AI in Talent Selection is Driving Consolidation in Talent Acquisition Technology

Leading providers of screening technology products are acquiring competitors in a bid to drive maximum benefits from Artificial Intelligence.

The adoption of Artificial Intelligence (AI) and Machine Learning Solutions within HR Technology software products has grown significantly in recent years. One area where it is having the biggest impact is to help to predict which candidates will excel in a given role.

Various studies have shown that a candidate’s prior work experience has a low correlation to future job performance in a particular role. This is where AI-powered tools aim to improve and re-engineer the traditional approach of reviewing résumés to select candidates for interview.

However, other approaches to screening have historically been difficult and labour intensive. There have also been some well-publicised failures of AI-based selection tools implemented by Amazon and Hirevue, among others which were shown to introduce bias, known as ‘adverse impact’ in AI parlance, which have given many justifiable cause for concern when applying AI to their recruitment processes. The current trends in AI in the HRTech sector, demonstrate how successes of AI in other sectors can be applied effectively in a HR context and avoid adverse impact.

AI in the Healthcare Sector

In the healthcare sector, AI has had demonstrated success. Well-trained machine learning algorithms outperform humans in cost and speed to quickly rule out negative test results and leave the remaining potential positive results for further review by qualified radiologists to make a final determination.

This blended approach can also be used effectively in recruitment where AI can quickly and efficiently analyse data from many sources such as, the résumé process, recorded video interviews, situational judgment tests and psychometric testing. This approach can quickly and efficiently identify the top tier candidates who are then put forward for further review by qualified HR professionals and hiring managers for a live interview, with humans making the ultimate hiring decision.

Data-led Recruitment Processes

To develop the most effective algorithms, technology providers are seeking access to data from all stages of the recruitment process which is driving consolidation in the market as ‘best of breed’ providers within the various steps are brought together into one cohesive product.

Notably Outmatch, Hirevue, Modern Hire and iCIMS, have all made multiple acquisitions of talent selection tools in the past two years in an effort to produce comprehensive and cost-effective AI-based recruitment automation products with much higher predictive power than other methods at speed.

The Adoption of AI in Recruitment

The consolidation is also driving the next wave in AI adoption, which is to use the results from one stage in the selection process to dynamically influence later stages. Rather than a simple screen-in/screen-out result candidates can be directed to a specific battery of further testing or be subjected to bespoke structured interview questions.

Given the clear benefits and the rapid pace of technological advancement in this area, we believe this consolidation trend is likely to continue for some time to come. As with all uses of AI, it’s important that these tools remain well-grounded in science and undergo rigorous testing to avoid adverse impact.

Next Steps

If you are considering buying or selling your HRTech business, get in touch with one of our specialist M&A Advisors here, who have more than 30 years’ operational and M&A transaction experience in the HRTech sector.

Author: Kevin O’Neill


Highly-experienced M&A advisor with a particular emphasis in Technology globally; assignments range from working with leading businesses in Financial Technology (FinTech), Environmental, Social and Governance (ESG) software and data, HR Technology (HRTech) and Technology companies in other areas as well as companies in the Workforce Solutions sectors. In my career spanning more than 40 years, I have served in senior positions in International Technology companies and advised on Technology & Workforce Solutions M&A transactions in the Americas, Europe and Asia Pacific regions.

I held senior positions in corporate development, marketing, and product management in several International Technology companies prior to being a co-founder of Goldenhill.

If you are an owner or senior executive of a Technology or Workforce Solutions-related business interested to discuss how M&A could help you accomplish your objectives – please get in touch.