Industry Disrupting Startup Idea: "DevPro" Developer Profiles
Current Process of Recruiting Companies (quick and dirty version)
A quick shpeal about the current web dev industry
Recently in the web development industry, there has been a sharp increase in demand for those possessing technical abilities (specifically open sourced development). This increase in demand has caused headhunting companies to charge top dollar (20-25% of the annual salary of the qualified employee) for properly locating, interviewing, and screening candidates based on desired qualities & abilities that the hiring company is looking for.
The deliverable in this whole process that the staffing companies provide, then, is simply a contact's name, phone number, and maybe a little background as to their qualifications, education and experience that the company then uses to reach out to them and conduct their own interview and screening. At this point, if the interviewee passes the company's assessments of experience, education, skill level, industry knowledge or other areas of interest, he/she is handed an "Offer of Employment" outlining the role to be filled, specific duties and tasks of that role, rate of pay, pay dates and expected employee hours/time schedule as well as any health, retirement or other benefits included with the acceptance of the offer.
Take notice as to how little the recruitment/headhunting company actually does and compare that to the process that the company still has to do before selecting someone to fulfill the role... The hiring company still has to basically do the same amount of work they would normally do in the hiring process so its not so much that headhunting provides any kind of benefit in regards to speed of hiring or saving time in the physical hiring process but more its the data that the headhunters provide. Sure they do the initial screening and maybe a small interview to see if there's a potential fit but it doesn't help the company really decide anything any faster than they normally would--What the company needing to hire the employee pays for, then, can be watered down to simply contact details. We will come back to this but for now, lets continue with what happens when and if the candidate accepts their offer of employment
If the offer is accepted, the employee starts working and the recruiting company is paid in full at the time the employee starts their employment.
90 Day Probation Period
The company has a 3-month refund availability period that is offered at different levels depending on the length of time the employee worked before the company decided they were not a good fit for the role (or when and if the employee decides to quit w/ or w/o notice). Generally the fees are in the ballpark of what follows:
- Employee lasted 1 month or less: Refund 75-100% of the company's money spent to hire this employee - Employee lasted 31-60 days: Refund 50% - Employee lasted 61-90 days: Refund 20%
What that means for the company is that they are basically paying good money to hire employees that they have entrusted a 3rd party to find and have absolutely no guarantee of the employee's competence, habits or the sustainability of showing up to work everyday and being committed. Often, there are little (if any) warning signs that an employee won't up and leave 65 days into a job nor are there many foreseeable signs that a new hire will become bored after a month and a half and decide he wants more money and threatens to quit if he doesn't get it. At that point, not only has the company lost the initial investment of finding an employee (due to the recruiting company's refund schedule listed above), but now has lost any additional time, money and other resources in the form of training or on-boarding the new hire and will likely have to invest the same amount of resources again into another new hire.
Breaking down the $
Wow this is getting expensive. Let's break this down real quick:
Say that Company ABC inc. hires recruiting company BizTalentFinders LLC to find them a new web developer that is needed to build additional site capabilities because Company ABC is expanding their online presence. The decision to hire a recruiting firm came after an exhaustive efforts using Craigslist, Monster and a handful of paper ads had failed to return any qualified leads of capable web developers to fulfill the role. After 20 days, the recruiting company comes back with someone they thing is a potential fit for the position: John Smith. The salary of this individual is pretty moderate given his history and experience: $70,000 / year. Here's the numbers so far:
$70,000 - John's annual salary if he accepts employment offer x 22.5% - BizTalentFinders LLC's fee for contacting & interviewing John __________ **$15,750** - **Recruiting fee paid by Company ABC to find John Smith**
Okay, not too bad right? I mean, if you consider that Company ABC is expanding and needs a developer as soon as possible, then $15,000 is not all that much to find someone qualified for the position.
What if the new guy walks?
