Is there a threat from freelance platforms attempting to muscle in on agency contracting?

Where does benefit end and threat begin?

The recruitment industry has benefited enormously from the development of technology in a number of ways, including:

• Making it easier to advertise and market jobs
• Leveraging social channels to promote roles
• Automating and reducing costs of repetitive manual processes
• Communicating with candidates and clients
• Accelerating the process of search and selection

However, one of the hallmarks of tech businesses is that they are often disruptors of established business models and markets. For some recruiters, this might provoke the question of where does the benefit end and the threat of disruption begin?

Musical revolution: The lessons of the streamers

Starting in the late 1970s, digital technologies started to change the music industry. Initially, this was an evolution, seen in music production and distribution of recorded music. Digital musical instruments such as synthesizers, recording technologies, and compact discs (CDs) are prime examples, and they slowly became absorbed within the established model.

However, the music industry was revolutionised – more fundamentally and rapidly transformed by the advent of online streaming. Negative impacts included record companies losing control and revenue, artists receiving poor income from streaming, and consumers paying increased prices for live tickets.

Some might say the streaming platforms disrupted the market and stole the industry, breaking the established business model which had persisted for decades, disenfranchising the incumbents.

The streamers would say that music businesses were complacent and had given artists and consumers a bad deal for years, and the industry was crying out for change.

If we transpose the lessons of the streamers onto the recruitment industry and the jobs market, then could similar charges be levelled at recruitment agencies?

Once purely transactional but now building relationships

Technologies such as job boards, ATS, and back-office RecTech are all highly complementary to established recruitment business models. Whether it’s contract and temporary staffing, corporate RPO, or retained search, these types of software provide a logical way of simplifying processes and reducing costs.

Freelance marketplaces have been around for about 25 years. Typically such web platforms allow clients with projects to locate freelancers and vice-versa. Pricing is a critical part of the equation, with the price of each job key to the selection of workers and projects.

For many, it is purely transactional. Beyond the boundaries of each job there’s no commitment from either side. However, some have found that freelance marketplaces may provide the basis for repeat business, building relationships and longer collaborations. This effect has largely been organic.

From marketplace to hiring platform: The threat to recruiters

Leading marketplaces, such as Upwork, Freelancer, and Guru have a reach, with many thousands of freelancer profiles and projects. Another of the key players, Fiverr, is now attempting to re-position itself as a hiring platform.

In an attempt to break out of its casual worker marketplace image and offer an alternative to conventional staffing agency recruitment, Fiverr has recently introduced some changes designed to help businesses recruit skilled talent and integrate freelancers into their workforces.

Key features that enable this are to provide:

• Full freelancer profiles, akin to CVs, help businesses identify full potential
• An hourly rate option to let businesses choose how they work with freelancers
• Outsourcing with Fiverr-trained business partners who will manage an organization’s projects
• Money-back guarantee on services traded between Fiverr Pro customers and sellers

Some may say that there has always been some competition for recruiters from freelance platforms. However, with Fiverr making it something of a USP, will other platforms follow suit and increase the threat potential?

Find out more and tap into the conversation amongst freelancers and contractors about Fiverr’s transition from marketplace to hiring platform here.

Get a smarter recruitment back-office with ETZ

ETZ’s leading recruitment back office software solution streamlines the back office processing of your recruitment agency. Our complementary solutions to our leading timesheet and invoicing solution are ETZ Comply for onboarding and document management and Caspian for business intelligence. These give agencies further capability to streamline and uncover opportunities.

To find out more, call us on 0800 311 2266 or book a demo.