For some recruiters, self-hosting is still the most cost-effective and efficient way to manage their ATS and CRM. For others, SaaS makes the most sense. So how do you know what’s right for your recruitment firm? And is there a vendor who can offer you both? (Yes. PCRecruiter).

Whether you’ve been in recruitment for decades, or you’re just getting started, your Applicant Tracking System (ATS) and Customer Relationship Management (CRM) sit front and center of your business. Their value to your day-to-day activities is unquestionable. 

If your current software license is due for renewal, you’re about to heavily invest in new hardware, or you’re building a recruiting business from the ground up, it’s a good time to reevaluate your options. But should you choose self-hosted or SaaS?

In this blog post from PCRecruiter, company co-founder Martin Snyder looks at the key differences between self-hosted and SaaS, and the advantages of each type of setup. Why? Because unlike other vendors, PCRecruiter still offers both options to ensure we can provide the best fit for a wide range of needs.

What Is Self-Hosting?

A self-hosted solution run by the user’s company on their own IT systems and servers or from a data center which is not owned by their software vendor. This is also known as an ‘on-premise’. In a self-hosted set-up, the software is purchased outright via a license, typically renewed on an regular basis. 

Self-hosting works well for companies who already own or pay for the services required to facilitate it. So if you’ve already got a web and database server, storage infrastructure, technical and administrative support, and software maintenance services in place and working well, then all you need is the software. In this set-up, the software is a capital expense – a one-time purchase.      

What Is SaaS?

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Software as a Service (SaaS) is the more popular alternative to self-hosting. SaaS is delivered over the Internet and does not require the same level of installation or maintenance. It eliminates the need for you to self-manage complicated software and hardware installations. SaaS is sometimes referred to as on-demand software or web-based software. It’s also sometimes referred to as “hosted software” because SaaS is hosted by the vendor who manages updates, security, access, and availability. SaaS uses a subscription model, so you pay on a recurring basis, often monthly.

SaaS doesn’t require the expensive IT infrastructure needed to self-host. In most cases, SaaS can run from any device with a browser or sometimes via a dedicated app. SaaS eliminates the need to buy and maintain your own hardware and networking infrastructure. In this way, SaaS helps to keep the capital costs down for IT hardware and equipment. It also means that your software becomes an operating expense (OpEx).

Self-Hosted or SaaS

In many ways, recruiting is a very narrow economic process. But the definition of a ‘recruiter’ is very broad – from an independent headhunter working at home to the HR sourcer at an international corporation. The one thing they all have in common is that recruiters tend to be ‘people’ people, not ‘tech’ people. They need a solution that fits their day-to-day needs without adding an unnecessary layer of complexity. 

In the distant past, the only option was for businesses to use a self-hosted or on-premise solution to meet their IT needs. It’s still the traditional way of setting up major IT infrastructure – and there’s nothing wrong with that. But as the saying goes: do what you’ve always done, and you’ll always get the same results. For some recruitment firms, this approach still works and they get great results. For others – particularly recruitment start-ups – SaaS offers a better solution.

Here are some key points to consider when comparing self-hosting with SaaS:

Continuous Delivery

There are many reasons to choose SaaS. If you lack the IT infrastructure to self-host, or if you’ve got any concerns whatsoever about the stability of your database, a SaaS vendor can take care of that for you. The other considerations are uptime and availability. If you’re not able to guarantee the stable and continuous delivery of your recruiters’ every day software tools and network, then SaaS is also a good option.

IT Resources

While major recruiting agencies may have lots of IT assets, smaller firms often have fewer resources. SaaS gives these companies access to a much more powerful software stack than they would otherwise manage themselves.

Smaller organizations also benefit from only needing a handful of user subscriptions. On the other hand, large enterprises can sometimes find self-hosting a more cost-effective way to add tens or hundreds of users (see Economic Models). 

Data Security

Most recruiters would agree that their most prized asset is their database. 

Self-hosting gives recruiters the reassurance that, with proper security in place, only they will have access to their data. There’s no need to be concerned about the vendor relationship and what could potentially happen with their data when it’s hosted by a third-party provider. Fears over a data breach, cyber threats, or even the sale of data are common concerns. Some less reputable ATS providers may even stipulate that if you import data into their SaaS, they own or can make use of the data. If you’re looking into any SaaS option, always ask the vendor for the specifics about who has access to and ownership of the database!

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For every company around the world, there are ever-tightening regulations around data privacy. Recruitment is no exception. A data breach or cyberattack can be costly in terms of reputation and financial damage. Self-hosting gives you complete control over where the data is stored, who can connect to it, and even direct database access to the contents if needed.

Conversely, self-hosting means the entire security of your database rests upon your own network and IT capabilities, which could make you more vulnerable to issues rather than less. A reputable SaaS provider should have a highly secured hosting setup and regular security audits to ensure safety of the system, as well as be compliant with any applicable data protection regulations. This may offer you more peace of mind than managing things yourself.

