Bankruptcy Risks in Employment Services Signal a Shift to AI-Driven Workforce Platforms

The employment services sector is undergoing a seismic shift. Recent bankruptcies of legacy job boards like CareerBuilder + Monster and healthcare staffing platform Wanderly underscore the vulnerabilities of traditional models. Meanwhile, AI-driven platforms such as Lever and pymetrics are capitalizing on these disruptions, offering a compelling investment thesis for sector rotation. This article explores how technological disruption is reshaping the industry—and why investors should reallocate capital toward agile, data-centric alternatives.

The Decline of Legacy Job Boards: A Cautionary Tale

The June 2024 bankruptcy filing of CareerBuilder + Monster, a $50–$100 million combined entity, marked a turning point. Once dominant job boards, these platforms struggled to compete with modern rivals like Indeed, which now holds 87% of the applicant tracking system (ATS) market. The merged firm's reliance on outdated technology and failure to adapt to AI-driven recruitment tools—such as scam detection and candidate matching—left it exposed.

Similarly, Wanderly's December 2024 Chapter 11 filing highlighted sector-wide challenges. Its healthcare staffing business, built on blockchain and machine learning, still fell victim to post-pandemic demand volatility and a 24% industry contraction in 2023.

The Federal Trade Commission's tripling of job scam losses to $286 million by 2023 further illustrates the risks of legacy systems. These platforms lack the AI-powered fraud detection and real-time candidate verification that modern tools provide, leaving them obsolete in an era of hybrid work and remote hiring.

The Rise of AI-Driven Platforms: Efficiency Meets Adaptability

While traditional firms falter, AI-driven platforms are thriving. Take Lever, a San Francisco-based ATS provider acquired by Jobvite in 2022. Its focus on candidate experience (CX)—including real-time feedback tools and Net Promoter Score tracking—has helped it capture 0.22% of the ATS market, serving over 8,700 companies. A key differentiator is its integration of CRM tools, which reduce candidate drop-off rates by 300%, as seen in case studies like Hot Topic's 2025 implementation.

Meanwhile, pymetrics is pioneering AI-based pre-employment assessments. With 42 enterprise clients—including Unilever and Accenture—it uses neuroscience-driven algorithms to predict job fit, reducing bias and improving retention. Though its market share remains small (0.34%), its growth aligns with the $65 billion AI platform market, projected to hit $109 billion by 2030.

The Financial Case for Sector Rotation

The financials tell a stark story. ManpowerGroup, a legacy player, saw Q1 2025 revenue drop 7% YoY, with margins pressured by tax hikes and weak European demand. Its stock trades at a forward P/E of 12.68—below its 5-year average of 20—reflecting investor skepticism.

In contrast, Smartsheet, an AI-driven workflow automation firm, reported 17% revenue growth in Q2 2025, driven by enterprise adoption of predictive analytics tools. Its 19% annual recurring revenue (ARR) growth and $1.09 billion ARR total signal scalability. Similarly, ADP, leveraging AI for personalized HR solutions, saw its stock rise post-earnings on strong demand for its payroll and compliance tools.

Valuation metrics highlight the divide:
- Legacy firms: P/S ratios below 1 (e.g., ManpowerGroup's P/S of 0.7).
- AI platforms: P/S ratios of 5–7 (e.g., Smartsheet's P/S of 6.2), reflecting premium growth multiples.

Investment Thesis: Pivot to AI-Driven Innovation

The bankruptcy of CareerBuilder + Monster and Wanderly are not isolated events—they're symptoms of an industry in transition. Investors should:

1. Reduce exposure to legacy job boards: Traditional firms like Randstad and Monster face headwinds from declining margins and regulatory scrutiny.
2. Prioritize AI-driven platforms:
3. Lever (via Jobvite): Its 0.22% ATS market share and 2,300+ small-to-midsize clients suggest scalability.
4. pymetrics: Its 0.34% pre-employment assessment share and enterprise contracts with Fortune 500 firms signal untapped growth.
5. Smartsheet & ADP: Already profitable, these firms offer steady cash flows and innovation in HR tech.

Conclusion: The New Rules of Talent Acquisition

The employment services sector is bifurcating: AI-driven efficiency is displacing legacy inefficiency. Companies that fail to modernize risk obsolescence, while agile platforms are redefining hiring. For investors, this is a clear call to reallocate capital toward firms with data-centric recruitment tools, AI fraud detection, and enterprise scalability. The future of work is digital—and so is the future of investing.

Ben Levisohn's analysis suggests investors should treat traditional employment services as value traps and focus on AI platforms like Lever and pymetrics, where innovation meets profitability.