LinkedIn Part 5: Where the supply and demand of labour meet

Inspired by how LinkedIn has grown from a start-up in a one-bedroom apartment to a multi-billion dollar company about to change the game (so to speak) in the recruitment industry, we saw how its Talent Solutions business, its primary revenue stream, is responsible for most of the recruitment carried out across several global organisations and how it falters in some areas where it has not yet become mainstream.

In this post, we look at what purpose Talent Solutions aims to serve from an economic standpoint of labour. We consider what LinkedIn aims to do with the data that it already possesses and the one that it will acquire as more users sign up.

To increase the operational efficiency of global economies, one of the aspirations of Jeff Weiner, CEO of LinkedIn, he will have to make the utmost and optimised use of data. Having already emphasised the hunt of internet-based companies for consumer data, we will move on with that as an underlying assumption for LinkedIn as well. After all, LinkedIn relies, survives and thrives on consumer data.

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Source: Linkurio (US)

With a little over 300million users as of June 2014, compared to over a billion users of Facebook, the world’s largest online social network, LinkedIn has a rapidly expanding consumer base. As more users sign up and put their professional details online, LinkedIn will amass enormous amounts of information which it can use to formulate its products and solutions. The richness of a user’s data, which includes professional details such as college, skills, jobs and endorsements, will be utilised to form connections among them to arrive at something that Jeff Weiner calls an “economic graph“, much like the “social graph” that Facebook harnesses.

[…] Jeff Weiner envisions what he calls a vast “economic graph”, connecting people seeking or starting work or wanting more from their careers. […] the lines in Mr Weiner’s graph will become more numerous – and more useful. He thinks that if you trace the connections between workers, companies and colleges, and if you map people’s jobs, qualifications and skills and plot these against employer’s demands, you will end up with a step-change improvement in information about labour markets: big data for the world of work.

Indeed, the use of big data will be a necessity for the volumes of data that LinkedIn will obtain over time. If LinkedIn can use this data to build the economic graph, as Weiner envisions, then it will begin to transform the world of labour. It might as well influence strategic decisions, as The Economist cites in the article, Workers of the world, log in, and change the recruitment landscape entirely.

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Source: LinkedIn

This will further the change that Talent Solutions brings in for the recruitment industry. From an economic standpoint, Talent Solutions contributes to both supply and demand.

The labour industry’s supply is the global labour force, which is becoming more competent and educated. The recruitment market comprises the employees, both active and passive, available online. On the other hand, the demand is from the employers, who are sourcing and recruiting employees.

The task of connecting the supply of labour to its demand, which was conventionally carried out by headhunters and professional recruitment agencies, can now, at least in most part, be carried out through in-house HR teams that use LinkedIn to source candidates. LinkedIn is the platform that connects the supply of labour to the demand for labour, acting as the marketplace. As the online labour market grows in size, LinkedIn becomes the master of the industry-wide data.

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Source: The Rational Theorist

Since the adoption of technological platforms such as LinkedIn and Viadeo, LinkedIn’s competitor in France and China, the economics of business has shifted from the outsourced tasks to the in-house use of these platforms.

LinkedIn is better positioned to be the favoured platform to connect the supply and demand of labour. It has already listed over a million jobs on its site, with several recent ones coming from employers’ job sites and human resources databases. These jobs, which include all low-skilled jobs such as delivery drivers and check-out clerks, manifest a broader demand that was earlier limited to only the software engineers and professional executives.

Though LinkedIn has not yet scooped up executive recruitment among its primary operations, it will get there eventually. When it does, the recruitment function will no longer be the same…

Have a look at the next post on how LinkedIn can use the data it acquires to influence strategic decisions and operational efficiency of global economies.

Related: How LinkedIn is changing the world’s labour economics – An Introduction


3 thoughts on “LinkedIn Part 5: Where the supply and demand of labour meet

  1. Pingback: LinkedIn Part 6: How can LinkedIn’s data help? | The Wordy Nerdy Pedantic

  2. Pingback: How LinkedIn is changing the world’s labour economics – An Introduction | The Wordy Nerdy Pedantic

  3. Pingback: LinkedIn Part 4: The other side of Talent Solutions | The Wordy Nerdy Pedantic

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