Updates & New Features

With self-hosting, updating and getting new features can potentially be a time-consuming and costly process. It may impact business functionality, and generate downtime. SaaS is hosted by the vendor, so any updates and new features are handled centrally and automatically, and are therefore much quicker and easier to roll out. 

The other aspect to consider is timing. With SaaS, updates and new features are rolled out on a continuous basis. With self-hosting, it’s more typical to receive less frequent updates because of the complexity and disruption to services. Digital SaaS updates put the control in the hands of the vendor. Self-hosting updates tend to happen on-demand, putting control in the hands of the owner.

Another factor of increasing importance is how well the software can connect to other tools in your recruitment software stack. While a SaaS vendor may be able to offer software integrations through their own application programming interfaces (API), technical or contractual requirements often limit these to the SaaS provider’s own domain or infrastructure. Choosing to self-host may mean giving up some of the more robust features that rely on specific hardware and software behind the scenes. If you are currently self-hosting and have pre-existing integrations that you want to continue using when making a switch, it’s vitally important to ensure you can keep those connections.

Economic Models

As with most business decisions, cost is a make-or-break factor. Your decision to self-host or subscribe to a SaaS depends on your preferred economic model. When you self-host, the software is purchased as a single product. It’s owned. In countries like the US, for tax purposes, the value of this asset is said to depreciate in value over time. SaaS, however, is handled like a rental or lease. This means it there’s no depreciation. It’s an expense, and it gets taken as you spend it. 

Most SaaS vendors have three distinct fees: setup, user fees, and workload. For recruitment software vendors, workload equates with storage, updates, and data maintenance. The more storage you need, the higher the cost. SaaS user fees are generally per-user/per-month, whereas self-hosted configurations generally involve an initial startup fee, plus an update fee. This means that as the number of users increases, the cost per user decreases. There is a level where self-hosting can represent a huge saving when compared with SaaS user fees, but that tipping point tends to be at much larger organization sizes.

Which One Is Right For You?

Despite the increasing popularity and advantages of SaaS – it’s still not for everyone. For every recruitment firm, what’s most important is to balance innovation with necessity and cost with functionality.

Thankfully, with PCRecruiter you can take your pick. While the vast majority of our users go with the SaaS model, we still offer a self-hosted solution for those who require one. The software is substantially identical, with the exception of some of the more advanced features, making it possible to move your data from one model to the other if your business requirements change in the future.

If you’re not sure which makes sense for your company, our sales consultants are trained to help you compare the various options, and determine the right one for you. Get in touch with us today.

Post pandemic – and in response to the ‘Great Resignation’ – some recruiters quickly turned to innovative methods, in order to speed up the hiring process and fill open positions. Bringing in artificial intelligence (AI) and machine learning (ML) to handle some of the key decision-making might have initially helped to streamline workflows, but it’s also had some unintentional consequences.

While many people might be happy to have AI make suggestions around which film to watch next, or to recommend other music they may enjoy, handing it responsibility for the selection process in their next job application can raise understandable concerns.

In this blog post, we take a closer look at the pitfalls and the potential of using AI in recruitment, and where it might add value rather than systemized bias.

Current Applications 

There’s no denying that in the modern world, AI has a lot of great uses. Across a range of industries, it’s being increasingly used to streamline workflows and cut costs. In fact, in the recruitment world, AI — and more specifically machine learning — has been used in various forms for some time now. 

Common applications include automated interviews, resume (or CV) screening, as well as administrative duties, such as identifying duplicate candidate records. But the truth is, there’s a lot we don’t know about how AI is being used in recruitment. And that’s a concern. 

Potential Benefits 

For the recruitment business, where AI can really shine is in crawling talent pools for potential candidates based on specific job criteria such as qualifications and experience. It can also learn broadly what kind of candidate is a good fit for a particular role. However, its real potential benefits come from automating some of the repetitive and time-consuming work which goes along with screening, assessing, and scheduling.

Even as far back as 2017, studies showed that hiring decision-makers saw the cost and time saving potential of AI, alongside its ability to deliver better candidate matches. Interestingly, 43% of decision makers also believed that it would remove human bias. And that’s exactly where AI has come unstuck: when it’s been used to replace human decision-making in an effort to speed up the hiring process.

Knowing The Pitfalls of AI in Recruitment

When we talk about AI in recruitment, we really mean machine learning — computer systems which can learn from statistical models and data sets. As Amazon discovered in 2015, using historical human data to inform AI decision models can come at a cost to both potential candidates and their future employers. Their experimental hiring tool which made use of machine learning was informed by ten years of resumes submitted to the company.

This illustration of a robot recruiter was generated entirely by AI.
This illustration of a robot recruiter was generated entirely by AI.

