How to Create an Applicant Tracking System and Improve Your Recruitment Process

Most businesses can’t decide when getting an applicant tracking system is unavoidable. But in fact, if any of these ring true, the time is ripe:

In this article, we’ll share our experience of building applicant tracking software and give general guidance on the topic.

What is an ATS?

An applicant tracking system (ATS) is software that automates recruiting and staffing operations and provides a core repository for candidate data. An ATS optimizes every stage in the hiring process and reduces the time-to-fill.

How does an applicant tracking system work?

Applicant tracking software helps businesses to handle the recruitment process electronically. It streamlines the entire staffing process via a defined workflow, which, in essence, follows a familiar algorithm:

An ATS collects and stores resumes in a database for hiring professionals to access and manage. The applicant data are pulled from the internal (company website) or external (job boards) sources. Newer applicant tracking systems are SaaS platforms with omnichannel talent acquisition capabilities.

Next, it simplifies the recruiting process by automation and intelligent vetting and screening for the best fits.

Finally, it tracks candidates’ activity and automates the workflow of the entire recruiting process.

Why ATS?

Top employers have to manage tons of resumes on a regular basis. But even SMEs find it hard digging through the current surge of applications to secure the best talent.

In essence, an ATS helps:

• limit the applicant pool
• save the time and money
• comply with the Internet Applicant Rule and OFCCP

All in all, an applicant tracking system excels in the tasks recruiters love to hate:

1. Sourcing the right candidates. ATSs distribute job openings in multiple locations; generate detailed job listings for the best fit; provide a list of ‘knockout’ questions.
2. Mimicking the human thought process. The system employs specifically designed AI to parse resumes.
3. Storing resumes for review. The paperless workflow creates space and efficiency.
4. Scanning and sorting applications based on qualifications. Parsing algorithms are designed to embrace the unique style of resumes and elicit the relevant information.
5. Crawling resumes for specific keywords. Job titles and skill summaries are scanned for specific keywords from a particular field.
6. Tracking and selecting candidates for interviews. ATSs track short-listed candidates throughout the interview stages. Database stores all candidates’ data in case of a new job opportunity.

That’s why businesses of all sizes reap the benefits of buying or creating an applicant tracking system.

Applicant tracking system benefits

According to the report, 94% of recruiters using ATS have seen improvement. Here are some benefits that come with building an applicant tracking system.

Improved time-to-hire

An ATS optimizes workflows, automates repetitive tasks, and eliminates paperwork, slashing hiring timelines. With 75-88% of resumes unqualified for most roles, smart screening tools ensure recruiters focus only on top candidates. This is critical when top talent stays available for just 10 days on average.

Reduced cost-per-hire

An ATS filters out 75% of unqualified resumes, allowing recruiters to focus on high-value tasks. At $100−150 per user monthly, an ATS is a fraction of the cost of a recruiter’s salary ($2,000−3,000/month). The result? A 5% cost increase for a 200% boost in efficiency.

Streamlined recruiting process

An ATS eliminates spreadsheets, reduces errors, and ensures no candidate slips through the cracks. With Kanban-style dashboards, recruiters can easily track candidates, send updates, and make data-driven decisions. This is especially vital in a competitive market where 80% of recruiters report improved hiring quality with an ATS.

Enhanced compliance

An ATS ensures fair hiring practices by storing applicant data and documenting hiring decisions. This is crucial for compliance with GDPR and other regulations, reducing legal risks and protecting your company from potential lawsuits.

Data-driven decisions

Manual data handling often leads to unreliable metrics. An ATS provides actionable analytics, helping you refine your recruitment strategy and avoid costly bad hires. With 46% of new hires failing within 18 months, data-driven decisions are more important than ever.

If your company hasn’t seen these benefits yet, maybe you are using the wrong ATS? Or maybe it lack the AI capability?

Five ways AI can transform your applicant tracking system

Automated resume screening

AI-powered resume parsing and candidate matching eliminate the tedious manual review process. By leveraging natural language processing (NLP), AI extracts skills, experience, and qualifications, ranking candidates based on job requirements. For example, an AI-driven ATS can sift through 500 resumes and surface the top 20 candidates for a Data Scientist role, saving recruiters hours of work.

