Cloud HR app solves chicken-and-egg issue

Cloud HR app solves chicken-and-egg issue

Summary: RecruitLoop has taken the cloud service delivery model to the Australian recruitment industry and in the process may have solved the chicken-and-egg problem that plagues start-up marketplaces often touted as the "99designs of x or y".

SHARE:

RecruitLoop has taken the cloud service delivery model to the Australian recruitment industry and in the process may have solved the chicken-and-egg problem that plagues start-up marketplaces often touted as the "99designs of x or y".

The application was originally conceived as a suite of online tools that perform different functions in the recruitment process, such as video interviewing and candidate testing, but quickly grew in popularity with the freelance recruiter industry.

Since it was launched five months ago the site has attracted over 30 recruiters and completed over 60 projects, according to co-founder Michael Overell, who said the next milestone is reaching 100 clients.

This popularity manifested itself in recruiters directing clients back to the site, creating a specialised marketplace where recruitment services can be bought and sold.

"The best metric we like is that a third of clients have come back three or more times," said Overell, a former McKinsey analyst. "They engaged a recruiter in a project, done that once, and come back again and again, which means we're doing something right."

He said one project placed a $150,000 role for a fee of less than $1000, which is a saving by a factor of 30 compared to the standard rate of 20 per cent. The salaries range from $40,000 to $250,000 and across all industries, and the "sweet spot" role is a mid-level, white-collar office manager.

Overell said the site provides the applications for freelance recruiters to scale their operations, while small businesses can just pay for the recruitment services they need, rather than paying for an expensive recruitment package.

"Our clients effectively become recruitment agencies," he said. "We think of that as our wholesale channel, so rather than building direct client relationships with employers, we become a wholesale service for recruitment agencies, which gives them access to a scalable workforce of recruiters."

The site has been fully funded by the current team, which also includes co-founder and head of product Denis Zubkov, co-founder and chairman Garry Visontay, and head of community and client services Paul Slezak.

Nearing the eve of its six-month anniversary, RecruitLoop has set the lofty goal of being the default hiring method for Australian small business.

"Rather than go direct to a job board and do everything themselves, and/or go to a recruitment agency, we want to be the go-to option in business because it's so easy and flexible and cost effective."

SWOT

Strength

The company has developed a product that is endorsed by freelance recruiters, and in the process has driven usage with businesses seeking recruitment services. It has early traction.

Weaknesses

It's largely reliant on word of mouth of recruiters and clients to drive business. There's limited room to scale.

Opportunities

It's operating in a very lucrative niche, and by developing a product for small businesses it has tapped into a huge but under-serviced market. There are plans to eventually expand internationally.

Threats

The jobs website giant Seek could leverage its brand to provide a similar product.

Conclusion

RecruitLoop has created a truly unique product that solves a real-world problem and targets a large but neglected market: Australian small business. It occupies a key position in the recruitment cycle, and if this can be maintained, it will be a very big success.

Verdict: BOOM

Topics: IT Employment, Start-Ups

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

2 comments
Log in or register to join the discussion
  • Thanks for the writeup Mahesh :)

    This short demo video shows a bit more about how the model works:
    http://vimeo.com/recruitloop/introduction.

    I should clarify: Our biggest target 'customer' base is actually SME employers - with recruiters in our network helping to find them new staff, at +80% cost saving than a recruitment agency.

    In some cases we have worked with recruitment agencies as clients (the 'wholesale' customer), but we really aim to solve the recruitment problem for SMEs, who have been priced out for too long.

    Michael Overell
    www.recruitloop.com.au
    mboverell
  • This article was good for the information that it conveyed. I forwarded it to my sister who has an HR consultancy. However--perhaps it was just Monday-itis--I had trouble understanding the article, even after a few re-reads. For one, I didn't really understand what the site does because this article didn't make it very clear to me. I found the site myself and read how it works there. (Now I can see how this could benefit SMEs.)

    It mentions a chicken-and-egg problem of "99designs of x or y". I don't know what that means. The article doesn't explain the reference, nor does it spell out what the chicken-and-egg problem actually is. (By the way, problems are not "touted" - unless you're trying to sell them!)

    I also didn't quite understand this sentence for a couple of reasons: "This popularity manifested itself in recruiters directing clients back to the site, creating a specialised marketplace where recruitment services can be bought and sold." First, 5 months, 30 recruiters: I will take the author's word for it that that is popular, but I sort of feel that this article could have benefited from a little more information to explain why those numbers are significant. For example, searching for "recruitment" in the Yellow Pages produces 6725 results. I don't know how many recruitment agents there would actually be or how large the target market is. I didn't understand why recruiters would send their clients back to the site. And I thought that the site was by design already a "specialised marketplace where recruitment services can be bought and sold".

    Sorry if my comments seem nitpicky. I only made them hoping that they would help future articles to be clearer.
    shahmatwu