Deal Radar 2010: nowHIRE, Detroit, Michigan

nowHIRE provides recruiting and hiring management technology for the human capital management (HCM) vertical. The company’s line of Web-based applicant tracking systems were designed for clients seeking measurable results in corporate, hourly, and internal recruitment. Its solutions feature fully integrated talent management software modules, including I-9 compliance, sourcing, and E-Verify.

nowHIRE was founded by Joseph Impastato, who started his first company, The Churchill Greenskeeper Collection, at the age of 25. With $70,000 from that venture, he partnered with one of his investors to create an interactive voice response (IVR) company that over an automated phone system screened, tested, scored, and profiled applicants for the service and retail industries, which wanted to reduce turnover. The IVR recruiting and screening software was developed for high-turnover organizations and for applicants who did not have Internet access (this was in the late nineties). Impastato’s first two clients, Kmart and Pepsi Bottling Group, helped to develop and build the technology platform that evolved into a Web-based applicant tracking and talent management solution. By working with these companies, Impastato was able to identify pain points and develop best-practice solutions for enterprise clients that hired and recruited for hourly, salaried, or contingent employees, or all three.

At the time, Unicru was the only competition for high-volume applicant processing (hourly recruitment), and Recruitsoft (Taleo) and others did the salaried and professional recruitment side of the business. But not one company did both well. Large multinational companies had to use two different systems for hourly and professional recruiting.

Impastato says that the hourly market is the hardest to provide solutions for. Hourly solutions are a different breed of applicant tracking system and require a different strategy for recruitment due to the type of applicants being processed. Users of an hourly solution need a very easy-to-use, wizard-driven tool whereas professional “type” recruitment has a need for more robust recruitment tools (e.g. sourcing, requisitioning, performance management). Most early systems for hourly recruitment were scaled-down versions of vendors’ enterprise (professional) systems for salaried recruitment and were too hard to use for the field. User adoption was thus extremely poor.

nowHIRE specializes in hourly capabilities. It offers an enterprise, wizard-driven system (for hourly, salaried, or combined).  The technology can be configured and customized and the system has multi-language capability.

The process that nowHIRE created for AutoZone is, the company said, an example of what it does differently: Candidates for corporate positions are directed to an application where they pre-screen themselves with weighted question types and also provide a resume — more of a “high touch” and fast process. Hourly candidates are put through a more robust yet easy-to-navigate “applicant self-selection” process that extracts pertinent candidate information to facilitate a quicker, more consistent hire. The hourly solution includes, at a minimum: prescreening, qualifying, testing, scoring, data gathering, online forms (such as FCRA and WOTC), assessments, status checking, applicant support, eSignature, and automated “personal touch” HTML correspondence.

nowHIRE’s software-as-a-service (SaaS) delivery model is another area in which it believes it has advantages over traditional software license agreements such as with Oracle and SAP. Further, the system works at a “sixth-grade competency level” and is almost entirely paperless. All users are on the same scalable platform, and clients get updates to the technology through modular offerings; there are no upgrades to buy.

nowHire partners with several companies to increase the automation of the hiring process in diverse areas, including: for HRIS/payroll systems (ADP, Peoplesoft); background screening (GIS, Choicepoint, InfoMart, Edge Information Management, First Advantage); drug screening (eScreen, Choicepoint); assessment screening (ePredix, Bay States Psychological); work opportunity tax credit (ADP, CIC); job boards (CareerBuilder, Monster, CPG Joblist, America’s Job Exchange, Indeed, Simply Hired); and performance management (Halogen). But clients are not restricted to using these partners and can work with whom they choose.

There are more than 200 competitors (Jack Stupak, the “ATS guy,” lists several dozen on his blog) but only about ten with significant market share, including Kronos, Authoria (PeopleClick), Kenexa, Taleo, and ICIMS.  There are many players with ATS products, for example SuccessFactors, that address the broader talent management field, and standalone ATS companies may be absorbed into this consolidating market.

Applicant management is a multi-billion-dollar market. nowHIRE’s baseline is companies with over 500 employees, and to calculate the TAM for each segment (e.g. retail or healthcare), it estimates the market size and each competitor’s share and then estimates how many applicant tracking systems (ATSs) are purchased per year and the dollar value of each purchase by company size. So for the retail segment (hourly workers only), nowHIRE targets the top 2,000 companies with more than 500 employees; there is just 5% penetration in this market. The average deal size is more than $50,000 with 100 to 200 systems purchased a year, and the market potential is over $1 billion.

The company has been profitable for the past nine years; average annual growth has been 23%-33% and 2009 revenues exceeded $10 million. nowHIRE projects revenues of $12 million-$13 million next year. All growth has been organic and self-funded.

In terms of traffic, nowHIRE processes close to 15 million applicants a year and has more than 25,000 users. Customers include AutoZone, Silicon Image, PepBoys, Newsweek, St. Mary’s Medical Center, John’s Markets, West Virginia University Health Systems, Kamehameha Schools, and O’Neil Steel.

The company’s growth strategy is to bring on product lines that complement each other, such as I-9 Comply; each product can be sold as a standalone or be integrated into nowHIRE’s system. Another strategy is a focus on markets, such as the hourly high-volume market, which the company believes will hot in the next two to five years. As Impastato says, automation of recruiting processes is important, and “people finally get that now.”

Although Impastato believes that everybody is up for sale eventually, the company is pleased with its current position and Impastato thinks that “a good strategy is where you control your own strategy.” I have to say, I subscribe to this philosophy.

Recommended Reading
Deal Radar 2009: SimplyHired
Job Search Engine Indeed CEO Paul Forster
SaaS Talent Market Consolidates

This segment is a part in the series : Deal Radar 2010