Bias reduction

Unconscious bias remains a critical issue in hiring. AI can detect and mitigate bias by analyzing job descriptions, anonymizing candidate data, and ensuring diverse talent pools are considered. For instance, AI flags gendered language in job postings and suggests neutral alternatives, promoting fairness and inclusivity.

Enhanced candidate engagement

Poor communication often leads to candidate drop-off. AI chatbots and personalized messaging keep candidates informed and engaged throughout the hiring process. A chatbot can instantly acknowledge applications, provide status updates, and even schedule interviews, creating a seamless and positive candidate experience.

Streamlined interview scheduling

Coordinating interviews is a time-consuming task. AI automates scheduling by syncing calendars, suggesting optimal times, and sending invites to all parties. This eliminates the back-and-forth emails and ensures a smoother process for both recruiters and candidates.

Predictive hiring insights

AI’s predictive analytics capabilities help identify candidates most likely to succeed in a role. By analyzing historical data, such as past hires and performance reviews, AI can forecast a candidate’s potential performance and retention. For example, it might predict a 90% chance of success for a candidate based on their alignment with top-performing employees.

Should I buy or build an applicant tracking system?

It’s tempting to avoid the unknowns of building your own applicant tracking system by getting an off-the-shelf solution. Next, you wonder, ‘Why is this button here, anyway?’ According to the recent report, 75% of companies have an ATS in place today, 94% of those agree on its positive impact on the hiring process.

Despite the variety of solutions on the market, the demand for custom ATS options remains stable. So before I tell you how to build an applicant tracking system, let’s weigh the pros and cons of both sides.

Best applicant tracking systems in 2025

For those looking at how to create an applicant tracking system, it’s good to explore the existing free and paid solutions.

The systems range from free to multiple-thousand-dollar-per-month depending on the software pricing model and the number of users. Some ATS tools can automate the most time-consuming tasks for free. For more advanced features (video interviewing, calendar integration, automated scheduling), prices start from around $60 per month and go up based on a feature set or the number of open positions.

Free and open-source

With these tools, you get free plans for basic functionality (job posting, candidate tracking) or free trials for a wider range of features.

Open-source applicant tracking software has its source code provided to the user so that the product can be developed manually. It doesn’t have the plug-and-play attractiveness of commercial software. Nor can you build an applicant tracking system of your dream with it. But if there are skilled developers available, the code may be altered to better suit your needs.

Paid and proprietary tools

All of the above tools have more attractive paid packages. Some of the systems don’t open their code for modification. Let’s look at the top paid tools on the market.

Essential feature list for your applicant tracking system

Your business complexity will determine the software functionality. Oftentimes SaaS subscription entails paying for the features you will never use. Therefore, you may start creating an applicant tracking system with a strict feature list prioritization.

Below is a list of the most essential aspects.

Integrations

Sometimes you can’t build your own applicant tracking system without 3rd-party integrations. What external sources do you pull data from, or share content with, or use as tools? What reputable sites do you use for background checks? What workflow management tools do your employees work with? Are you planning to use messengers or e-learning apps from the App Store or Google Play? What social media platforms do you market on? While building an applicant tracking system, consider the following integrations:

• Social sharing
• Job boards
• Training programs
• Careers pages
• CRM integration

Analytics

Measuring your recruitment effort is vital to success. All the steps of your hiring funnel have to be visible. You can plan better by knowing the cost and time per hire, time to fill a position, the number of qualified prospects for a position, and the number of interviews per hire.

But tracking isn’t all. Applicant tracking software should provide you with business insights and optimal solutions. Being able to customize the requirements to your business needs is a bonus. Custom reports and visualization is another.

Here are some ideas for analytics:

• Time to fill
• Time to hire
• Candidate sorting
• Resume storage
• Chrome extensions

Candidate experience

Job hunting is stressful enough as it is. You don’t want to deter the best talent by a lengthy and cumbersome application process. The least you can do is reduce the steps and keep it under 10 minutes.

Another thing candidates will appreciate is improved communication in the form of timely feedback. Better still, allow the applicants to track their status and get automated updates whenever it changes.

