Can Big Data cut through your growing resume pile?

August 2, 2012: 5:00 AM ET

Several startups are looking to use algorithmically powered job search systems to solve job search woes for candidates and recruiters alike. But can data replace the human touch?

By Ethan Rouen

FORTUNE -- Everything seemed to be going right for startup founder Steve Goodman, except for one major detail.

Even during a recession where the unemployment rate flirted with double digits, he could not find computer programmers that were both qualified and would fit into his tech startup's culture.

"Sourcing and recruiting the best people is finding the needle in the haystack," he says.

So Goodman decided to start Bright, one of several new companies that rely on powerful computing and the billions of pieces of job data available on the Internet to create algorithms that they believe make the job hunt more efficient, inexpensive, and successful for both the jobseeker and the recruiter.

The Internet initially seemed to make job hunting easier. With a few clicks, someone looking for work could apply for a dozen positions, and employers' job postings could reach thousands of eyes. Some large companies saw the number of resumes they received increase five-fold.

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But this democratization of job searching soon proved false. Those looking for openings often grow discouraged when they send out several resumes and receive no feedback. Recruiters are inundated with resumes and are forced to weed out candidates based on superficial and unreliable information such as what college someone graduated from.

Almost two years ago, Goodman started Bright and gathered millions of resumes and job descriptions to create a system that develops a Bright Score, which tells recruiters what kind of fit a person would be for a specific job based on algorithms that are constantly learning as they devour more data, he says.

"A recruiter now only has to look at 50 resumes because we cut it down for them," he says. "It also tells job seekers whether they are a good fit, and if not, why."

Peter Cappelli, the George W. Taylor Professor of Management at the Wharton School of the University of Pennsylvania, is skeptical of this new technology, though. "The technology is not the problem," he says. "The problem is companies that don't know what they want."

Trying to quantify intangibles that not even the hiring manager can put into words is impossible, Cappelli says, and even if it were, replacing human recruiters with software is shortsighted. The financial investment in recruiters can be hard to justify in tight economic times, but humans, not computers, are best suited to recruit and judge top talent, he says.

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Darren Bounds, the founder of another new job site, Path.to, says that his business and others like it are not trying to replace human recruiters. They are just trying to make their jobs easier and more efficient.

Billing Path.to as "eHarmony for hiring," Bounds says, "We don't want to follow the relationship through to marriage. We really want to introduce you to someone we feel you have a strong bond with."

Path.to also uses a score to weed out candidates for recruiters. It focuses heavily on company culture in an attempt to match up candidates that will be a good fit beyond their qualifications.

The idea is that the cost and time saved for companies will allow recruiters to spend more time with the candidates that have the most potential. Although Path.to works mostly with small- to mid-sized companies, Netflix (NFLX) and Fox News are also among its current customers.

One of the problems, these new job search companies argue, is that during the initial perfunctory weeding out of candidates, recruiters are weighing information improperly.

In the same way Oakland A's manager Billy Bean reexamined which statistics make a good ball team, Gild, a third major player in the race for improved job search, is exploring what makes a successful hire.

Instead of placing the emphasis on where a candidate went to school, or what company he worked for in the past, Gild places emphasis on such information as coding experience and involvement in the open source community when hiring programmers.

"The system is so broken that people can't even see what's getting in the way," says Gild CEO Sheeroy Desai. "We have found great, experienced coders, and most of them had not gone to a top computer science program."

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Gild is working with several large technology companies, including Facebook (FB), Red Hat (RHT), and Box, that have said they see a marked improvement in their recruiting by using the site.

Desai says that recruiters are still a vital part of the process. Still, ask a talented programmer her thoughts about recruiters and be prepared for some foul language.

Recruiters cast their nets too wide and wind up reaching out to people who have no interest in the jobs they are looking to fill, Desai says. Much like other companies in the space, Gild is trying to find the best way to winnow the long list of potential candidates and provide a concise group that would be the best fit for each job.

"The current system is using a tank when you really need a sniper," he says. "We are providing that sniper solution…. Our system with an amazing recruiter is going to give you great dividends."

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