December 23, 2013 5:48 pm

LinkedIn sets sights on recruitment trade

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Job seekers line up at a job fair at Tianjin University

LinkedIn, the online professional network revolutionising recruiting, plans to use the data it has amassed from more than 250m curricula vitae to help companies improve their hiring.

The Silicon Valley-based company plans to create a global map of companies, tracking when people move jobs, where they go and what skills they have.

Users will theoretically be able to select a company to see where its employees have been hired next, and into what kind of roles.

Dan Shapiro, senior vice-president for global solutions at LinkedIn, said it had a “very ambitious road map for the next five years” with plans to mine what he called the “world’s largest longitudinal data set” of moves within and between companies.

“We are due a complete increase in the sophistication of the talent marketplace like we saw in the financial marketplace 50 years ago,” he said. “[Using this data] governments will invest in education to fill skills gaps in the economy and companies will make workforce plans figuring out how to invest in their own people and put facilities in the right locations.”

Mr Shapiro said LinkedIn would develop algorithms akin to those Google has created for its search engine, using its large database to find the right candidates with the aim of transforming the “incredibly inefficient” world of recruiting and charting careers.

The new product, which does not have a release date, will be similar to a LinkedIn service called “university pages” which allows potential students to track alumni from each university and each course across the world and see what jobs they hold.

Shares in LinkedIn have almost doubled this year, after the company beat expectations thanks to its “talent solutions” service, which offers recruiters and corporations premium features to connect with potential candidates by paying LinkedIn a subscription fee.

Revenue from the unit makes up more than half of total sales, making LinkedIn much less dependent on advertising than other social networks.

In the third quarter, “talent solutions” revenue increased 62 per cent year-on-year, while total revenue was also higher than expected at $393m. A high tax charge meant it reported a net loss of $3.4m compared with net income of $2.3m in the same period the year before.

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Recruiters have begun to abandon old internal databases, which were difficult to maintain, in favour of the constantly updated LinkedIn network of more than 250m potential candidates who can be easily searched and contacted.

The company’s content business, where it has hundreds of industry executives and consultants writing original articles for the site, is designed to help recruiters engage with potential candidates by discussing the articles.

Adam Charlson, an executive search consultant from DHR International, said LinkedIn had a “significant impact” on the industry by giving the companies the ability to use internal recruiters to find most candidates below the boardroom level. The recruitment industry that had to stop and examine its purpose, he said.

“It has forced search firms like our and others to differentiate ourselves with our capability to assess talent,” he said.

But LinkedIn sees potential in using its database to track which kind of candidates do best at which companies. Like other companies seeking to harness the power of “big data”, LinkedIn believes it will be a more accurate and authoritative source on which to base important decisions.

“The idea is that LinkedIn could become a global repository and platform for people, companies, knowledge opportunities and skills, we can map it all out, index it,” Mr Shapiro said.

It is also expanding by launching a product for sales staff earlier this year, to help them pursue leads via the site, and encouraging companies to use LinkedIn as a marketing tool.

Some companies are using the site to plan moves into new markets. Invensys, the FTSE 100 technology company, said LinkedIn was important for its emerging market strategy because before it bid for a contract it could easily assess whether it would need to bring in staff from elsewhere.

Michael Pachter, managing director of equity research of Wedbush Securities, said he is a “huge believer” in the company’s value as a recruitment tool.

But he added: “I’m a lot less of a believer in the idea of the economic graph. While I appreciate their desire to be more relevant to their users, the truth is that people primarily think of them as a job search tool, not for any other purpose.”

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