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The assessment business is counter-cyclical.
And, the future might have a couple of moments with both services are up.
Our logic is pretty clean. When an organization is growing rapidly, it is less interested in the quality of a particular employment relationship and more interested in getting the proverbial "buns on seats". The sheer quantity problem of moving new talent into new facilities (what we've been doing for most of the past ten years) requires increasing sophistication in the management of Recruiting workflow. As hiring volume accelerates, the basic questions for an applicant involve Suitability (physical characteristics, references and drug tests).
Sophisticated assessment firms work in the "development and optimization" end of the spectrum we defined yesterday. They are most interesting when the predominant theme is "making do with what you have". When the emphasis is on increased quality, assessment is the answer.
Rightly, and uniformly, they recognized that assessment practice was changing and needed to be rearranged. So, major investments were made in companies like ePredix. Web based offerings became the fad. And still (because the economy buffered managers against mistakes), the Assessment companies fell short of their objectives.
We see that changing quickly. Tightened borders, higher government demands for workers, tightened budgets, the potential for serious workforce displacement and the ever present skills dislocation problem conspire to create an environment that requires assessment programs. Should the existing companies begin to demonstrate real cost savings for their customers again, there will be another phase of growth in the industry.
Interestingly, it will precede the restoration of demand for ATS. That means that shrewd Assessment companies (or investors wanting to enter that market) will be purchasing ATS systems by this time next year (after the books are in order and sobriety has returned to the management ranks).
Then, and probably only then, will we see the emergence of tools that treat applicants as scarce resources rather than commodities designed to run up the backend ATS bill.
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