AI gig economy platforms: Should recruitment agencies fear or embrace?

Agencies under threat from online AI-powered platforms

One aspect of AI that is of great interest to the recruitment sector is the continuing development of freelance job-matching websites. This type of AI-powered gig economy platform is gaining popularity.

Generally, this type of online tool allows people to find short-term temporary or contract work by using algorithmically-driven automation to make matches and suggestions for suitable roles. This is creating new opportunities for people who want to work on their own terms, but it’s also leading to concerns about job security and income inequality.

Some examples of the most popular AI-powered gig economy platforms include:

• Upwork – is a platform that connects freelancers with businesses that need work done. Upwork uses AI to match freelancers with projects that are a good fit for their skills and experience. They say: “Upwork uses advanced AI and data science to provide accurate talent matches, faster.”
• Fiverr – is a platform that connects businesses with freelancers who can provide a variety of services, such as writing, graphic design, and translation. Fiverr uses AI to match businesses with freelancers who can provide the services they need at a competitive price. They say: “Fiverr embraces the use of new technology and allows content generated by users with the help of generative artificial intelligence (AI) tools and programs.”

These platforms are making it easier for people to find work on their own terms. However, they also allow candidates to bypass recruiters, or as some might put it, ‘cut out the middleman’, reducing employer costs for hiring.

This might provoke familiar ripostes about the value of the recruitment industry to employers, such as saving time and providing specialist search and selection services, including screening, background checks, psychometrics, and other candidate evaluation data. Such a service offer is invaluable to smaller firms that are unable to fund a fully-fledged in-house HR function.

But in a climate where businesses are looking to cut costs, hiring gig workers directly with only minimal employer liability and obligation to workers is likely to be an attractive proposition to companies looking to grow their bottom line.

The implications for recruitment agencies

AI-powered gig economy platforms have a number of implications for the recruitment industry and agencies, both upside and downside.

Here are some of the chief pros of AI gig economy platforms for recruitment agencies:

Opportunities for the recruitment industry

• Increased efficiency – AI may be used to automate many of the tasks involved in recruitment, such as sourcing candidates, screening resumes, and scheduling interviews. This can free up recruiters to focus on more strategic tasks, such as building relationships with clients and candidates.
• Improved candidate experience – The use of AI leads to more personalised candidate experiences, such as tailored job recommendations and automated reminders for upcoming interviews or deadlines. This helps candidates avoid missing out on opportunities.
• Increased engagement – Using AI improves candidate engagement by providing more transparency into the recruitment process through functionality such as giving real-time updates on their status and feedback on their interviews. Such communications convey a sense of fairness in the recruitment process, helping to build trust with candidates.
• Increased talent pools – AI gig economy platforms can create new opportunities for recruitment agencies to reach a wider pool of candidates and offer a more personalised service.

Challenges are part of the package too!

Here are some of the main cons of AI gig economy platforms for recruitment agencies:

• Job losses – As AI becomes more sophisticated, it is likely to automate more and more tasks in the recruitment industry. This could lead to reduced numbers of agency staff, especially those who are involved in the most repetitive activities.
• Competition – AI-powered platforms are likely to provide a more efficient and cost-effective way to recruit candidates. This may lead to increased competition for traditional recruitment agencies, as businesses may opt to use these platforms instead of conventional human-powered recruitment.
• Skills gap – As AI becomes more prevalent in the recruitment industry, there will be a demand for new skills. Recruiters will need to be able to use AI tools and understand how AI can be used to improve the recruitment process.
• Trust – Some candidates may be hesitant to use AI-powered platforms, as they may not trust the algorithms to be fair or accurate. There is already a great deal of negative media on the candidate perspective of AI-powered recruiting.

Should recruitment agencies fear or embrace AI gig economy platforms?

Ultimately, whether recruitment agencies should fear or embrace AI gig economy platforms depends on how they choose to respond to these challenges and opportunities.

Here are some tips for recruitment professionals who want to stay ahead of the curve:

• Invest in AI-powered Rectech – Automation tools already help recruiters to automate tasks, personalise the candidate experience, and improve transparency. AI-powered RecTech takes this to the next level.
• CPD and Upskilling – Recruiters need training and career progression initiatives to be able to use AI tools effectively and understand where AI fits in to enhance the recruitment process and add value to successful hiring.
• Build relationships with candidates – AI can’t replace the interpersonal skills of a human recruiter. Building trusted recruiter-candidate relationships is pivotal to understanding candidate needs and finding them the right roles.
• Be flexible and open-minded – The recruitment industry is constantly shifting in response to changes in the operating environment, and recruiters need to be flexible to adapt to these changes.

Streamline your agency back office with ETZ

The automation features of ETZ RecTech tools promote efficiency and have paved the way for the emergence of sophisticated AI NLP search and selection tools that are emerging to power the front side of agency operations.

ETZ’s leading timesheet and invoicing solution, streamlines the back office processing of your recruitment agency. Our complementary solutions, ETZ Comply for onboarding and document management, and Caspian for business intelligence give agencies further capability to streamline and uncover opportunities. To find out more call us on +61 (0) 405 458 821 or book a demo.