problem for the candidate whose resume format is not compatible with the system. Absent certain keywords or phrases, the tracking system will rank the resume as a bad match even if the candidate has matching qualifications.

Most HR departments can benefit from using applicant tracking systems. However, some research shows that using these systems does not have a high impact on recruitment results. Factors that contribute to first-rate recruiting results are not differentiated by the use of applicant tracking systems. Using a system has benefits for the recruiting process, but does not guarantee results will be better than not using one.

In part, this could be due to the value-added components of recruitment are not measurable within a tracking system. Campaign management, corporate branding, relationship management and assessment still require human connections to work well.

Are These Systems a Real Replacement for Staffing Agencies?

In addition to the omission of value-added components for recruiting, a door is open for staffing agencies. Many feel they must contend with employers who use sophisticated software to recruit job candidates. The challenge is to present cost-effective alternatives that demonstrate a competitive advantage for employers.

Additionally, some staffing agencies are already using these systems to find candidates for current and potential clients. Ideally, employers can outsource recruitment effort to staffing agencies. Not only can they access a pool of candidates that in-house recruiting might overlook, but they can dedicate more time to building the company. Training is minimized because agencies dedicate time to selecting candidates with the best skills.

Complex application systems are also a disadvantage for candidates that use mobile applications. Nearly half of candidates that use mobile applications to apply for jobs will abandon a process that becomes too cumbersome. Making job postings mobile friendly requires additional time for HR staff. Employers that do not have an HR department and rely on other employees to perform these duties will suffer productivity losses in other areas.

Another possible obstacle is the reliance of data collected from resumes related to EEOC compliance. Typically, emailed resumes are not acceptable for data collection and create another time-consuming task. Employers must have adequate HR staffing to upload emailed resumes into the applicant tracking system.

Small employers may have the advantage of a simpler application process than large employers. However, not all have the budget to create highly visible or mobile-friendly job advertisements to support a tracking system. In a world where small employers must compete with large employers, hiring a staffing agency can give them a competitive edge.


Like many industries linked to technology, recruitment software for the human resource industry has experienced many changes. The innovation of different vendors makes these systems available as a core platform for practically all core HR functions. Employers may find some advantages in using these systems that seemingly outweighs the cost of hiring a staffing agency.

It remains to be seen whether applicant tracking systems are bad news for staffing agencies. Some agencies are already using these systems to find candidates for current and potential clients. Others are mapping strategies to ride the trend towards remaining a viable in the recruiting industry.