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MP74123

KEY NOTE: E-RECRUITMENT : APRIL 2003

Overview

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This report covers: E-Recruitment, jobsites, clicks and mortar, DotCom Bubble, electronic methods for advertising, Pureplay, electronic methods versus employment agencies,

Companies covered include: Fish4 Trading, Forgroup Internet, Gis-a-Job, the hotgroup, Jobserve, Jobsite UK, Pharma-ID.com, Reed Elsevier Group, Reed Executive, s1now-www.s1jobs.com, TMP Worldwide/www.monster.co.uk, University of Warwick, Workthing Ltd (Guardian Media Group),

Table of Contents
Executive Summary
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TABLE OF CONTENTS

Executive Summary 5

DotCom Bubble? — What Dotcom Bubble? 5

The Infant Has Started to Talk 5

Clicks and Mortar — the Dominant Business Model 6

The Growth Driver 7

The Future is Bright, But Not All Will Survive 7

1. Introduction 8

DEFINITION 8

REPORT FOCUS 9

2. Strategic Overview 10

Market Dynamics and Segmentation 10

E-Recruitment Expands Among Companies 10

Table 1: The Proportion of Employers Using Electronic Methods for Job Advertising ( percent), 1998-2002 10

Figure 1: The Proportion of Employers Using Electronic Methods for Job Advertising ( percent), 1998-2002 11

Table 2: Recent Trends in Online Recruitment Activity Among Human Resources Professionals (number, £ and percent), 2001 and 2002 12

Jobsite Metrics 13

Table 3: The Number of People with Internet Access and Using the Internet to Look for Work in Great Britain (million and percent), July 2000-February 2003 13

Table 4: Jobsite Metrics (million), 2002 14

From PUREPLAY TO Clicks and Mortar 15

Disintermediation Yes, Disintegration Definitely Not 16

Table 5: The Usage of Electronic Methods Versus Employment Agencies ( percent), 1999-2002 17

Figure 2: The Usage of Electronic Methods Versus Employment Agencies ( percent), 1999-2002 17

Offline is Dead, Long Live Offline 17

Table 6: Methods Used By Online Jobseekers ( percent), Winter 2002/2003 19

NeverMind the Width, Feel the Quality 20

3. Competitive Structure 21

Main Types of Site 21

Table 7: Breakdown of UK Jobsites (number and percent), February 2003 22

The Major Jobsites 23

Table 8: The Top 15 Jobsites Ranked by Unique Users ( percent), 2002 23

Table 9: The Leading Jobsites Ranked by Average Page Impressions ( percent), 2002 24

Table 10: The Leading Jobsites Ranked by Average Jobs Advertisements On Site ( percent), 2002 26

Advertising and Promotion 27

Media Used for Job Advertisements 27

Contacting Clients 28

Table 11: The Main Reason Jobsite Users Use a Particular Site ( percent), Winter 2002/2003 28

The Jobsite Users 29

4. Market Drivers 30

It's the Economy, Stupid! 30

Table 12: The UK Labour Market (000 and percent), Spring 1998-2002 and Autumn 2001-2002 30

Key Sectors Will Influence the Picture 31

Table 13: The UK Recruitment Market by Turnover (£bn and percent), Years Ending April/May 1997-2002 31

Figure 3: The UK Recruitment Market by Turnover (£bn), Years Ending April/May 1997-2002 32

The Search for a New Business Model 33

GO WHERE THE JOBSEEKERS ARE 34

Table 14: The Number and Proportion of Households in Great Britain with Internet Access (million and percent), 1999-2002 34

5. SWOT Analysis 35

Strengths 35

Weaknesses 35

Opportunities 36

Threats 36

6. PEST Analysis 37

POLITICAL FACTORS 37

Economic FACTORS 39

Social FACTORS 39

Demand 39

Supply 39

TECHNOLOGICAL FACTORS 40

7. Recruiter Strategies 42

INTRODUCTION 42

Advantages of E-Recruiting 42

The Internet Reshapes the Agency Business Model 43

Disintermediation — Should Jobsites Worry? 44

Table 15: Sources of Candidates ( percent), 2001 and 2002 45

Figure 4: Sources of Candidates ( percent), 2001 and 2002 45

Table 16: Methods Used to Recruit Staff ( percent), 1999-2002 47

Table 17: The Most Important Issue Facing Online Recruitment ( percent), 2001 and 2002 48

The Job Advertisement Continues to Rule 48

Table 18: Advertising and the Best Source of Candidates ( percent), 2002 49

Figure 5: Advertising and the Best Source of Candidates ( percent), 2002 49

But Opportunities are Being Missed 50

From E-Recruiting to E-HR 51

Greater Familiarity Leads to Less Site Loyalty 52

8. Site User Dynamics 53

INTRODUCTION 53

Who Are Online Site Users? 53

Table 19: Characteristics of Internet Users ( percent of adults and index All=100), February 2002 54

