The Power of Platforms: Part 2
Online recruiting platforms, and a case study of a Taiwanese ‘HR-tech’ company
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In Part 1 of this two-part Insight, we explored the origin of classified advertising in local newspapers, and traced their evolution into today’s digital marketplaces. We also examined how network effects have driven the success of the classified advertising model, and discussed how early internet bulletin boards have developed into sophisticated digital platforms.
In Part 2 of this two-part Insight, we take a closer look at online recruitment platforms. We also highlight a Taiwanese case study, telling the story of how this recruitment platform has leveraged its brand strength, data access, and strategic investment to build a formidable human resources technology (‘HR-tech’) ecosystem.
TABLE OF CONTENTS
Online Recruitment Platforms
Classified advertising platforms often boast attractive, cash flow-generative business models. It should thus be no surprise that the Seraya team has taken the time to examine various companies of this sort, including horizontal platforms, as well as those specialising in specific verticals such as real estate, jobs, automotive, and second-hand goods.
Among the different flavours of classified platforms in Asia, the vertical that we have spent the most time researching is online recruitment platforms. In this sector, we have managed to find several companies with strong cash flow generation ability and an attractive growth trajectory, which also trade at reasonable valuations.
One notable feature of recruitment platforms is their potential to form enduring relationships with both employers and jobseekers. Platforms should not only list job vacancies, they should also help employers find high-quality, well-suited candidates to fill important roles within their firms. Platforms should also support jobseekers to develop their skills, search and apply for jobs efficiently, and grow their careers over the long term.
At the same time, success hinges on addressing local norms around employment, data privacy, and trustworthiness – especially since hiring often involves sharing sensitive information. As a result, a secure online environment, backed by a reliable platform partner, is essential to build long-term trust and secure greater customer loyalty.
Just like other classified advertising platform verticals, online recruitment can enjoy a strong ‘network effect’. Each new employer who joins a platform expands job inventory, which in turn draws more jobseekers who believe the platform can connect them with relevant roles, which then further attracts employers who target the larger talent pool.
Many platforms extend their reach by layering on further services such as HR software, analytics dashboards, and/or other value-added functions that deepen ties with customers and may also help to offset the inherent cyclicality of hiring cycles. This is the ‘online recruitment’ flywheel (Figure 1).
While these dynamics help explain the attraction of online recruitment, the fundamentals remain the same as in other classified advertising verticals. In summary: brand credibility, strong matching algorithms, user‐friendly interfaces, and flexible monetisation models to achieve scale.
Monetisation techniques vary across recruitment platforms. Some employ subscription models, charging employers monthly or annual fees to list vacancies and access candidate databases. Others rely on pay-per-click ads. Recently, more platforms have attempted to introduce ‘success-based fees’, which effectively tie their own revenue to their clients’ successful hiring of staff based on their introductions.1
This new success-based monetisation model – if successful – may well mean higher revenues for platforms with strong matching rates, as theoretically they are able to capture revenues from each successful hire rather than merely selling adverts. At the same time, however, transaction-based monetisation approaches of this sort may also leave a platform more vulnerable to economic cycles.
In the future, it might be possible to strike a balance by adopting a hybrid approach that combines subscriptions with transaction-based elements. In theory, this would enable platforms to boost revenues by helping customers make more targeted hires, while at the same time reducing its own exposure to fluctuations in the job market.
An alternative recruitment platform business model, exemplified by LinkedIn, is to adopt a social media-style approach. Revenue is primarily generated by charging employers for hiring services and advertising, with additional subscription income derived from users of premium services.
In recent years, it has become more common for organisations to use employment platforms not just for filling job vacancies, but also to address their broader workforce needs (e.g., providing employee performance analytics, succession planning, and/or employee development). By tackling such critical tasks and sustaining user trust, a dominant recruitment platform has the potential to transcend its origins as a job listing service and evolve into a part of the foundational infrastructure of an entire labour market.
