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Talent Management Perspectives

Published February 2010

Let’s Make a Deal

  Mike Prokopeak

Last week saw a sharp uptick in acquisitions in the HR vendor market. On Monday, Feb. 1, recruiting and staffing specialist Spherion Corp. announced it would acquire executive services firm Tatum, a specialist in the CFO market, for $46 million in cash and stock.

On Tuesday, staffing giant Manpower announced an agreement to acquire IT services company Comsys in a $431 million deal that will create a company with an estimated combined total revenue of $2.5 billion. Then on Wednesday came the news that Monster Worldwide is gobbling up job board Yahoo HotJobs for $225 million, followed by another splash on Thursday, Feb. 4, when SuccessFactors announced a deal to acquire Inform Business Impact (formerly Infohrm) for $25.5 million in cash and $15 million in stock.

The flurry of deals appears to be timed to coincide with the announcement of year-end results, said Lisa Rowan, program director for HR and talent management at IDC, an advisory services firm, but they also reflect some strategic shopping.

Both Spherion and Manpower — players in the recession-ravaged temporary staffing industry — snapped up companies with strong experience in two potentially lucrative niches, the CFO and IT markets, respectively.

"They're taking advantage of what would be bargains because of the depressed market over the last 18 months in staffing," Rowan said.

It appears to be a savvy move. The Bureau of Labor Statistics reported last Friday that temporary hiring grew last month by 52,000 jobs, the strongest January showing in the 20 years BLS has been measuring temp staffing. A spike in contingent hiring is also a good sign for the broader jobs market, as companies often take on temp workers before they begin hiring permanent workers.

At $225 million, the Monster deal to acquire HotJobs is a steal compared to the $426 million Yahoo paid in 2001 for the job board. Although it was a bargain, Rowan remains skeptical about the long-term outlook for job boards.

"There are so many alternatives," she said. "The Monster model puts the emphasis and the financial burden on the hiring organization. That worked for many, many years — employers pay to post their jobs."

Now, she said, many job seekers go directly to their employers of choice or to new job boards, like JobFox and The Ladders, that put the financial burden on the job seeker. With the highest unemployment rate in decades, people appear to be more willing to spend money to find a job.

Other job search methods have also cut job boards out of the action. Many job seekers will simply do a Google search and use the recommended results or tap into Facebook or other social media tools to seek out and apply for jobs.

"When you consider that's the way a lot of people look for a job, they're not going to necessarily go to a Monster first," Rowan said.

Rowan expects to see more HR deals materialize in the near future, but those deals will most likely be similar to the SuccessFactors acquisition. That deal brings Inform's business analytics and workforce planning expertise together with SuccessFactors' suite of software, placing actionable business intelligence into the HR process and making it a tool for broader business decisions.

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