We’re now five years into the push for a “digital transformation” across every industry, staffing included. During covid, businesses needed to adapt to a remote workforce, changing their systems to be digital-first and cloud-based, phasing out some of the more manual processes that required in-person teams.
For staffing firms, this meant moving previously in-person or manual recruiter workflows like candidate intake, resume reviews, interview scheduling, onboarding, time tracking, and pay/bill out of the office and into a remote setting.
This digital transformation led to major investments firms were making in new SaaS platforms, buying the promise of digitization by offloading the work to outside vendors and services. The amount of cloud-based SaaS investment has continued, and is now set to reach $300 billion in 2025, according to Gartner.
In those early days of transformation, staffing teams often found themselves navigating disparate ATS, CRMs, sourcing platforms, background screening portals, onboarding systems, timekeeping tools, and separate payroll or billing solutions, each with their own logins, processes, and data formats, which caused breakdowns or slowdowns in process as well as higher operating costs.
Challenges with Digital Transformation
Because workforces needed to adapt quickly to a changing world in 2020, many organizations jumped fully into digital transformation without truly understanding the ramifications of their investments. And it makes sense; staffing firms were really thrown into the fire during the early days of the pandemic, leaving little time to think through the long-term impact or do an in-depth analysis on their digital transformation strategy. According to a study by Zylo, this unpreparedness has led to what’s referred to as a “license graveyard”, where nearly 50% of provisioned SaaS licenses go unused.
In short, companies haven’t been in a position to make the most of their platform investments, creating bloated ecosystems of cobbled-together technology tools that didn’t do what they were supposed to and, maybe more importantly, don’t speak to each other.
Prior to the pandemic push towards digitization, a 2018 McKinsey study found that around 50% of respondents reported that their organizations’ change efforts were geared towards digital transformation. Six years later, that urgency is even greater: another McKinsey study from 2024 found that some 90% of organizations are now undergoing some form of digital transformation.
AI Has Entered the Chat
As it stands today, the digital transformation has morphed with the rise of new AI and automation tools. While many of the outcomes of that initial 2020 push remain the same — increased efficiency and better processes, modernization of outdated systems, better customer experience, more robust insight gathering and audience data, and more — the tools have changed from more traditional SaaS platform investment to AI and automation-focused ones. It’s no surprise that investment in AI is set to eclipse $400 billion this year.
Every industry is different, but it’s no exaggeration to say that digital transformation was, and continues to be, more of a challenge than organizations had initially thought. In staffing, these problems show up where it hurts the most: slower time-to-fill, inconsistent candidate experiences and communication, payroll and compliance errors, lost contracts, and so much more.
One estimate places the sentiment on digital transformation at an average success rate of around less than 30% across all industries, according to McKinsey.
“Only 16% of respondents say their organizations’ digital transformations have successfully improved performance and also equipped them to sustain changes in the long term,” the report claims. “An additional 7% say that performance improved but that those improvements were not sustained.”
So if you’re feeling like your organization isn’t where it needs to be, you’re not alone. But also, it’s not too late.
How AI Presents New Opportunities
The emergence of AI is giving companies a chance to try their hand at digitization once again. From AI-driven content creation that improves candidate communication, to candidate matching and automated workflows, these new tools have the potential to transform the way staffing works. They also present the potential for staffing firms to learn from past mistakes in everything from data governance and security to right-sizing investments to reduce bloat.
This moment is an opportunity to use what you know to diagnose how processes have changed over time, and where organizational drift may have occurred that is not only threatening day-to-day operations, but may be serving as an impediment to implementing new efficiency tools in AI and automation.
In this blog series we’re going to take a look at organizational drift, which is the slow slipping of process standards over time. We’ll discuss what it is, what it looks like, why it’s so insidious, and how correcting it can help set your firm up to make the most of your digital transformation as you explore new tools in AI, automation, and beyond.