Over the last two years, the rapid rise of artificial intelligence (‘AI’) has inevitably added a new layer of complexity. Many recruiters rely on AI chatbots or scheduling tools to handle routine tasks such as answering basic candidate questions, sending follow-up emails, and transcribing interviews. Jobseekers are also increasingly using AI to generate ‘polished’ CVs or to submit bulk applications to a multitude of job adverts.
AI thus enables efficiency gains for recruiters and employees. Yet this new technology also brings with it a heightened risk of ‘mass-produced’ applications and embellished résumés, making it harder for employers to differentiate between genuine applications and disinterested candidates who are applying to jobs en masse.
So far, AI’s true matching ability remains constrained. If underlying job descriptions and candidate data lack detail or authenticity, then a platform’s algorithms cannot accurately rank candidates. As a result, while AI can be a helpful tool for automating simpler steps in the recruitment pipeline, final hiring decisions still benefit from human judgment and oversight.
Having touched on the basic business models and features of online jobs platforms, we now turn our attention to a leading Taiwanese recruitment platform. This company’s evolution illustrates many of these dynamics in practice.
Case Study: A Taiwanese ‘HR-tech’ Ecosystem
Launched in the mid-1990s, this dominant Taiwanese recruitment platform gained immediate brand recognition by adopting the same name as a well-known local telephone directory.
From modest roots, the company has flourished over the last 30 years. Today, the platform is responsible for as much as 50-60% of all job listings in Taiwan, rising to a remarkable ~70% market share for white-collar jobs in IT and manufacturing. Rather than merely matching candidates to vacancies, the company has positioned itself as a ‘career partner’ for both jobseekers and employers by offering comprehensive workforce solutions.
Competition
Although the company established a strong lead early in its life, it has faced consistent competition from smaller rivals. Some of these platforms specialise in matching part-time work and jobs for foreign labourers, while others have used ‘freemium pricing’ to compete. Local job aggregators also emerged, but they lacked the incumbent’s depth of market data or strong brand recognition.
Even though these competitors often price listings at 40-50% below the dominant platform’s rates, they have not managed to make sustained market share gains. This is because they have failed to offer key features which larger employers find indispensable, such as call centre support or advanced search features. As a result, these challengers have had a limited impact on the dominant platform’s control over the white-collar segment.
LinkedIn is a globally recognised platform that blends social networking with recruitment. Over time, this service has also managed to carve out a niche in Taiwan for international and bilingual senior-level roles. Nevertheless, LinkedIn has not managed to challenge the incumbent’s dominance in mainstream white-collar postings because of the strong network effect enjoyed by the market leader. Moreover, the dominant platform’s Chinese language HR tools and broader market coverage align more closely with the day-to-day needs of Taiwanese employers and jobseekers.
Developing into a Comprehensive Talent Ecosystem
Job classified advertisements, which include both basic ads and premium add-on services, account for ~80% of total revenue for this dominant Taiwanese recruitment platform. This segment commands attractive core operating margins of as much as 50-60%,2 which underscores the attractive economics of a leading classifieds platform. Cash flows are particularly strong, while employer prepayments allow the company to operate with a negative working capital cycle.3
Building on its early dominance in the white-collar segment, and buoyed by robust employer demand, the company soon expanded beyond standard job listings. In the early 2000s, the firm launched the first of its broader HR offerings by introducing ‘talent management’ solutions, including on-premise software for large enterprises and an executive search ‘headhunting’ service.
The company’s enterprise HR software solutions experienced some early success, and in late 2015 it launched a SaaS-based HR management suite. This SaaS offering started as a niche launch which initially targeted Taiwanese SMEs. Since then, it has evolved into one of the more important services among the firm’s HR-tech offerings, with as many as ~4,000 subscription-paying customers employing more than 100,000 people.4
The company’s executive search ‘headhunting’ service, on the other hand, utilises the conventional success-based fee model (i.e., the recruiter receives a percentage of the hired candidate’s salary). While this service is ‘offline’ in nature, it nevertheless reinforces the firm’s reputation as a one-stop solution for both mid-level and senior-level roles.