Why Are Jobsites Used? 55

Table 20: Summary of Reasons for Visiting an Internet Careers/Jobsite ( percent of adults), February 2002 56

Table 21: Reasons for Visiting an Internet Careers/Jobsite ( percent of adults), February 2003 57

Table 22: More Reasons for Visiting an Internet Careers/Jobsite ( percent of adults), February 2003 58

Traffic Generators 59

Table 23: Summary of Very Important Features or Services Available on Jobsites ( percent of adults), February 2003 59

Table 24: Very Important Features or Services Available on Jobsites ( percent of adults), February 2003 61

Table 25: More Very Important Features or Services Available on Jobsites ( percent of adults), February 2003 62

Frequency of Visit 63

Table 26: Frequency of Visiting Internet Jobsites ( percent of adults), February 2002 63

Table 27: The Intensity of Jobsite Visits by the Main Social Groups in the Last 3 Months (number and percent), February 2002 64

The Skills in Demand 65

Generic Sites (Sites That Deal With Many Different Industry Sectors) 65

Specialist Sites (Sites That Deal Primarily With One Industry Sector or Type of Job) 65

Table 28: What Role Do Jobseekers Have? ( percent), Winter 2002/2003 66

Table 29: In Which Industry Sector Does a Jobseeker's Employer Operate? ( percent), Winter 2002/2003 67

Speed is Essential 68

Jobseekers are Not Site Loyal 68

Table 30: The Number of Online Recruitment Sites Visited in Order to Look for a Job ( percent), Winter 2002/2003 69

9. Site Strategies 70

DEVELOPMENTS 70

Value-Added Services to Jobseekers 71

Geographical Diversification 72

E-HR and Vertical Integration 73

Consolidation 75

MAJOR JOBSITES — MINI PROFILES 76

Fish4 Trading Ltd 76

Forgroup Internet Ltd — www.careers4a.com 76

Gis-a-Job Ltd — www.gisajob.com 77

the hotgroup PLC 77

Jobserve Ltd 78

Table 32: Financial Results for Jobserve Ltd (£000), Years Ending 30th September 1999, 2000 and 2001 78

Jobsite UK (Worldwide) Ltd 79

Table 33: Financial Results for Jobsite UK (Worldwide) Ltd (£000), Years Ending 31st August 1999 and 31st December 2000-2001 79

Pharma-ID.com Ltd — www.pharma-id.com 79

Reed Elsevier Group PLC 80

Reed Executive PLC 80

s1now Ltd — www.s1jobs.com 80

Table 34: Financial Results for s1now Ltd (£000), Years Ending 31st December 2000 and 2001 81

TMP Worldwide/www.monster.co.uk 81

University of Warwick — www.jobs.ac.uk 81

Workthing Ltd (Guardian Media Group) 82

Table 31: Financial Results for Workthing Ltd (£000), Years Ending 1st April 2001 and 31st March 2002 82

10. The Future 83

KEY DEVELOPMENT TRENDS 83

Forecasts 84

Table 35: Forecast Growth in Internet and Jobsite Users (million and percent), October 2002-2007 84

Figure 6: Forecast Growth in Internet and Jobsite Users (million), October 2002-2007 85

Table 36: The Forecast Proportion of Employers Using Electronic Methods for Job Advertising ( percent), 2002-2007 85

11. Further Sources 86

Publications 86

General Sources 86

Bonnier Information Sources 87

Government Sources 88

Jobsites 88

EXECUTIVE SUMMARY

DotCom Bubble? — What Dotcom Bubble?

Since 2000, the dotcom bubble has well and truly burst; the deflation of that bubble has left in its wake a stream of failed start-ups, stock market failures and investors that got their fingers badly burnt. The Internet business model has taken severe knocks in many markets, but has seemingly gone from strength to strength in the recruitment market. In contrast with many other Internet sectors, online recruitment has a number of profitable jobsites — such as monster and, the example to them all, Jobserve — although it would be wrong to see the sector as awash with spare cash and financial reserves. Indeed, consolidation is badly overdue in this industry and is expected in the future.

However, online recruitment is now firmly recognised as a strategically important medium to fulfil vacancies both by recruitment agencies and, more recently, by employers. The use of electronic recruitment (e-recruitment) is also expanding by industry sector. Originally largely limited to IT, graduate and senior management roles, the Internet is now utilised at every level, across all industry sectors.

The Infant Has Started to Talk

For many companies, e-recruitment is still at an early, even infant, stage of development, with the imperative largely driven by a desire to cut recruitment costs. In addition, most recruiters using the Internet are pursuing piecemeal initiatives rather than having a guiding strategy and the Internet has not yet broken into the total jobs market. Instead, it targets a particular type of jobseeker.

