Artificial intelligence may soon automate much of the work of matching candidates with employers, reducing the need to engage the services of recruiters.
Advances in AI are allowing employers to screen resumes, rank applicants and conduct preliminary interviews without relying on external recruiters from firms such as Robert Half Inc., ManpowerGroup Inc. and Randstad NV.
As the technology improves and becomes cheaper to deploy, companies are increasingly able to bring parts of the hiring process in-house. That’s compounding existing challenges for the sector as the post-pandemic hiring boom has given way to a “low-fire, low-hire” environment, squeezing an industry that depends on hiring volumes and placement fees.
Pressure on margins and revenue is set to increase as clients either cancel contracts or push for lower prices since competition for business will grow, said Bloomberg Intelligence senior analyst Stuart Gordon, adding that the way to manage costs will ultimately be by laying off recruiters.
For those that remain, AI may also complicate their jobs. Tools that help candidates rewrite or embellish resumes risk making applicants harder to distinguish. “Everybody’s going to look the same,” Gordon said.
Staffing executives have pushed back on the idea that AI can fully replicate what recruiters do. There is “negligible impact” from AI on Robert Half’s core business, particularly among small and mid-sized clients, Chief Executive Officer Keith Waddell said on the firm’s most recent earnings call. AI has made resumes harder to authenticate, increasing demand for recruiters’ judgment and personal interaction, he added.
Some peers are going further in highlighting the benefits of AI, with Hays Plc and Randstad among those seeing an ability for more complex, precise and faster talent-to-job matching. “By reducing administrative friction, we drive higher fill rates and optimize our productivity,” which improves efficiency ratios, Randstad said in its 2025 annual report.
AI Matching
That view resembles the approach of AI-driven matching platforms, a leaner and fast-growing segment of the recruiting market positioned to allow employers to bypass traditional recruiters.
Upwork Inc., which uses AI to match freelancers with employers, had about 600 employees and about 2,220 contractors at the end of 2024, generating $595 million in gross profit in 2024. Robert Half, by comparison, had about 14,700 full-time employees and generated $2.25 billion in gross profit. Upwork’s model makes it significantly more profitable per employee, Gordon said.
Analysts also warn that staffing firms face competition not only from startups but also from big technology companies with the resources to build or improve hiring platforms with AI. Microsoft Corp., which owns LinkedIn, is one example.
What remains unclear is whether AI and automation will ultimately destroy jobs or create new ones, with evidence mixed so far. Many companies have cited AI when announcing job cuts, but US unemployment has remained relatively steady. A sustained increase would be needed to demonstrate a structural impact on employment, Gordon said.
That would further reduce the need to engage recruiters.
BNP Paribas Exane analyst Andrew Grobler cut his ratings on Adecco Group AG, PageGroup Plc and Robert Half in December, saying that temporary workers are 40% more likely to be employed in roles at high risk of automation than the broader labor market. Grobler has a “neutral” rating on Adecco, and “underperform” ratings on PageGroup and Robert Half.
ManpowerGroup, which specializes in blue-collar and industrial roles, is less exposed to AI-related disruption than firms focused on white-collar fields, Chief Strategy Officer Rebecca Frankiewicz said on the company’s latest earnings call.
“What we found is that for blue-collar industrial manufacturing roles, they appear to be more resilient over the horizon where the disruption is happening more in the white-collar software developers and coders,” she said.
Robert Half faces a double AI whammy of digital disruption by online recruitment platforms and the adoption of productivity-increasing software that reduces the need for less complex, back-office roles, according to Jefferies analyst Stephanie Moore.
Similar pressure applies to UK-based Hays, she wrote, noting its high exposure to the white-collar roles that make up a large chunk of recruiters’ placements. Jefferies rates both stocks “underperform.”
While AI can help all recruiters improve matching, Moore said smaller recruiters may be adopting the tools more aggressively because it’s cheaper for them to use AI. Clients are also expected to ask for lower fees as recruiters save time and cut costs using AI. “Disruption from automation has taken some volumes that will never return.”
Phua writes for Bloomberg.
