How is Artificial Intelligence used in Talent Acquisition?

How is Artificial Intelligence used in Talent Acquisition?
Jane Smith

Senior Editor

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Jun 12, 2024
How is Artificial Intelligence used in Talent Acquisition?
At a Glance

Recruitment is one of the most crucial functions of HR. It encompasses everything from posting a job position to onboarding a new employee.

Cost of Recruitment Depends Upon

However, the average cost per hire is approximately $4,700.[1]https://www.talentinsightgroup.co.uk/insights/cost-of-recruitment, CIPD 2022 Resourcing and Talent Planning Report, 2022 This cost is affected by the factors mentioned above.[2]Katie Navarra, https://www.shrm.org/topics-tools/news/talent-acquisition/real-costs-recruitment, SHRM.org, April 11, 2022 It can make hiring expensive, especially if the ROI received from the hiring is lower than its cost. Below is the graph showing the percentage cost for in-house and agency-led recruitment teams.

Average Cost Per Hire

According to a 2023 study by Deloitte, companies utilizing AI in recruitment experience a 25% improvement in time-to-hire and 18% reduction in turnover rates.

Digital Adoption in Recruitment and Talent Acquisition

The field of HR is rapidly evolving, with digital HR technologies transforming traditional recruitment methods. Adopting tools like automated screening, online assessments, and virtual onboarding makes hiring more efficient and effective.

Recruiters can also use HR analytics that aids in data-driven decisions, guaranteeing better candidate matches and optimizing processes. This shift to digital has the potential to increase productivity and improve the hiring experience for both recruiters and candidates.

AI recruitment tools like Fetcher, Manatal, Humanly, and RecruitCRM are revolutionizing HR processes. These tools use data to assist recruiters in making better decisions. They help in:

  1. Sourcing and screening candidates
  2. Analyzing resumes and job applications
  3. Conducting pre-employment assessments
  4. Predicting candidate success and cultural fit.

This improves the chances of hiring the right fit, reduces biases, and saves time and costs associated with a lengthy recruitment process.

Recruiters can now automate the initial stages of the recruitment cycle by integrating these tools. It reduces the need for human resources until the interviews are scheduled.[3]Wael Abdulrahman Albassam, https://www.researchgate.net/publication/371792898_The_Power_of_Artificial_Intelligence_in_Recruitment_An_Analytical_Review_of_Current_AI-Based_Recruitment_Strategies, International Journal of Professional Business Review 8(6):e02089, June 2023

AI Powered Solutions for HR

Although we do not see much adoption of AI in the interview stages, its partial adoption can be fast-paced. For instance, an AI virtual assistant recruiter can monitor the candidate during an interview. However, the idea of AI making autonomous decisions to recruit candidates remains under scrutiny, with a positive outlook. In this article, we explore how AI is advancing in the field of HR and its challenges.

For instance, a retail company using Fetcher reduced its time-to-hire by 40%, filling crucial positions during peak sales season in a fraction of the usual time.

Cost Savings in the Recruitment Process through Artificial Intelligence

According to Forbes, around 79% of recruiters use AI tools.[4]Dipen Pradhan, https://www.forbes.com/advisor/in/business/what-is-recruitment-in-hr/#use_of_analytics_software_in_hr_recruitment, Forbes.com, May 5, 2023 Humans are required for the final stages where human relations matter significantly. The role of human judgment is irreplaceable and soft skills can not be fully assessed through technology yet. The graph below shows the results of a survey of HR professionals. They agreed that AI made it easier to acquire new employees.

HR Professionals Survey Results

The latest AI-powered recruitment tools can

  1. Reduce fill rates to days instead of weeks
  2. Sort large candidate data in minutes 
  3. They can conduct interviews and screen profiles quickly through video or chat.

A report by McKinsey shows that companies adopting AI in talent acquisition report a 50% improvement in hiring accuracy, reducing the need for re-hiring.

