Tough Times Ahead for Online Jobsites

We are in the middle of a recession which started in 2008.. Stock market is now searching for its bottom. “A bank failure a day, Keeps customers away” has become a norm . Economic experts started equating the current situation with the great depression of 1930’s.

In a roller coaster business cycle, a lagging indicator of growth of economy is the employment rate in a country. It follows the Consumer sentiments, Sales growth and Purchasing managers Indices. Economist mentions it as a lagging indicator because companies start recruitment only after they get a stable growth through improved revenue from sales.

The online jobsites started during the second half of 1990’s had a period of expansion during 2002-2007.New jobsites and consultancy companies grew 10 fold eyeing the vast opportunities in job requirement. They advertised it as a low cost, mass-appealing concept compared to conventional one .

When the recession started at the midst of 2008,the job sites saw an increase in number of applicants for job. But the companies stopped recruiting new people. When the whole world entered into a full-scale recession, all companies started retrenchments and massive layoffs. The increase in number of applicants has increased and ate the memory space of the servers of jobsites, with few companies looking for recruitments.

The revenue streams for jobsites were the commission from recruiters for selecting a candidate and revenue through renting space for advertisements. Since the recruitment of major companies reduced drastically, the major chuck of revenue got reduced. The colored & flashy advertisements sponsored by banks and lifestyle companies replaced with dull colored ad sense advertisement by google. The major part is that they have to wait till the economy revamps. When the economy starts growing, the recruitments start in a company a minimum one year after the turnaround. Many jobsites, which manage physical offices, finds it hard to maintain the fixed cost of all these facilities for a long run. These companies will resort to manpower reduction and closing costly offices to keep the bottom line in green zone.

So 2009-2010 will be a difficult time of all these companies and they have to tighten their seatbelts to face it boldly.