Collectively, these other ‘HR solutions’ now account for ~20% of total revenue, with software representing roughly three-quarters of this amount, and executive search one-quarter. While the software business has historically generated mid-teens operating margins – much lower than the listings database – management believes that once its SaaS product achieves sufficient scale, the margin of the talent management segment should be able to surpass the company’s current ~22% operating margin.
At present, this company uses a ‘traditional’ monetisation model for its job classifieds database, in line with Taiwan’s widespread employer preferences. In other words, employer customers pay in advance to post mass-market white-collar job listings. At some point in the future, it is conceivable that management might experiment further with partial success-based fees (e.g., ‘pay-per-applicant’, or ‘pay-upon-hire’), but this does not seem to be on the cards just yet.
Investing for Growth vs. Capital Discipline
One of the salient features of this dominant recruitment platform is its strong cash flow. While this adds resilience and facilitates high shareholder returns, excess cash flow generation can also lead to greater ‘temptation’ for management to allocate capital to ‘side projects’ with less attractive fundamentals than the core business.
From 2017, management started to deploy more capital towards several adjacent ‘ventures’. These were apparently initially launched as CSR initiatives, and included recruiting services focused on attracting senior citizens back to the workforce, as well as career guidance for high school and college students.
While these projects might have added some value by raising the company’s profile, the markets targeted by these initiatives were simply too small to offer any serious prospect of driving future revenue or profit growth for the firm. These ventures did, however, absorb a surprisingly large proportion of R&D resources, which contributed to a marked decline in the company operating margins from 2016 to 2022 (Figure 3).
Recognising that innovation and growth require both creativity and capital discipline, the Seraya team worked with company management and with the board of directors to develop a clearer return-on-investment framework for new R&D projects. This was to ensure that capital would be allocated to the most relevant projects (i.e., adjacent to the firm’s core recruitment and HR-tech strengths), which also had the largest addressable markets and highest profit-generation potential, while also minimising distractions.
As a result of our constructive engagement with the company, we have been gratified to see the firm’s operating profit margin bounce back from the high-teens to the low-20% range (Figure 3). Meanwhile, the company continues to make more focused investments in key R&D areas, which we believe will lay the foundations for many more years of growth and dominance within the online recruitment vertical in Taiwan.
Much of the company’s recent R&D investment has been channelled into AI-driven screening, analytics, and specialised filtering, thereby improving both product quality and internal efficiency. The platform increasingly uses ‘stack ranking’ (i.e., breaking job roles into core competencies, and grouping applicants by how many criteria they select) to prevent employers being overwhelmed by less suitable applicants. While advanced matching still depends on accurate job descriptions and candidate data, these initiatives streamline workflows, automate key processes, and reduce overheads.
Shareholder Returns
The firm’s business is asset-light, relying primarily on software, data infrastructure, and highly scalable cloud tools. Capital expenditures are thus modest even during phases of higher growth and spending. The company has paid out all profits to shareholders as dividends for the last eight years, and has managed to maintain a dividend payout ratio of >80% for almost twenty years. Despite such strong shareholder returns, the company’s balance sheet is robust, with no debt and a large cash position (equivalent to ~40% of market capitalisation). This balance sheet strength gives management the ability to invest opportunistically.
At points in the cycle when broader recruitment activity cools, management has historically demonstrated cost discipline on discretionary spending (i.e., marketing costs and exploratory product R&D). This has enabled the company to preserve margins and generate steady cash flow even when labour markets experience a slowdown.
The firm’s online recruitment model further benefits from cross-selling synergies between the job classifieds database and the HR software suite: employers who subscribe to the HR platform can seamlessly post to the database and pull in real-time salary data, which significantly increases customer ‘stickiness’. Indeed, once an employer commits to the integrated system for daily HR tasks, this customer becomes less likely to switch to a rival job site or standalone HR tool, further entrenching the platform’s competitive position.
