fy12 results, outperformance, re-rating due, page-12

I think one needs to be clear on what he was talking about when he mentioned 'the recruitment industry'. This maybe a brash claim but it seems to me that in actual fact, SEEK makes very little of its revenue (if any) from the 'recruitment' industry directly. (Note below!)

The 'recruitment industry' (my understanding) refers to third party recruiters - those who charge fees as an outsourced service to locate and hire talent for corporate clients. In this regard, companies like Talent2, HAYS or those who take three months salary as a 'finders fee' for headhunting your next CEO are the ones whose revenues will be 'threatened' by LinkedIn because their clients can now get online and access what is arguably a bigger and better database than the largest headhunter could ever dream of owning. For a small fee, they can also then contact candidates of interest and assess their potential to fill any role.

This is happening right now and from what I can see, is something of a dilemma for LinkedIn. It wants corporations to recruit directly from its platform. This is the huge and scalable market they need to capture. Accordingly it wants to price it in a way that enables more of them to leverage their talent-search functions. These prices need to be reasonable because recruitment is a little bit 'chicken-and-egg'. If linkedin cannot list the jobs, the talent wont get in the habit of going there looking for opportunities and the whole thing breaks down.

At the same time, it knows that agencies (headhunters) given the same tools, are able to reap massive rewards (3 months salary) as placement fees for recruitment work that is now sometimes being totally facilitated on and by the linkedin platform and their tools. LinkedIn knows this and charges much higher rates to 'recruiters' for what are effectively the same services. This is the 'recruitment' industry that I think Basset is referring to as being under threat from LinkedIn.

The threat of course being that corporations will now start doing their own recruitment on Linkedin and the headhunters will lose their market altogether. Indeed in HR circles today, 'direct recruitment' and the savings to be made by getting this right are high on many agendas.

SEEK on the other hand is a classifieds media business. He has what would have 40 years ago been the largest "jobs section" in any weekend paper in Australia. In fact, he has the combined jobs sections of every major Australian paper. And he's not charging 50 cents a line either! Advertisers buy it because they know that active job seekers will be reading it and applying for opportunities. To the advertisers, he is supporting the recruitment function, but he is not a recruiter and his fees are not based on success as it is with the agencies.

There is a difference. There will always be space for a talent 'market place' where buyers and sellers meet (recruitment classifieds fills this void) and this is not a space that LinkedIn will own until it re-brands itself from being a professional social network to being a talent marketplace. What we need to appreciate is that if they do make this transformation, they threaten to lose their ultimate value which is their database because if my online data is being sold time and time again to recruiters and all I get is job-spam from this platform... I am out of there faster than you can say leave me TF alone!

The challenger is Linkedin and due to the dual nature of their client base (corporate Vs recruiter) they are going to find themselves in a bit of a pickle one day very soon.

SEEK however should be able to power on. The only threat to their business is from recruitment verticals that will establish niches for highly targeted recruitment (such as jobs4teachers.com.au) but these will never supplant the coverage SEEK has built. They also have many opportunities to on-sell additional services (Education and Training growing) plus the fantastic data that pours off the back-end of a system like that...

(Note: Of course SEEK does make a LOT of revenue from the recruitment industry indirectly because headhunters will often use SEEK to locate suitable candidates from those who might be actively seeking new opportunities. I am sure that the larger recruitment firms have huge annual spends with SEEK)

PS: I also think that the states is the LAST place SEEK wants to be. They don't need it at all. The growth will be in Asia and South America (roll-on Brazil!).

and yes, I have again taken a position since my last post and wish I'd done it when it was still under 7 dollars!

Good luck all.

mandatory disclaimers / DYOR etc. what do I know anyway? this is an opinion piece!