Humans can experience burnout or increased costs due to technological expenses. The need for interviewers to prioritize candidate interviews over other important tasks. They can check which candidates fit best in the company through their employee history. It reduces the cost of a recruiter who will manually check it which takes a lot of time.

AI Recruitment Technology

Additionally, AI can greatly shorten the time-to-hire, making the recruitment process more efficient. This increase in ROI makes hiring more profitable and cost-effective for enterprises. The savings from the recruitment process can be reinvested in the company, added to profits, or distributed as bonuses to employees, enhancing their satisfaction.

Advantages of AI in Human Resources:

  • Reduce costs
  • Save time
  • Increase efficiency

Challenges for Human Resources in Artificial Intelligence 

  • HR must comply with data protection laws to protect personal and confidential information.
  • A breach of data protection can lower the confidence of stakeholders like employees, clients, vendors, etc.
  • There is also a risk of algorithm bias where a certain group of people may be disadvantaged due to biased past data, which compromises fairness.
  • AI-based chatbots may only be able to answer a limited number of questions, adding to candidates' frustration and leading to a poor candidate experience.
  • Chatbots also cannot assess soft skills or other important abstract aspects.
  • Predictive analysis in AI cannot always account for factors that may change quickly, or other factors like the workplace environment. This can lead to inaccurate analysis and may not find the perfect candidate.
  • Input the right data set on the backend as poor-quality data can lead to incorrect predictions and candidate selection.[5]Wael Abdulrahman Albassam, https://www.researchgate.net/publication/371792898_The_Power_of_Artificial_Intelligence_in_Recruitment_An_Analytical_Review_of_Current_AI-Based_Recruitment_Strategies International Journal of Professional Business Review 8(6):e02089, June 2023

A report by Mercer shows that despite the advantages many companies and professionals may only partially rely on AI. 42% of those surveyed do not currently or plan to use AI as their talent acquisition practice. The chart below shows how companies are using AI in talent acquisition.

Companies Using AI in Talen Acquisition

Just 8% of companies use AI-first recruiting. The total initial recruitment process (application through scheduling interviews) is implemented through AI. The report identified the following three barriers to using AI-based tools in talent acquisition.

Challenges for HR in Artificial Intelligence

The Global Talent Trends Study 2024 by a reputable company, surveyed 12,200+ global C-suite executives, HR leaders, employees, and investors. Artificial intelligence lands at number five on the following list of priorities among the C-suite executives surveyed.[6]https://prescreenai.com/how-ai-recruiting-transforms-cost-structures-for-large-companies/, https://prescreenai.com/, April 30, 2024

This survey shows that AI is changing the corporate world, regardless of the pace. It will take time for recruiters to adopt AI and make changes in their processes. Many professionals face a lack of understanding of technology and how to integrate it into the current systems.

It is difficult for them to step out of their comfort zone and give up on practices that have been followed for years. While the change is fast-paced, it will still take time for companies to acquire this technology fully. The onus lies on the leaders on how fast they can train their employees and integrate AI into their systems.

How is AI transforming the Digital World?

AI is changing the way we work. It is changing the entire corporate world including the talent acquisition and hiring process. At Plutus21 Partners, the potential of AI is employed to build proprietary softwares for our clients.

Our latest collaboration with a portfolio company involved building a knowledge repository, and off-boarding strategy. The use of AI to achieve operational efficiency and build new revenue streams.[7]https://partners.plutus21.com/case-studies/strategic-alliance-with-private-equity-portco, Plutus21 Partners, April 22, 2024 This transformation exemplifies the technology's capability to deliver effective results, aiding companies in developing systems. However, time and learning are still required to use its full potential.

Organizations are on the path of AI adoption globally in various functions, including Human Resources and popular productive strategy. As AI advances, its capabilities are expected to become increasingly efficient. However, there will always be challenges and biases that need to be addressed when AI comes into play. It is vital to set up and use a set of protocols to leverage AI to its full potential.

For more, read our case study