AI had a huge impact on recruitment in 2024, and it’ll likely continue to disrupt hiring in big ways this year.
The staffing industry, which supplies temporary workers to employers, is expected to feel this acutely, a new report from research and advisory firm Staffing Industry Analysts (SIA) hypothesizes. Advancements in the technology could lead to new use cases—and even the emergence—of AI agents in recruitment, but they could potentially create an increasingly tricky legal landscape as well.
While SIA’s research is tailored to temporary staffing firms, employers and their in-house recruiters may find it relevant to their own day-to-day work, as AI continues to impact the recruitment industry broadly. Read more of the firm’s predictions below.
New use cases. One trend highlighted by SIA’s research is the emergence of new AI use cases, including automated candidate sourcing, candidate chatbots, and improved match-making capabilities.
Another significant use case that may emerge this year is agentic AI: autonomous AI tools that can work without the need for constant human supervision. These tools are already permeating the recruitment industry. In December, Salesforce announced HR services and temporary staffing giant Adecco would use its “Agentforce” product to scale its workforce of recruiters, who field more than 300 million résumés annually.
Disruption acceleration. That said, agentic AI also stands to accelerate disruption of the labor market, including the jobs and skills that will require a human touch, the report noted.
“For a long time, people have been talking about how AI will disrupt the labor force. There’ll be jobs won and jobs lost. I think agentic AI actually means that that will happen a little bit more quickly than perhaps people thought,” John Nurthen, executive director of global research at SIA and author of the report, told HR Brew. Recruiters may even see AI agents take over parts of the search process, including identifying top candidates and conducting outreach.
And the emergence of virtual recruiters may mean less demand for staffing firms—a phenomenon also impacting in-house recruiters, who already face dwindling demand. But, given that AI will likely create more jobs than it replaces, staffing firms also stand to benefit by reskilling their own temporary workers, thereby meeting a demand that employers might overlook.
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“Anything that disrupts the market creates confusion, that’s generally good for agencies. It means they can really help their clients understand what’s happening, help perhaps re-skill temporaries,” Nurthen said, noting that some large agencies already have reskilling programs for their temps.
Regulations mess. Staffing agencies should also brace for a changing AI regulation landscape, both in the US and abroad.
Many countries and regions have implemented, or are in the process of creating, AI regulations. The EU AI Act, approved in May 2024, will partly go into effect on Feb. 2. The legislation identified AI systems used for recruitment, such as technology that analyzes applications or other candidate information, or is used to make decisions about candidates, as “high risk” and subject to compliance obligations. Failure to meet these requirements can lead to significant penalties.
“The EU AI act is very significant for recruitment, because the European Union decided that that was a high risk segment, which meant that they would be looking at it very closely, and any companies that were unethical in their use of AI, they would get particularly high fines,” Nurthen said.
The US lacks comprehensive legislation at the federal level, so regulation has been left to the states. That’s unlikely to change, as President Donald Trump has already signed several executive orders revoking prior attempts at AI regulation. As such, employers will have to look to state regulations, which are only expected to become increasingly polarized, exacerbating an already fragmented legal landscape.
“You can imagine that there will be two things going on. There will be some states…cutting back, pulling back legislation, or even any proposed [AI] legislation. And then in other sort of Democrat-leaning states, perhaps, they’ll go the other way,” Nurthen said.
Firms that operate across multiple states or countries can expect a compliance headache.
“If you’re just operating one state in the US, it's probably nice and easy. If you’re a national company, then no doubt it’s a challenge. If you’re an international company, then it’s even worse,” Nurthen said.