The building versus buying debate has been sparked by the news that Tesla built its own proprietary recruitment software for tracking job applicants. Should you be building or should you be buying?
Finding the right system in a fragmented market
Whether you’ve got an endless budget, or an ending budget — an applicant tracking system is used by roughly 90% or more of large companies. Through automating several parts of the application and evaluation process, the right ATS helps companies save incredible amounts of time and money. According to Polaris, global applicant tracking system market was valued at $2.35 billion in 2021 and is expected to grow incrementally over the coming years. The rise in the need for automation in the recruitment process has primarily driven the growth of the global market.
A 2022 Recruiting Brainfood survey found approximately 200 different applicant tracking systems.
But finding the right system is easier said than done. A 2022 Recruiting Brainfood survey found approximately 200 different applicant tracking systems. “It tells its own story on how fragmented the ATS market really is”, Recruiting Brainfood’s Hung Lee said. With a whopping 497 net positive responses, Greenhouse led the way in Recruiting Brainfood’s survey. Followed by Lever, with 201 net positive responses. SmartRecruiters, meanwhile, rounds off the top three with a total of 127 net positive responses.
Building versus buying
While there are many options out there, when it comes to applicant tracking systems, some companies get so picky they just decide to build their own. Tesla has been the latest company to opt to spend time and resources on building its own recruitment technology. According to a new report in The Information, the company has succeeded in building its own proprietary software for tracking job applicants.
Are companies better off spending time and money building their own, tailor-made system, designed specifically to cater their needs?
According to reports, the primary reason comes down to CEO Elon Musk not being too keen on the company’s use of external software vendors. It has sparked yet another building versus buying debate. Are companies better off spending time and money building their own, tailor-made system, designed specifically to cater their needs? Or should they just rely on the software that’s out there?
Companies that built their own
We can find out who build their own ATS through 2020 research conducted by Apps Run The World. According to their research, 5 of the top 25 companies worldwide use their own, in-house ATS. China-based Sinopec, Apple, Amazon, Volkswagen Group, China State Construction Engineering, Netherlands-based EXOR all use a self-built ATS. When looking at the full, top 500 of global companies, in-house applications actually rank second among most-used systems. Oracle Taleo ranks first, while Workday, SAP Successfactors and IBM Kenexa BrassRing rounds off the top five.
When looking at the full, top 500 of global companies, in-house applications actually rank second among most-used systems.
Apps Run The World also found that smaller companies very rarely use an in-house ATS. According to their research, companies with 0 to 100 employees make up about 1.7% of the total amount of companies that use self-built applicant tracking systems. Notably, with 59.4%, Germany comes out as the country where by far the most amount of companies use a self-built ATS. The United States (12.8%) ranks second, while China (7.3%) ranks third.
High failure rates
Now, companies that failed to successfully build their own ATS aren’t likely to send out press releases anytime soon —but according to Bobby Bartlett, Director of Enterprise Accounts at TargetRecruit, there’s a high failure rate among ‘top companies with deep pockets’ that aimed to launch their own, custom system built on CRM market leader Salesforce. “I have seen top 10 companies in the US and UK with deep pockets sink years into a custom build on Salesforce, only to abandon the effort and opt for a pre-built solution. It’s easy to crash and burn.”
“Imagine refusing to give up on a custom build because you are so heavily invested you won’t call it quits. It happens all the time.”
Bartlett describes a two-year, $2M+ project that launched but just didn’t work. “But it gets worse”, he said. “Imagine refusing to give up on a custom build because you are so heavily invested you won’t call it quits. Here, entrepreneurial pride and job security sabotage the project, leaving you stuck with a troublesome, half-baked solution simply to avoid calling it a failure. It happens all the time. Sad, but true.”
“Just ask Robert Half recruiters after almost a lost decade, they are still struggling with customising Salesforce to do what they need and they have unlimited resources.”
“In my opinion building on top of an existing database is the worst possible option”, Matt Chambers, CEO at Loxo, wrote. “Just ask Robert Half recruiters after almost a lost decade, they are still struggling with customising Salesforce to do what they need and they have unlimited resources. This was supposed to be the easiest option for them to get their own custom ATS + CRM. Now it is super old and they’ve invested too much to stop now.”
There’s always a risk
Whether you decide to buy or to build, there’s always a risk involved. Candidates are finding ways to work around whatever pre-screening or screening system you have in place, by finding workarounds with fonts, keywords and templates. Moreover, candidates can grow annoyed by the lack of a human touch. Generic ‘thank you for submitting your application, if your qualifications meet our needs, we’ll contact you’-type e-mails should be a thing of the past.
“Checking a resume that your ATS didn’t rank highly may lead you to your next great employee.”
The success of any system lives and dies with a human touch, said John Pierce, Head of Recruiting at Stifel. “Common ATS features, such as automatic candidate rankings based on keyword searches, can certainly give you an idea of who may be a good fit. However, certain kinds of formatting may confuse your ATS, and qualified candidates who haven’t keyword-optimised their resumes may fall to the bottom of the list. Keep these limitations in mind, as checking a resume that your ATS didn’t rank highly may lead you to your next great employee.”
Have you built your own?
We’re looking for case stories of companies that have built their own ATS, or propriety recruitment technology. Reach out to us, and let us know about your experiences.