Some ATS’s let applicants self-schedule their interviews by showing available time slots in the calendar. All in all, any features adding flexibility and convenience are welcome:

• Intuitive interface
• Messaging
• Personal note-taking
• Online applications
• Interview scheduling
• Status updates

Automation & customization

The degree of automation and customization depends on business needs. Sometimes toggling between automated and manual modes is required to meet hiring goals. One of the pitfalls of modern ATS’s is missing out on perfectly reliable candidates and people with unique experience and skills only because their resumes don’t fit in with the set requirements. Some features in this category are:

• Customizable job descriptions
• Automated correspondence
• Continuous candidate tracking
• Customizable reports
• Adjustable search engine

Performance

If you’re casting worldwide nets to catch the best talent, you need a working site 24/7. Discuss the amount of customer support with your vendor well in advance to avoid surprises. When is the best time for fixes and upgrades?

Another important decision is mobile apps. Do you want your applicants to find and contact you on mobile? Will your employers work remotely and interact on-the-go? That makes two apps with unique interfaces and functionality. Consider these:

• 24/7 support
• Installation & setup
• Mobile recruiting
• Mobile apply

Security

Protecting user data and sufficient system uptime is especially important if you use 3-rd party APIs. On-premise software does not depend on outer connectivity to the same extent. So if the internet is flaky, it’s a better option. Still, some amount of customer support should be agreed on. Make sure your SLA contains clear security guarantees.

• Data encryption & protection
• User access levels сontrol
• Electronic signatures
• Identity verification

How to build an applicant tracking system: our experience

Challenges

Our client, a B2B and B2C temporary worker market facilitator, was generally unprepared for the active growth, with legacy software and a number of typical challenges:

1. Recruiting agencies have standalone systems with isolated databases. They need integration to change the dynamics and increase value.
2. The existing databases are incomplete, outdated, and devoid of validation.
3. Data aggregation is hindered by slow outer systems’ performance.
4. Every database requires a unique search algorithm incompatible with another.
5. Traceability and visibility of changes are crucial with the multiple sources of data input.

Lean plan

• Data import optimization
• Data mapping
• Power search algorithm
• UX enhancements
• Performance improvements

Achievements

Data import

We’ve developed a solution to aggregate the data from disparate sources, support its uniqueness, and synchronize the regular 2-way updates. Due to the slow data transfer from the external sources, we created additional background services for intermediary storage. Thus we were able to toggle between the real system and the mirror in the development process.

Data mapping

The database had to be cleaned, updated, and indexed for further search. We created templates for data clusterization.

Power search algorithm

The core value of the system lies in a smart semantic search algorithm. Users match orders (missions) and contacts based on set-up parameters or manually pick the matching criteria from the list. As a result, the power search gives the most relevant results from massive volumes of data, without overstressing the system’s performance or overlooking valuable assets.

UX enhancements

UX asked for serious improvements. We had to find a simple and efficient way to present the abundance of information in its dynamics. A kanban style was used to visualize the stages of contact movement through the hiring funnel. Dashboards and icons helped to render real-time change indication for prompt decisions. Multichannel data manipulation (mobile app, extranet, backend administration) required traceability throughout the entire process.

Performance improvements

System efficiency consists of adjustments and smart solutions on multiple levels:

• The power search optimization presupposes working out the right matching criteria and their ratios.
• Data aggregation and synchronization require optimal steps. Independent load testing helped enhance the system’s performance.
• Introducing microservices lets automatically increase the capability by adding nodes on demand.

Potential

The system has the potential to develop in various directions, based on business specifics. Here are just a couple of functions to look for:

• Analytics. A large pool of historic data is a treasure trove for business intelligence solutions. So far the reporting has been done manually. But automation is the next step.
• Sourcing. Applicant sourcing is a task every recruiter loves to hate. Our system’s API allows 3rd-party integration with job boards, company websites, and other external tools.

Final thoughts

Applicant tracking systems have set a higher standard in hiring. They’ve come a long way from background checks and screening to delivering the best talent fast and improving the candidate experience. Now, enhanced by AI, they can take hiring to the next level. It’s no longer a question of whether or not to have one, but how to find the best fit. There is no universal way to optimize recruitment efforts. Do you want to tap into a larger talent pool or outsource yours, take advantage of smart tools or centralize your processes, stick with tradition or breathe in innovation? There is no shortage of choice. Choose wisely.