However, greater sophistication and maturity in the market are emerging, with companies seeking to use e-recruitment as part of a wider shift of their human resource (HR) operations to an electronic basis. Key Note expects the Internet to penetrate the wider jobs market in the next 5 years. A growing proportion of recruiters are now seeking to develop e-human resources (e-HR) and e-recruitment strategies.

In the early stages of the market, the main priority for recruiters was generating applicants for their job advertisements. Today, the focus is shifting towards improving the quality of candidates that apply for jobs. As e-recruitment becomes part of e-HR, so the focus of recruiters is shifting towards accurately evaluating and comparing the relevant skills of candidates, i.e. screening, filtering, sorting, and ranking of candidates. This, in turn, is reshaping the services and functionality offered to recruiters by jobsites.

Jobsites must increasingly develop services and solutions to help recruiters throughout the recruitment value chain and across the broad areas of human capital retention and development, such as training and career development. In response to recruiter pressure, jobsites are also becoming more sophisticated in the types of jobs they offer and in their geographic targeting. Jobsites are, therefore:

· providing value-added services to jobseekers, such as services and information, to aid the jobseeker in his/her career management and development

· diversifying overseas to attract jobseekers in other countries, reflecting the global operations of major employers and the search for in-demand skills overseas

· providing value-added services to recruiters, especially services along the recruitment value chain, leading sites to vertically integrate, often by buying in solutions or partnering with companies with the relevant software expertise or intellectual capital

· consolidating by developing new site functionality and services, which require substantial investment. Only those players that reach the critical mass to generate substantial profits will have the capital base for long-term survival.

Clicks and Mortar — the Dominant Business Model

UK national and regional newspaper groups, trade publication publishers and traditional offline recruitment agencies have all moved strongly online since 2000. Today, pureplay Internet jobsites are only a small minority of the sites available, although some still hold strong market positions. Of the top 15 jobsites, as measured by average unique users per month in 2002, only five are pureplay companies, with the rest ultimately owned by traditional offline companies.

In the recruitment market, it is increasingly the norm for agencies to run/use online and offline operations. For these operators, going online was part defensive and part opportunism. Many agencies entered the online market out of a fear that jobsites would effectively cut them out of the recruitment value chain, but, to their delight, this has not happened. Instead, agencies have realised that online operations cannot replace the traditional agency; online has complemented offline activities. The combination of the traditional people skills of the agency and the automation skills of an online operation enhances the total offer an agency makes to a client.

Moreover, since mid-2001, major employers have made a significant move online and are increasingly offering jobs via their own corporate websites. Key Note would argue that, far from this being a threat to the traditional recruitment agency, it is the jobsites that have the most to fear. This development increases the pressure on jobsites to offer a wider portfolio of services, including recruitment software and solutions for corporate websites.

The clicks-and-mortar business model also works because offline services still have a significant role to play in the recruitment industry: online jobsites are not suitable for targeting all sectors of the jobs market. Key Note research shows that online jobsite users are typically:

· male

· affluent (ABC1)

· from London and the south east of England.

They are not, therefore, representative of all employees in the UK.

In addition, offline is still a prime channel for brand building by recruiters: online is used to `sell' jobs (e.g. below the line), but offline builds the recruiter's brand (e.g. above the line).

The Growth Driver

Online recruitment is a candidate-driven market and, in February 2003, there were around 7.5 million jobsite users in the UK out of approximately 27.8 million adults with access to the Internet. On average, over the whole of 2002, around 6.2 million adults visited jobsites, of which 670,000 found jobs through the Internet.

Jobfinding remains the key motivation for using jobsites, including the availability of job-related information, such as information on recruiters and on an industry. However, a range of other factors also drive site traffic, especially career-associated information such as training/careers advice and employment news. Jobsites are therefore expanding the range of career-related information and services that they offer the jobseeker. Such services help build, and maintain, site loyalty and ensure repeat visits by jobseekers as they change their jobs/careers throughout their working lives.

The Future is Bright, But Not All Will Survive

In the next 5 years, Key Note expects e-recruitment to continue to grow in popularity among both employers and employees. By 2007, 10.3 million adults will be using jobsites and all major companies will be using the Internet to advertise their jobs.

Clicks and mortar will remain the most successful business model: a symbiotic relationship between online and offline recruitment methods will be the norm. Jobsites will grow in sophistication and expand along the recruitment value chain. However, the investment required for this will demand greater consolidation in the industry. By 2007, Key Note expects the number of jobsites to have fallen by a half, as employers increasingly advertise jobs via their own websites (plus the surviving jobsites).

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Last updated by Amanda Portoeus June 2003