Recruiting at a mid-sized or large enterprise often means juggling hundreds of applications for a single job opening.
Without the right tools, important candidates can slip through the cracks, communication can lag, and hiring becomes painfully slow.
It’s no wonder nearly 98% of Fortune 500 companies use applicant tracking system (ATS) software to streamline recruitment, contributing to a global ATS market valued at USD 16.04 billion in 2024 and projected to reach USD 30.51 billion by 2032.
But how do applicant tracking systems work, exactly, and what do they do?
Let’s explore ATS software in simple terms, exploring how ATS systems work, their core features, and the benefits they bring to modern recruitment workflows.
What is an Applicant Tracking System (ATS)?
An Applicant Tracking System (ATS), such as Zappyhire, is essentially a software platform that manages and automates the hiring process from end to end. Think of it as a centralized hub where all candidate information lives and where recruiters handle every step of recruiting.
An ATS, especially a modern AI-powered ATS, collects incoming resumes and applications, stores candidate data in a searchable database, and helps HR teams filter and organize applicants. It also automates many tasks – posting job ads, screening resumes, scheduling interviews, and emailing candidates – that would be tedious if done manually.
Now that you know what it is, let’s understand how an applicant tracking system works in practice during a typical hiring process.
How does ATS software work?
An ATS follows a straightforward workflow to take a candidate from application to hire. If you’re exploring recruitment transformation, understanding how AI is changing both hiring and the broader future of HR is essential to stay ahead.
Let’s walk through a typical hiring process to understand how an ATS system works step by step.
Job posting & ideal profile
The process starts when a recruiter or hiring manager creates a job posting in the ATS.
Advanced ATS platforms powered by AI can even analyze past hiring data or high-performing employees to recommend enhancements to the ideal candidate profile, making the job description more accurate and effective from the start.
The ATS can then post the opening to multiple job boards and career sites with one click, leveraging its integrations. This means you only have to input the job details once, and the system broadcasts it to your company website, LinkedIn, Indeed, etc., saving lots of time.
Application collection & resume parsing
As applications roll in (often through an online application portal or email), the ATS collects all resumes and candidate info into a central database.
AI-powered resume parsers go beyond keyword detection as they can interpret context, infer skills, and understand role-specific language, even if resumes are unstructured or use creative formatting. This enables more accurate candidate profiling.
This parsing makes every applicant’s information standardized and easily searchable. Instead of juggling email attachments and paper resumes, recruiters see each applicant as a profile in the system.
Automated screening & candidate ranking
Another key aspect of how applicant tracking platform works is the automated screening layer that reduces manual filtering.
Once resumes are in the system, the ATS can automatically screen and filter candidates based on the job requirements. It compares each application against the ideal profile or preset criteria.
Ms. Sangeeta Singh, Director of Talent Acquisition at Shaadi dot com, emphasized in a webinar, how AI and ATS streamlines candidate shortlisting, “We implemented Zappyhire’s ATS… It significantly reduced our time to hire. People not meeting criteria are already flagged, and we get a pool of only qualified candidates.”
How is this done? For example, the ATS might scan for relevant keywords, years of experience, certifications, or answers to knockout questions. Candidates who meet more of the criteria are flagged as better matches.
Many modern ATS platforms also include automated video interviews, like ZappyVue, to further assess shortlisted candidates on soft skills, communication, and domain knowledge – all without needing a live interviewer at the initial stage.
Shortlisting & collaboration
With the initial screening done, the recruiter can review the shortlist of best-matched candidates in the ATS. All candidate data and documents (resumes, cover letters, portfolios) are right there for evaluation.
Recruiters and hiring managers can share notes and feedback directly in the system, rating candidates or leaving comments for the team. This collaborative step is part of how applicant tracking systems work to improve decision-making across hiring teams.
The ATS keeps track of each applicant’s stage in the hiring pipeline (e.g. application received, phone screen, interview, offer). This organized workflow makes it easy to manage who’s moving forward and who’s not.
It also builds a talent pool – a database of past applicants that you can search later when new roles open up, which is incredibly useful for future hiring needs.
