The impact of the labor shortage and Great Resignation on today’s ATS market

HR and hiring platform provider Hireology’s recent purchase of franchise application tracking system provider Hyrell could mark a wave of consolidation in the crowded and competitive ATS marketspace.

According to Hireology CEO Adam Robinson, the company purchased Hyrell for its franchise solution that is used by clients such as The UPS Store, Wendy’s, Snap Fitness and others. The corporate parents of these franchises did not have to approve the deal and Hireology declined to reveal the worth of the deal. 

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Both Hyrell and Hireology provide franchise hiring solutions and have operated side-by-side in this sector for 12 years. 

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“We knew their business very well. Their customer base was the customer base we already have, and it was a very clear and direct choice to partner with them to convert their customers over to our platform,” he says.

Robinson adds that both companies’ solutions provided similar functionality but their distinct offerings would offer more value to current and potential clients. “We gave [Hyrell’s clients] the opportunity to maintain their current pricing and pick up more capability,” he says.

Hireology’s client base consists of roughly 3,500 individual franchises that include Anytime Fitness, Lincoln Park Zoo and a range of retail automotive, healthcare, professional and consumer services and hospitality franchises, or what they call “decentralized businesses.” 

Franchises are a challenging market segment that had difficulty attracting and retaining staff even before the pandemic and subsequent lockdown and Great Resignation. Now, many markets experience 50% to 100% turnover per year, according to Robinson. 

Related: To learn more about ATS and other recruitment tools, join HRE for the 2022 HR Technology Conference from Sept. 13-16 in Las Vegas. Register here.

An added challenge in the space is that some markets, such as nursing and automotive repair, have a constrained candidate talent pool. 

Those are very specialized, specific skills where there’ll never be enough talent,” Robinson says, adding that the supply-demand imbalance and the Great Resignation only made that more challenging. “It’s never been tougher for them.”

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ATS mergers on the move

Today’s tight labor market and the lingering Great Resignation could drive consolidation in the crowded ATS landscape over the coming months, predicts HR technology expert Josh Bersin, who likely will discuss the topic when he debuts his latest HR tech market research during his keynote address at the 2022 HR Technology Conference later this year in Las Vegas.

The ATS market is very competitive and also very big, so it has lots of consolidation going on all the time. Those who cannot compete and build great products and sales teams are always getting acquired,” he says.

And innovation has only made ATS tools more attractive to demanding clients.

“Right now the introduction of candidate marketing features, AI tools, integrated assessments and integrated video interviewing tools has really raised the bar,” Bersin says. “It’s not surprising to see companies get ‘tired’ of their ATS and shop for a new one.” 

Although Hireology’s Robinson declined to mention what ATS or HR technology solution his company may purchase next, he says the company is not sitting still. It acquired employee referral platform EmployUs last year to expand its array of built-in talent acquisition tools and he predicts that more consolidation is bound to happen. 

Along with looking for the chance to purchase technology that can grow along with the company, small to medium-sized businesses are looking to buy from a single vendor to reduce confusion and streamline their IT.

Previously, your small and midsize businesses had to glue together a solution if they wanted to have end-to-end functionality because some solutions were just overkill for these markets,” he says. “Now you’ve got this amalgamation of solutions.”

Thanks to the increased investment from venture capital and private equity in the HR tech arena over the past decade, Robinson says the ATS space is filled with “great solutions but with limited distribution,” which will allow Hireology and others to consolidate the best of those solutions and bring them to the market.

He adds, “I think you’ll see a lot more of this in the next year.”

Phil Albinus
Phil Albinus is the former HR Tech Editor for HRE. He has been covering personal and business technology for 25 years and has served as editor and executive editor for a number of financial services, trading technology and employee benefits titles. He is a graduate of SUNY New Paltz and lives in the Hudson Valley with his audiologist wife and three adult children.