How Microsoft’s LinkedIn Deal Could Change HR

The HR tech world just got a big new player. Really big.

Once Microsoft closes its $26 billion acquisition of LinkedIn late this year, the software giant will own a service that has become increasingly important to HR departments around the world. With Microsoft’s resources behind it, LinkedIn could become a massive force not only in recruiting, but in the larger world of HR, experts say.

LinkedIn CEO Jeff Weiner said as much in an email to his staff on Monday announcing the deal.

Among the business opportunities for Microsoft, he noted, is “expanding beyond recruiting and learning and development to create value for any part of an organization involved with hiring, managing, motivating or leading employees. This human capital area is a massive business opportunity and an entirely new one for Microsoft.”

That doesn’t necessarily mean a Microsoft-backed LinkedIn will be moving into payroll, benefits administration and other bread-and-butter HR applications, though.  Many experts see the company integrating LinkedIn data into Microsoft Office tools, but not moving wholesale into new lines of business.

Under Microsoft, “LinkedIn could become a network for learning and collaboration,” providing HR departments a tool for connecting employees, says George LaRocque, a well-known HR technology consultant. “I think that’s the direction.”

LinkedIn already is a force to be reckoned with. Though far smaller than social-media titans like Facebook, it virtually owns the world of professional connections, with over 100 million active users and four times as many profiles. It’s increasingly necessary for an active business person to have a presence on the site, which has made it a critical resource in many businesses — particularly sales and HR.

The company posted $2.9 billion in revenue last year. About $1.9 billion of that was in its “talent solutions” business, the company says. Most of that came from recruitment services, which include premium search functions, targeted job postings, a referral tool for current employees and company branding. Through its April 2015 acquisition of the online tutorial site Lynda.com, LinkedIn also has a solid presence in training.

Though revenue was up 41 percent from 2014, in other ways LinkedIn has lost momentum, which is what helped make it an acquisition target. After disappointing earnings, the share price had dropped by 50 percent — from over $260 in February 2015.

Many experts say the marriage with Microsoft makes sense because the two companies don’t overlap in services, yet cater to the same audience — business professionals. That opens up the potential for connections between Microsoft productivity tools and LinkedIn’s vast people database.  The immediate opportunities may be in customer relationship management — an area where Microsoft already has a presence with its Microsoft Dynamics software.

The reality, though, is that no one knows what Microsoft plans to do with LinkedIn — likely including Microsoft itself, notes LaRocque, principal analyst and founder of New Providence, N.J.-based #hrwins.

“I think we’re all going to be reading tea leaves for a little bit on this one,” he says. “The opportunities are endless.”

But most experts say Microsoft is most likely to build on its strengths as a provider of tools that business professionals use every day. LaRocque sees the company connecting LinkedIn’s Lynda tutorial videos to Excel, for example, so that users can get immediate help.

He and others don’t see this as a beginning of a move to take over HR technology — or even just recruiting.

“I have a hard time thinking Microsoft is excited about getting into talent acquisition,” though LinkedIn may well stay in that business, LaRocque says. On the other hand, LinkedIn’s networking and communication functions could become another “pillar” of the company’s Office 365 platform. “They’re impacting HR technology in a huge way,” he says. “But they’re not the classic HR player.”

Kyle Lagunas of the IT market research firm International Data Corp. has a similar view. He sees three key opportunities for Microsoft in the acquisition: LinkedIn’s in endorsements, recommendations and posts.

If properly leveraged by Microsoft, LinkedIn endorsements — in which users rate each other for various skills — could be used internally “to map influence across various subject matters, skills and capabilities,” he notes in an email.

Recommendations shared among LinkedIn users could provide a powerful tool for recruiters, he says. And companies could track posts on LinkedIn’s Pulse service to help workers develop — and demonstrate — expertise.

Another HR tech expert agrees that the Microsoft-LinkedIn deal will lead to new tools for HR departments, but not fundamentally change the landscape.

Kathryn Minshew, CEO of a career site called The Muse, notes that the two companies both target established white-collar professionals. She doesn’t see that changing with Microsoft’s purchase of LinkedIn — leaving plenty of room for businesses like hers.

“I think this acquisition is a great thing  for the industry — it validates the core role that HR has,” Minshew says. ” Companies are starting to realize that products and platforms in the human-capital space have a much broader impact.”

Muse, with 50 million site visitors annually, serves a diverse population of workers with an average age of 29, and 60 percent female. Those people, she says, may keep their resume on LinkedIn, but The Muse “is where their heart is.”

“I don’t know that the human-capital space is ever meant to have a single winner-take-all,” Minshew says. “There’s a lot of room for those who want to take a different approach.”