Anu Shah, CEO of UShift, shares her perspectives on the potential & challenges of online recruitment platforms.

Momentum Works wrote about WeWork, a key success factor for which in the US is the development of gig economy – people prefer to work independently or as freelancers. And for companies it actually makes sense as well. Many of the functions, including process work, events, and design, can actually be performed by freelancers, instead of fulltimers.

AI decides your fate?

Theoretically, matching of potential employees and employers can be done using algorithms. If you look at the traditional recruitment method for freelancers, there is a lot of inefficiencies: recruitment agencies put ads for recruiters, screens the applicants, pushes those who meet the initial checklist to hiring companies, and promises to replace them if they do not work out.
Of course, all these costs are ultimately borne by the recruiting companies. This is not including the time included in the searching process, and the lost productivity if someone needs to be replaced. There have been a few companies trying to move the recruitment process onto mobile, using algorithms to match. Many of them dab themselves as “Uber for jobs” – well maybe this term is no longer popular in the region now since Uber has thrown in the towel here.

Homejoy – an “uber” for homemaking decided to close its doors in mid-2015. The truth is, many more such “uber for x” businesses have shut.

In fact, many of these apps are not going anywhere – why?
First, a few claim to be algorithmic matching, but the data they collect and use are very rudimentary and can’t be used for algorithms that are more complex than simple formulae. Many do not even collect data in a structured manner.
Second, even if you collect the data in a structured manner, you still need to train the system to make sense. That part is only possible when you have a lot of users (and their data), and have made many mistakes – alas, many in the region, either because of their decision making style or because of lack of support from investors, are not really willing or able to trial with mistakes.
At the end of the day, this is automation – but you need to do automation properly. The only platforms that show some promise in that include Helpster, Jobdoh and UShift – although it is still a long journey towards efficiency and effectiveness.
Employers, however, welcome this shift, even if they are imperfect. At the very least now they can source for candidates and directly communicate with them, which in itself already dramatically reduced direct and time costs.

Lucrative sector, ripe for disruption

Globally, online staffing platforms have raised more than USD$200 million in just nine months in 2017, indicating the appeal of this industry. In addition to showing the appeal, it also shows how much a pain point that the whole recruitment industry is facing.
And judging by the acquisition price of some mediocre agencies and job platforms, we can hardly see why there should not be disruptive players who capture a big slice of the market, and are valued at hundreds of millions.
Ultimately, staffing agencies by and large have not changed they way they place workers for the past few decades. Change is inevitable as these agencies get wiped out by the new wave of platforms. That said, staff reliability is still a huge issue, as part-time workers in blue collar jobs are hardly a disciplined bunch.

Changing the way we work

If anything, the startup culture has totally changed how people around the world work. Just look at the tonnes of coffee shops, co-working spaces that sprouted up in the past year or two in Southeast Asia.
Startups have given life to the gig economy, doing away with traditional office hours and a fixed workplace. Workers who are tired of pulling long hours and being asked to take on administrative tasks beyond their original job scope have the freedom of choosing the the work they want, at the amount of hours they prefer. They can choose their employer and change employer more easily should things not work out.
This has already resulted in a more fluid allocation of tasks to the mutual benefit of both companies and workers. Workers get to choose the tasks that they are interested or have experience in, and companies benefit from having better workers and possibly lower fixed costs. And we believe this trend will continue to match what has already happened in the US – it is just a matter of time: sooner or later.

Immense opportunities

The only resources that are valuable in the internet world are customers (traffic) and data. Ideally when a staffing platform is mature, it would have both: complete profile of blue collar workers (and freelancers) and ideally their job history; and of course, entry point to these workers.

CEO of Facebook apologizes for the recent data sharing scandal. However, we see data sharing as a prevalent practice that will be increasingly evident in years to come, across all industries.

An obvious possibility is salary financing & payday loans. The hundreds of payday loan companies in Indonesia would love to have that data and access – so are the credit scoring companies. Of course, this will only be possible once you have significant number of users, and their data.

Conclusion

Short-term staffing needs will continue to grow, especially across verticals like food and beverage, retail, logistics, events and insurance sectors. Online staffing platforms are expected to become the preferred mainstream hiring solution for many types of jobs.
But how successful these online staffing companies will be will really depends how much customer traffic and data they can capture, retain and make sense of.

Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at hello@mworks.asia.

 

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