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However, experts caution that buyout may stagnate the company’s talent direction
Microsoft’s blockbuster announcement that it is purchasing LinkedIn foreshadows a huge shift in the human capital and enterprise technology market. Will it lead to enhanced recruiting opportunities for talent professionals or dampen innovation at one of the world’s most popular talent solutions providers?
Microsoft is hoping the purchase will expand the market for both LinkedIn and Microsoft’s workflow products. It is especially keen to make use of LinkedIn’s vast data network of over 100 million active users, and four times as many profiles, weaving the social networking site’s graph throughout its suite of tools.
“Microsoft cares deeply about the corporate enterprise, and now with this acquisition, they’re sitting on the CRM [customer relationship management] data for every professional in the world,” said William Tincup, CEO of HR consultancy Tincup & Co., based in Dallas. “It’s a really wise move and a wonderful way to extend themselves within the enterprise cloud.”
The acquisition includes the millions of professional profiles registered on LinkedIn’s global network—a network more valuable to Microsoft than, for instance, Facebook or Twitter, which are plagued with spam accounts, said Kyle Lagunas, research manager for talent acquisition and staffing trends at IDC, a leading global provider of market intelligence and advisory services based in Framingham, Mass.
“While this professional profile database alone would be valuable for a tech giant making an enterprise play and presents myriad integration opportunities for Office 365 and Windows 10, there’s potentially more at work here if they intend to further penetrate the world of talent technology,” Lagunas said.
Microsoft said it expects that integrating LinkedIn into its productivity and business-processes area will boost employee productivity when employees see the connections and data about other people they’re working with. The engagement between the two companies’ offerings will enable features like a LinkedIn feed that “serves up articles based on the project you are working on and Office suggesting an expert to connect with via LinkedIn to help with a task you’re trying to complete,” said Satya Nadella, Microsoft CEO, at the June 6 announcement.
Impact on Talent Acquisition
“Today is a re-founding moment for LinkedIn,” said Jeff Weiner, LinkedIn CEO at the acquisition announcement. About two-thirds of LinkedIn’s revenue comes from its talent-solutions division, including search functions, targeted job postings, a referral tool for current employees and employer branding. The unit’s 2016 first quarter revenue is up 41 percent from a year ago.
LinkedIn ranks as the second-largest job board in the world (after Recruit Holdings, the parent company of Indeed) by revenue and market capitalization, according to Staffing Industry Analysts’ Job Board Service Differentiators 2016 report.
Over the past year, LinkedIn launched a new version of its mobile app, acquired online learning platform Lynda.com and rolled out a new version of its Recruiter product.
“Integrating LinkedIn’s recruiting tools with Skype and Microsoft’s other social products will make recruiters currently using LinkedIn’s talent tools even more efficient than ever before,” said Ben Eubanks, SHRM-SCP, principal analyst at talent acquisition analysis firm Lighthouse Research and Advisory, based in Austin, Texas.
Thus far, LinkedIn hasn’t “played well” with other human capital management solutions providers that leverage its profile data for recruiting or assessment purposes, Lagunas said.
“Perhaps Microsoft’s long-standing reputation for fostering a healthy ecosystem, and the reach and assets of Microsoft, will help LinkedIn achieve its vision for transforming work life to better empower career movement,” he said. Lagunas added that many hope that LinkedIn will open its APIs (application program interfaces) to enable more innovation in talent acquisition and talent management technology.
“One of the neat ways I see this playing out with integrating LinkedIn into Microsoft’s existing offerings would be having recruiter products automatically connected with Outlook calendars and e-mail,” Eubanks said. “Think about how much time we spend going back and forth trying to find calendar times for meetings and interviews. What if it instantly knew when the recruiter was available and offered those times to a candidate?”
Tincup said he’s excited about the communication possibilities for recruiters with Microsoft’s Yammer and Skype being connected to LinkedIn. “If a candidate’s profile interests a recruiter, he or she could click on a link and Skype-call that person.”
Sway is another Microsoft product with talent acquisition potential. “Users can create stories and powerful presentations within the tool, which could show up in LinkedIn’s functionality so users could not only take a static picture of skills and experience, but share a story to demonstrate their competency,” Eubanks said.
Some in the talent acquisition technology space are not as sanguine about the mammoth buyout.
“There’s a lot of uncertainty about what the future is going to be for LinkedIn,” said Jon Bischke, CEO of Entelo, a recruiting software company based in San Francisco. “The fact that Microsoft has not had a great track record with integrating acquisitions has some LinkedIn customers worried about the future direction of the company.”
The company’s 2014 acquisition of Nokia’s mobile phone business is Microsoft’s most recent high-profile bid that didn’t pay off.
The topic of recruiting only came up once during the joint June 6 acquisition announcement. “That might be telling about how Microsoft is thinking about this acquisition,” Bischke said. “Nothing about talent acquisition or HR is core to Microsoft’s business. But a lot of what LinkedIn does, including their social selling tool and building professional profiles, does correlate with Microsoft’s push to growing CRM and what they’re doing.”
The integration of Microsoft’s tools and LinkedIn’s data will undoubtedly yield positive surprises, said Fred Goff, the founder and CEO of Jobcase, the Boston-based firm which positions itself as the alternative to LinkedIn for the 70 percent of U.S. adults without four-year college degrees. “But the transaction overall has more to do with nontalent-related objectives—fleshing out human data rather than anything specific to LinkedIn’s recruiting products,” he said.
In recent years, LinkedIn has strayed from what its initial mission was, Goff believes. “When they started, there was a focus on content marketing and then they made a disruptive play into professional recruiting. But recently, we’ve seen them focus on new products taking them more toward a Salesforce competitor than going deeper into talent acquisition and HR. And that’s where a lot of the synergies from Microsoft are going to come from.”
Bischke added that in many mergers and acquisitions, the pace of innovation tends to slow down, and in some cases completely stalls out in the acquired company.
That’s the downside talent leaders fear. “If LinkedIn had been pivoting toward more talent acquisition products, now its resources will be spread out across many areas going forward,” Goff said.
The transaction has been unanimously approved by the boards of directors of both LinkedIn and Microsoft and the deal is expected to close this calendar year, subject to approval by LinkedIn’s shareholders and other closing conditions.
Roy Maurer is an online editor/manager for SHRM.
Follow him @SHRMRoy
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