Now, lets just say that John has worked for about 70 days and all the sudden a job that he applied for (before accepting this one) that pays $20,000/year more than he makes at Company ABC but didn't get a few months back has opened up and offered him a job--John threatens to quit unless you can somehow match the other company's salary offer (which is highly unlikely). Company ABC is stuck and makes the only decision that makes sense: Don't give him the additional $20,000 per year because the fair pay for the position is only $70,000 and let him walk. Here is what goes on with the numbers if this happens:
$15,750 - Fee originally paid to find and hire John Smith - 3,150 - Less amount to be refunded as per refund schedule (John made it 70 days) ___________ **$12,600** **- Adjusted cost that is STILL paid by Company ABC even though John quit**
So the company only gets back $3150 of their original $15,750 because John waited 70 days before quiting. Now let's say that during the 70 days John grossed $13,440 (There are 52 paying weeks in a year, John worked about 10 weeks @ $70,000/year = $13,440). The company obviously recovers some of this money because John was able to produce revenue for the company after he was fully trained 4 weeks into the job. So the cost of training John Smith was roughly 40% (4 weeks of training out of 10 weeks worked) of the total amount he made:
$13,400 - Johns total salary for the 70 days he worked X 40% - Percentage of John's salary that was paid in order to train him for the position ___________ $5,360 - The cost of training John Smith, paid by Company ABC
The grand total of this hypothetic situation
Let's total that up real quick:
$12,600 - Cost of Recruiting John for his 70 days of employment + 5,360 - Cost of training John that is not regained by Company ABC ___________ **$17,960** **- Total loss endured by the company for hiring (and loosing) John Smith **
Holy crap! That whole ordeal leaves Company ABC $18,000 poorer and counts as an immediate loss and comes out of the company's bottom line because recuperating those fees is not possible. Meanwhile, BizTalentFinders LLC gets to keep a whopping $12,600 just for finding John Smith, regardless of the fact that he ended up quitting. This number doesn't even include the process of finding John's replacement (which also carries the same level of risk that the company must expose itself to in its decision to work with the recruitment company).
What's wrong with this picture?
The overhead is too much and the risk is too high to make this model a sustainable solution to this technical worker demand problem that the industry currently is faced with. There has got to be a better way to find qualified people to hire without carrying that ridiculously large risk of still paying money for a recruit that walks away or that doesn't end up working out.
A possible solution that may disrupt the entire industry
My idea is a platform that integrates into many applications developers use daily (GitHub, Twitter/FB, Atlassian, StackExchange, LinkdIn, etc) that can be linked via OAuth2.0 to a user's profile in order to demonstrate involvement, experience, skills and work history in the field of software/web development. There will also be designated places on the site for "static" content--Awards, Recognitions, Achievements, etc. as well as a profile theme that the user can customize, add screenshots and relevant code examples to, and state any interests or passions relating to Software, Code practices, design patterns or whatever else the developer is interested in. The platform will conglomerate all the data it pulls from the social and programming OAuth sites and the user's static data (including references and past job history) into one customizable "DevPro" developer profile page that lists all their achievements and experience on one page, with any special content like resumes and cover letters properly linked and in an easy to use UI.
Another automated process the platform will have is determining some sort of standardized "Developer Score" that will reflect the amount of content in a user's profile as well as reflect a user's personal and professional involvement in a given set of industry-specific languages, frameworks, libraries or topics that the user has specified when setting up their profile. The score will be a number between 1 and 100 and will come with hints and tips uiser's can employ to increase their score (reputation management is also a possible source of income -- offer to user's with low scores). The score is initially calculated automatically but can be adjusted manually in the back end by adjusting the specific area for which the client has proven proficiency toward.
Additional documents can be added to the user's profile such as:
* Letter's of recommendation * Awards & Certificates of Achievements * Official transcripts * Letters or Educational Achievements & Recognizations * Diplomas * Technical Certifications (linked online or scan of paper document) * Vocational Certifications / Degrees * Acceptance Letters / Offer Letters * anything else....
Verifying these documents are valid will be more of a manual process than an automated one (at least initially). This is an area that is going to cost money to dedicate in order to pay researchers to properly lookup and analyze all documentation a user provides for their profile. The main benefit gained from this investment is that we can offer a guarantee to the companies looking for people to hire that all things listed on a potential employee's profile as well as all documentation they provided relating to their professional software development career is 100% accurate and validated. In addition, if we can also confirm a user's references are good as well, that would save the employer an extra step.
At the same time I'm entertaining the idea to be able to appeal to both companies lookinhg for developers and developers themselves by:
(obviously) Charging companies a fee for finding and hiring anyone using the platform
Making the process to be apart of the platform (i.e. own a user profile) have a mid to high level of difficulty in screening all users on their skills, education, work history, comittment, etc. This would require an almost 100% manual screening process but would ensure only quality people would be able to post their professional profiles and only companies paying for service would be allowed to contact them. It's a win win.
Thoughts? Comments? Hate it? Love it?