Looking forward, sustainable margin improvement for this platform will hinge on successfully scaling the company’s HR SaaS product, as well as effectively utilising AI and other productivity enhancements to reduce costs.
Leveraging Taiwan’s Tight Labour Market Conditions
Improvements in the company’s capital allocation strategy come against the backdrop of an increasingly tight labour market in Taiwan (Figures 4.1 & 4.2). Unemployment rates in Taiwan are now hovering near historic lows, while total job listings on the leading online recruitment platform have trebled from ~400,000 posts in 2014, to ~1.1mn in 2024. As the firm’s market share has remained stable during this period, this growth reflects Taiwan’s ongoing economic success story, as well as the almost-complete digitalisation of the white-collar recruitment market.
Over the last decade, the ratio of total job openings-to-jobseekers on the platform has risen from ~1.5x to >2.0x, while in the manufacturing sector it has climbed from ~2.0x to >4.0x (Figure 4.1). As Taiwan’s society ages, employers are finding it harder to find workers, and this means that they are willing to pay higher wages. This is underscored by the uptrend in Taiwanese wage growth in the industry and services sectors, which accelerated from 2017 and again from 2020 (Figure 4.2).
As Taiwan’s labour market tightens, the dominant online recruitment platform’s strong brand and comprehensive HR toolset are becoming even more attractive to employers. Recognising the evolving nature of recruitment, management has prioritised ongoing enhancements to data analytics and core product design, ensuring that their platform remains both relevant and reliable.
By combining a dominant job board with carefully targeted HR-tech expansions, this company demonstrates how a strong network effect and carefully selected additional functionality can deepen user loyalty and lay the foundations for durable revenue growth. Their platform is thus well-placed to reap the benefits of a structurally tighter labour market.
Keeping the ‘Rivers of Gold’ Flowing
Even as classified advertising has transitioned from print to the digital world, one truth remains: any company which manages to match supply and demand under one roof will see the cash flows pour in. This approach once propelled local newspapers to near-monopoly status in the regions they dominated. Today, it supercharges online marketplaces.
Yet these ‘rivers of gold’ do not just keep flowing of their own accord. Preserving the headwaters calls for management to embrace relentless innovation, build trust with users, and keep a sharp eye on potential market shifts.
Consider Taiwan’s top recruitment platform... A combination of a strong brand, strategic expansion, and AI-driven enhancements have helped to build the company’s resilient moat. By packaging integrated HR services with basic listings, the firm’s offering transcends a simple ‘jobs board’ model, thereby winning loyalty from employers and jobseekers alike.
No platform is invincible. As digital ecosystems evolve, lasting leadership demands balancing fresh tech features with customer trust. The best recruitment platforms do more than just display listings – they provide the foundations on which careers are built.
Those classified platforms which stay attuned to real user needs and adapt intelligently stand a better chance of ensuring that their ‘rivers of gold’ keep flowing.
Thank you for reading.
Romain Rigby, Andrew Limond
Indeed, founded in the US in 2004 and owned by Japan’s Recruit Holdings, operates as one of the world’s largest ‘job boards’. In October 2022, it introduced a pay-per-application (‘PPA’) model intended to charge employers only for the applications that they actually reviewed. As a result of this change, however, many small businesses faced unexpectedly high charges (apparently because they often missed the 72-hour window to reject candidates). By late 2023, because of these problems, Indeed had decided to phase out PPA, although the company does retain a limited performance-driven approach through its ‘pay-for-results’ model, which offers automated filtering and spending limits.
Excluding non-attributable overheads and R&D expenses.
These prepayments appear as ‘deferred revenue’ (i.e., contract liabilities) on the balance sheet, and contribute to a sizeable cash ‘float’ which usually exceeds one-third of the firm’s annual revenue.
Priced at roughly NTD 60 (about US $2) per employee per month, we estimate that this software currently contributes ~5% of overall revenue. While precise market share data is scarce, company management and outside sources rank this SaaS platform among the leading cloud-based HR systems for SMEs in Taiwan.