The issue was that the computer system was essentially given a decade of data revealing male dominance in the tech industry and adapted its algorithms accordingly. The result? Resumes containing the word ‘women’ were automatically downgraded. When this ‘algorithmic bias’ was discovered, interventions were made to ensure the system became gender-neutral, but it left lingering concerns that future unintended discrimination might occur, raising important questions around how to ensure that recruitment AI is transparent and fair. 

In fact, transparency over the use of AI in recruitment is one of the biggest challenges currently facing the industry. That’s where new legislation is playing a crucial role.

New Employment Laws

A game changer in terms of the use of AI in recruitment, New York City’s AI employment law restricts the use of ‘automated employment decision tools’ and requires recruiters to undergo an annual bias audit to alleviate potential bias in their systems. 

Recruiters will also have to be transparent about where AI has been used in the recruitment process, and to even provide candidates with alternative options for processing their applications. Undisclosed or biased use of AI in the hiring process will also be subjected to penalty fines. 

Taking effect from January, 1 2023, New York’s new law blazes the trail for further legislation to tackle the inherent bias and potential discrimination generated by machine learning algorithms.

Similar conversations are taking place in the European Union, where the AI Act is set to institute self-certification programs and government oversight. This law will create transparency requirements for AI systems that interact with people, and will attempt to ban a few “unacceptable” qualities of AI systems. Individuals or companies located within the European Union, placing an AI system on the market in the European Union, or using an AI system within the European Union would be subject to the regulation.

Future Possibilities

It’s easy to be dismissive of AI in recruitment. After all, it’s a people business. But there are some clear use cases where it can make trustworthy and time-saving improvements to the placement process. AI can also be trained to trawl records and match specific criteria. For more common roles requiring limited experience or technical skills there is perhaps wider scope for AI to assist with search and selection. The real danger arises when AI trained on imperfect data, and therefore inherently biased, is used for key decision-making.

Conceivably, AI could be used to handle the entire recruitment process — which perhaps less scrupulous recruiters might find appealing. But for most recruiters there’s a sense of professional pride, and a human aspect to hiring — building relationships with employers and candidates — which AI simply can’t replace. 

As an example, there could be three equally well-qualified candidates in the running for an open position. Their education, qualifications and experience all fit the bill, but what about their cultural fit? A good recruiter understands the importance of aligning the employer’s value proposition with the right candidates. AI can easily miss the subtle verbal and non-verbal nuances which influence human-decision making. Humans can also see beyond the data. Especially when you’re looking for someone with transferable skills from outside a particular industry. Good recruiters know that instinct, as much as anything else, comes into play when making the right hire.  

There’s also the candidate’s perspective to consider. They may have a (sometimes valid) suspicion of any technology used to influence the hiring process. For example, even though Applicant Tracking Systems (ATS) have been around for decades, you can still find plenty of blog posts and guides for ‘how to beat the ATS’. Fears run even deeper with undisclosed uses of AI, particularly when it comes to diversity and inclusion in the workplace. As the Amazon experiment revealed, machine learning opens up the potential for discriminatory algorithms, and runs the inherent risk of excluding candidates you really wanted, over the ones it thinks you want.

Accelerate Hiring Without AI

Although there are some tasks and activities which can be comfortably replaced by AI, when it comes to key decision-making, sourcing the right talent and identifying the best-fit candidate is best left in the hands of humans. But how can you speed up the time to hire without using AI?

Recruitment automations can take care of repetitive, and repeatable everyday tasks, and give recruiters more time to spend time with candidates and employers. It’s particularly helpful for keeping all parties updated through emails, form letters, and notifications, cutting down the time needed to manually create correspondence.

PCRecruiter is an ATS / CRM hybrid which offers recruiters a huge range of opportunities to automate certain aspects of their recruitment process, making workflows more streamlined and cost-effective. Tailored to specific workflows, it’s a seamless, customizable and powerful tool for handling your end-to-end talent sourcing and. 

Want to learn more about the benefits of using automation in recruitment? Read our blog post 5 Ways To Use Automation In Recruitment.

On October 26th, learn about background screening trends, the importance of screening, and how to get started with the Verified First background screening integration in PCRecruiter.

Over 80% of organizations use background screening, yet 39% of organizations do not screen for every job (Aptitude Research).

Verified First

That’s why we’re hosting a FREE webinar with our friends at Verified First, Why & How: The Importance of Background Screening. On October 26th, we’ll explore background screening trends, the importance of screening, and how to get started with the Verified First background screening integration.

We’ll also explore:

  • Why you should run background checks on staff
  • What can happen when background checks aren’t properly run
  • How Verified First’s solution saves time, requires less paperwork, and simplifies the process

When: October 26th at 1:00 PM EDT

PCRecruiter is proud to include Verified First in our roster of PCRecruiter integrations and partners.