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Rise of the Staffing & Recruiting Machines: The Rush to AI-driven HR Technology

Part 1: Ever since John McCarthy coined the term “Artificial Intelligence” in 1955, we’ve been alternately fascinated (“Hello, Siri”) and dismayed (“I’ll be back”) by what AI may offer or foreshadow. How will AI impact the staffing and recruiting industry over the next twenty years?

A new “industrial-age” of AI-based business disruptions?

AI (artificial intelligence) and its impact on staffing and recruitingThe industrial-age leveraged the use of fossil-fueled mechanical power to enable more work to be done by fewer people. It also brought with it major disruptions in virtually every industry. Wherever there was an opportunity to reduce the cost of goods, or speed delivery, or improve quality, machines were invented that were better at performing those tasks and replacing people in the process.

We are now well into the information age, and the use of machines capable of being programmed to emulate even more human-like functions has led to advances that extend those industry disruptions. Intelligent automation is capable of replacing virtually any human activity comprised of repeated steps, as it has in robotized manufacturing. It seems that only in economies where the cost of labor is lower than that of the necessary automation can humans still be found on many manufacturing lines.

But there is more on the horizon. As the cost of computing power decreases, and the power of AI-based software and big-data analysis increases, more and more “human-only” jobs will be targeted for replacement to improve efficiencies and reduce costs. While we may be decades (or even centuries) from a true “Strong AI” capable of human-like thought, “Weak AI” or Applied AI is with is today. Apple’s Siri, Microsoft’s Cortana, and IBM’s Watson are all examples of Applied AI systems.

Siri and Cortana may be pretty good “virtual assistants,” for your smartphone but they pale in comparison to what Watson is doing right now. After crushing top human Jeopardy players, Watson is now focusing on industries where its capability for analyzing unstructured data (a particularly “human” skill) can be put to good use.

Backed by billion-dollar-plus investments, Watson is the centerpiece of a new IBM business unit, Watson Health, that has partnered with Apple and major healthcare players to set the lofty goal of leveraging Watson’s cognitive capabilities to create “new health-based offerings that leverage information collected from personal health, medical and fitness devices” providing “better insights, real-time feedback and recommendations to improve everything from personal health and wellness to acute and chronic care.”

That’s all well and good – we will all be better served with lower cost and more accurate delivery of healthcare – but really, how seriously should we take AI systems?

Really seriously. That business recognizes the potential opportunities that Applied Ai represents can be seen in the investments being made in AI. “The way software is eating the world today, well, AI will do that to software,” says Amir Husain, CEO of Spark Cognition, an AI security startup in Austin, Texas. In 2014 alone, startups developing artificial intelligence systems saw a 302% increase in funding, and since then there has been a constant stream of announcements about new AI applications or investments.

For example, Elon Musk and partners are investing a billion dollars to establish an “Open AI” not-for-profit foundation whose goal is to develop AI system technology – and then give it away to anyone who wants it. And it’s not just startups who are investing. IBM, Apple, Microsoft, Intel, Facebook, Google, and Amazon are among the big players who have announced (or have rumored) big investments in AI.

Applied AI will have a big impact on staffing and recruiting

Similarly, and more relevantly to staffing, recruiting, and HR practices, massive investments in AI and related HR technologies are being made here as well. In 2014 $1.9 Billion was invested in HR technology and venture-backed investments were on track for $2.8 Billion in 2015. Who knows what 2016 will bring?

The promise of AI or similar technologies that might improve the efficiency of hiring is not lost on staffing companies. For example, Recruit Holdings, one of the top staffing enterprises in the world, is investing in technology startups through its subsidiary Recruit Strategic Partners. Its focus is on investing in innovative startups from all around the world to support their companies. HackerRank is one of these startup investments, and HackerRank is using AI to create and develop “gamified” coding challenges for software programmers as a candidate sourcing tool.

Somewhat like Watson, another startup, Connectifier, (recently acquired by LinkedIn) solves the recruiting headaches of out-of-date candidate information, using AI to build meaningful candidate profiles from unstructured data and then matching job requirements to candidates with desired skills.

As HackerRank, Connectifier and other point solutions prove, there are plenty of opportunities for AI to improve on recruiting efficiency, such as providing recruiters with AI “virtual assistants.”

In fact, it’s apparent to some that AI will be a foundation for recruiting with semantic search, people data analytics, real time monitoring of performance and behavior, augmented reality tools to assist during interviews, and decision making aided by “cultural fit” analysis.

And that’s all great to hear. Faster, more efficient, more accurate, better fitting, (and less costly) recruiting and staffing of talent.

But will AI systems replace recruiters, staffing coordinators, sales representatives, or me?

What about all the jobs in a typical recruiting or staffing office? How will AI impact those jobs in recruiting, sales, or even management? Jobs that presumably require more thoughtfulness, creativity, intuition, or people-skills?

AI Disruption AheadFrankly, recruiters and many other recruiting and staffing agency jobs are not safe from the efficiencies that may be delivered by Applied AI systems.

Of course, staffing and recruiting agency personnel aren’t alone as targets for AI replacement. Almost half of all jobs in the Western world (47%) could be automated by computers within the next two decades according to research by The Economist and researchers from the University of Oxford’s Martin Programme on the Impacts of Future Technology. Even management positions are a target for AI-based systems. In just five to 10 years, AI-based systems will likely be able to do many managerial tasks more effectively than humans, says Bob Thomas, the managing director of Accenture Strategy. “We are entering a different kind of technological era,” he says — one in which robots play a much bigger role at work.

But there are caveats. The “low-hanging fruit” for AI systems are jobs that are by their nature repetitive and analytical. As the research points out, human social intelligence is important in a wide range of work tasks, such as those involving negotiation, persuasion and care. These are areas of human capability that are very relevant, but not critical, to staffing and recruiting – as they center on person-to-person communication and relationships. Yet these, too, are valid targets for Applied AI. To aid the computerization of such tasks, active research is being undertaken within the fields.

In analyzing the AI-based job replacement potential, the research indicates that service, sales, and administrative support are most likely to be replaced by AI systems in the next two decades. Not surprisingly, those coincide with the job titles and roles for most of the internal staff at staffing and recruiting agencies.

So, yeah. If you’re working for a staffing and recruiting agency, you may be replaceable (or at least significantly augmented) by an AI system in the future. But there’s a lot more to it. Stay tuned.

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Part two: “Rise of the Staffing & Recruiting Machines: No (Human) Recruiters Needed” explores how AI-based systems might change today’s staffing and recruiting industry model.

Phil McCutchen is a B2B software marketing professional with 25-years of experience in the staffing and recruiting industry. The observations and predictions presented here are based on his own research and future thinking and represent his own opinions.