Any recruiter working for a scaling tech company will tell you the same story; they are swamped. Their teams have been slashed in half, applicants are flooding into their ATS in record numbers, and they are being told to ‘do more with less’. 

We have spent the last 18 volatile months deep in the world of recruiting talking to Talent Acquisition leaders, recruiters, sourcers, and People Ops managers to get a realistic picture of the recruiting landscape. Unlike 2021, which was characterized by a tight and competitive labor market and aggressive hiring plans, we live in a different economy now - characterized by an abundance of applicants, data, tools, requirements - and recruiters are being asked to change their workflow to keep up with this reality. 

The SquarePeg team has been heads down building an exciting new product that addresses the realities of today’s recruiting landscape. Building this for today’s recruiter started with hours and hours of listening to how work is getting done with all the chaos that 2024 brought. Too many recruiting products have been cobbled together without deep insights from People teams, so in order to avoid that trap and build something from the ground up that represents the concerns and voice of today’s HR teams - we started by listening. 

So what does the landscape for lean recruiting teams look like as we enter 2025?

The lean team is here to stay

Most recruiting team we talk to have emerged from 2022-2024 RIFs that have directly affected their function. Sourcers and coordinators were often 1st to go, leaving recruiters and TA leads to be spread across the full hiring cycle. This was manageable when most news was layoffs, but there has been a general consensus in tech that these teams will stay lean through phases of growth. Short term, this has put tremendous pressure on recruiting teams to manage an unfeasible workload. Long term, we believe this actually provides a huge opportunity to finally shed some of the more manual tasks that have bogged down recruiting teams when headcount was larger. The AI based software applications built to free up recruiter time are hitting the market, but will need to be specific in the problems they solve to allow the ‘lean and mighty’ recruiting team to stay afloat.

High volume, low quality

The average employer we spoke to has seen applicant volume grow by 3-5x over the last year, with an average of 503 applicants per role, up over 100% from 248 applicants per job in 2023. This is mainly a result of macroeconomic factors: many tech companies over hired in a zero-interest rate environment, and spent 2024 downsizing to meet our new economic reality, flooding the job market with hundreds of thousands of new applicants.

The recovery has been slow, as higher interest rates have impacted VC funding rounds, with expectations that companies grow into their 2021 valuations - meaning rehiring has been far more careful and deliberate than in previous years. We have seen a focus on “precision hiring” - which has more to do with finding the niche set of skills and experience for a specific business goal, vs scaling a department with more generalized talent.

As part of this grand realignment, candidates are applying to larger numbers of jobs, driving up application volume across all major role types. This practice of “spray and pray” on the candidate side has serious implications for applicant quality. Knowing that they might get auto-rejected by an ATS and have a 1 in 300 chance of getting an interview has led candidates to widen the net of jobs they apply to - leading to a real decline in relevance between job seeker and job. 

Enter the era of AI robo apply

As applicant numbers started to swell, a suite of AI robo-apply tools entered the market, making it easier for candidates to automate the process of applying to thousands of jobs, often without reading the description. This includes AI auto-apply tools, AI cover letter writers, AI resume writers, AI LinkedIn profile builders and AI email tools - all allowing candidates to create “custom” applications to hundreds of jobs per day based on a set of search criteria, vs actually assessing if the job is a fit. We’ve even had recruiters complain about AI phone agents taking initial phone screens based on AI written scripts. This has tremendous implications for applicant pool quality, as recruiters are stuck trying to find a needle in a much larger haystack.

‍Here is an example of an AI agent reading your CV, scouring the internet for relevant job postings, and auto-applying. Ultimately, this burden falls on lean recruiting teams who now have to process sometimes thousands of applicants within a week.

Hiring manager standards and the great Googling conundrum

Recruiting is inherently tied to the technology and product evolutions taking place in the market. 2024 saw a proliferation of vertical SaaS applications and AI plays that require niche experience in a domain, industry, or product. Pair this with the focus on precision hiring, as well as slack in the labor market, and the result is a move towards more specific and rigid hiring requirements. What we now see at SquarePeg are applicant screening criteria that cover experience at companies with specific product types, sub-industries, growth rates, employee counts, VC investors, customer types, ACVs, and numerous other filters. The reality for recruiters is that the majority of this data is not listed on the typical candidate resume. In the proverbial pile of thousands of digital resumes, some of the most important data is not available to facilitate search. This means that in-depth applicant screening requires multiple tabs open for Linkedin, Google, Crunchbase, and company websites to validate a single candidate’s qualifications. The 30 tab browser window will be nothing new to the recruiter, but scaling this across today’s applicant pool is simply not feasible.

Sourcing and candidate rediscovery taking a backseat?

One thing we kept hearing from busy teams is not having time to re-engage former applicants from the ATS, or strategically prospect passives. The level of manual work required to screen and process inbound applicants is largely unfeasible, so building a pipeline from prior applicants or passive candidates takes a hit. Most Applicant Tracking systems are a treasure trove of viable prospects with warm interest in a company, but without a constant refresh of job movement, it can go stale within months. We see sourcing and candidate rediscovery as a huge opportunity for AI, but cannot expect lean teams to do this well manually given their current workload.

Tech overload

The (exponential) growth of HR tech solutions has generally been a good thing for recruiters, hiring managers and candidates. There are point solutions and domain experts with software for just about every task within HR’s purview, and with APIs that connect these solutions to the ATS, HRIS, and broader tech stack - HR teams can be specific about their needs and find niche providers that solve narrow problems really well. So many of the ‘all-in-one’ systems are overpromised and underdelivered, because it’s hard to master 20 things. Now we have a landscape with dozens of companies that do a few things extremely well, but navigating vendors and the overall integration of the tech stack is getting trickier. The teams we spoke to seemed optimistic about the promise of technology taking on their hardest challenges, but researching, demoing, and differentiating between hundreds of software tools has been a source of frustration.

Given the influx of LLMs into recruiting, so many new AI tools are entering the market with varying deltas between what they promise and what they can deliver, and creating a value-based business case takes effort.

Key takeaway

Overall - the picture is clear. Lean teams are seeing a record level volume of inbound applicants, with diminishing candidate quality. This has put serious pressure on the recruiter, and sourcing / deep-level applicant screening has taken a hit as a result. A new wave of HR tools have entered the market, but finding the time to demo and build out a strategic tech stack takes effort. All of this shapes the world today’s TA team faces, and how they will think about their workflows, team structure, and budgets.

Some good news about the future

Despite the lower headcount of HR teams across the board, we are seeing CFOs and CPOs recognize that they need to equip their teams with the right software and tech stack to win top talent in this market. That ultimately means is that there is a huge opportunity for the recruiting and TA teams to shape the type of work they do, and the value they add. More headcount often means more tolerance for manual, low-value-add work. 

Equipping a lean team with an intelligent tech stack means the software should take on the grunt work, leaving the recruiter and TA lead to focus on human conversations, hiring insights, and what they do best. With lean supercharged teams + the right tech stack, recruiters should be empowered to work more strategically, focusing on engaging with smaller pools of high-value talent.