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Recruiter Bought For 26 Billion, But Why?

Posted by Jeff Pelliccio on Jun 9, 2016 8:28:00 AM

In ICS insights

LinkedIn was purchased for 26 billion dollars by Microsoft recently and as a Staffing Company, we ask ourselves why a recruiting platform / job board interested Microsoft in the first place and how it will eventually affect our industry.

So what exactly is LinkedIn?

Let’s agree on a few things to start: LinkedIn is a job board and is actually the second largest job board in the world, behind only Indeed.  When it was announced 57% of traffic on the platform was mobile was anyone surprised? Who looks for a job at their desk? The mobile numbers are very similar to indeed.com.

It is a recruiting platform and has been reported that two-thirds of their revenue comes from “talent solutions”, which are recruiters and corporate staffing organizations paying to view resumes and profiles.  

Despite LinkedIn’s persistence, it should be easy to agree that LinkedIn is not a social network. Since its inception in 2003, it has not grown too far beyond its foundation as a recruiting tool. It is a platform for staffing professionals, recruiters, headhunters and job seekers. It is not surprising that only one fourth of its users return to the site each month. Why log on if you’re neither seeking a job nor trying to place someone in a job?

For the vast majority of users, LinkedIn rarely gets a glance until it is time to look for a job.

Why did LinkedIn Sell?

For a platform that acts as a recruitment tool, LinkedIn is having problems recruiting top talent. In Silicon Valley, LinkedIn is still a small player with small valuations that has been disappointing potential investors and potential employees alike.

By bulking up with Microsoft’s strength, LinkedIn can be in a better competitive position. In a profile of LinkedIn founder Reid Hoffman from The New Yorker last year, “Silicon Valley is obsessed with ‘scale’, and LinkedIn is, as yet, insufficiently enormous.” The marriage to Microsoft can solve the scale issue with its deep pockets and vast user base.

Are you looking to find talent? Schedule a meeting with one of our recruiters today!

Why did Microsoft buy?

The staffing and recruiting industry knows that the workforce is undeniably shifting and shifting quickly. Freelance and contract jobs are the new face of a “flexible” workforce, not out of necessity but because of preference.  So could this deal be keen foresight on the part of Microsoft?

Mr. Nadella made the case for buying a job board, saying, “Being able to take what LinkedIn has done with the recruiter and talent management solutions, and looking at what are the natural ways to expand into Dynamics, is going to be the next set of things that we will do”.

CRMs can be as hard to define as LinkedIn’s true identity. However one thing is certain Microsoft wants to badly enter and disrupt this massive industry, currently lead by smaller companies such as Salesforce (which Microsoft tried to buy last year). LinkedIn users are already Microsoft users, and vice versa. Since 2010, it has been possible to connect your LinkedIn network with your Outlook inboxes. The next step of increasing productivity will be to tie the data into Microsoft Dynamics to have a social edge over Salesforce.

The M&A between Microsoft and LinkedIn can also be justified by one of LinkedIn’s own M&A. LinkedIn owns Lynda, a subscription service with video tutorials on topics ranging from 3D animation to Project Management. This subscription won’t compete with universities, but it can compete in the wild west of corporate training. As said by a LinkedIn executive: “Now, visualize a new tab added to Office called Learning, and you’ll start to get a sense of the power of this […] When you are in these Microsoft products, you’re going to be able to see who you can tap within your network, within the entire broader ecosystem, freelancers, and the actual coursework itself.”

As recruiters, this groundbreaking tech deal could be a major benefit in expediting the recruitment process, analyzing candidates’ actual skills, and keeping track of all of our corporate and personal relationships.