Communication & interview scheduling
A good ATS doesn’t just track applicants – it also helps move them through the process seamlessly.
Recruiters can use the system to send emails or texts to candidates at scale – for example, to acknowledge applications, send screening questions, or schedule interviews.
Many ATS platforms integrate with calendar tools (like Outlook or Google Calendar) to auto-schedule interviews: you select time slots, and the system sends invitations or lets candidates pick a convenient slot.
The ATS can send automated reminders to both candidates and interviewers, reducing no-shows.
Throughout the process, candidates stay informed (they might even get access to a portal to check their application status). By automating communications and scheduling, the ATS ensures no candidate is left wondering and no meeting is missed.
Some AI-enabled ATS also recommend next best actions (e.g., who to interview next, which candidate may be a cultural fit) based on analysis of team feedback and previous outcomes.
To understand how applicant tracking software works from end to end, it’s essential to include post-offer workflows.
Hiring & onboarding
Once the team decides on a hire, the ATS can often facilitate the remaining steps. For example, it can trigger background checks or assessments through integrated services and generate an offer letter.
After the candidate accepts, some ATS platforms pass the data to onboarding systems (especially if the ATS is part of a larger HR suite).
Throughout this entire journey, the ATS logs every action and communication, creating an audit trail of the hiring decision.
What are the benefits of using an ATS?
To fully appreciate how applicant tracking systems work, it’s worth exploring the specific recruitment challenges they solve such as bias, speed, efficiency, and consistency.
Overwhelming volume & slow process
Manually sorting through hundreds of resumes is incredibly time-consuming and prone to error. An ATS tackles this by automatically screening resumes and highlighting top matches, drastically cutting down review time, and frees up your team to focus on engaging with the most qualified people.This demonstrates how applicant tracking systems work to eliminate manual inefficiencies
Disorganization & losing track of candidates
Without an ATS, recruiters often rely on email inboxes and spreadsheets to track applicants – a recipe for confusion. An ATS provides a centralized, structured pipeline for all candidates.
You can instantly see every candidate’s status (e.g., Screening, Interviewing, Offered) and pull up their full history with a click.
Poor communication with candidates
In traditional hiring, keeping every candidate updated is a challenge, and lack of communication frustrates applicants.
An ATS solves this by making candidate communication easy and often automatic. You can set up personalized form emails that go out at each stage (application received, interview scheduled, rejection notice, etc.), or even automate status updates.
As Jyothis KS, CEO of Zappyhire, a recruitment automation platform with a built-in ATS, puts it, “With conversational AI layers, we can improve candidate experience by even just giving the right status during the process.”
It’s another great example of how applicant tracking system works at scale.
Scaling and talent pipeline building
Traditional methods struggle to scale when you have many roles to fill or a surge of applicants.
An ATS, by contrast, scales effortlessly – it can handle thousands of applicants across numerous open positions simultaneously. As your hiring needs grow, the system supports the increased volume without chaos.
Jyothis KS also notes the broader industry shift – “Over the last 18+ months, I’ve seen huge acceptance of AI among CHROs. One of the first things they consider is whether it can scale while maintaining quality.”
Inconsistent screening & bias risks
Human-only screening can be inconsistent – each recruiter might evaluate resumes differently, and unconscious biases can creep in. One major benefit of ATS workflows is standardization.
You can enforce uniform screening criteria (keywords, knockout questions, scoring rubrics) for all applicants, leading to fairer comparisons making it one of the crucial benefits of an ATS.
Lack of insight into recruiting performance
Traditional hiring gives you very little data to improve upon – you might not know where bottlenecks are or which sources provide the best hires. ATS platforms address this by providing analytics and reports on every aspect of recruiting.
Applicant Tracking Systems have become indispensable in modern recruitment
Now that you understand how applicant tracking systems work across the recruitment funnel, from sourcing to onboarding, you can see why they’re essential for modern enterprises.
When finding and hiring the right talent is directly tied to business success, an Applicant Tracking System is essentially your recruitment team’s best friend – doing the heavy lifting behind the scenes so you can focus on people, not paperwork.
And when you know what the system can do, and configure it to suit your workflow, it becomes a powerful ally rather than just an IT tool.
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