What Is an Applicant Tracking System (ATS)? Explained

An Applicant Tracking System (ATS) is recruitment software that helps employers manage, filter, and streamline the hiring process by automating job postings, candidate tracking, resume parsing, and communication.

Hiring today is a far cry from a pile of printed resumes on a manager's desk. With the flood of applications, the rise of remote talent, and the demand for fast, unbiased decisions, we needed a better way to manage it all. That’s where the Applicant Tracking System (ATS) comes in. It isn’t just a digital filing cabinet—it’s the backbone of modern hiring strategies, giving businesses of every size a smarter, faster, and more compliant way to build high-performing teams.

Key Takeaways

• An ATS automates the hiring process by handling everything from job posting to resume filtering, saving time for employers.

• ATS software uses keyword-matching to rank candidates based on how well their resumes match the job description.

• Resume parsing in an ATS extracts data like skills and experience, making it easier to compare candidates fairly.

• Employers can improve compliance with built-in features in ATS platforms that support equal opportunity and data privacy regulations.

• Job seekers can improve their chances by formatting their resumes clearly and using keywords from the job ad.

What Does an ATS Do?

An ATS handles more than just resumes—it orchestrates your entire recruitment workflow. Here’s how:

• Automated job postings Easily publish listings across job boards, career sites, and social platforms.

• Resume parsing Extracts structured data like skills, experience, and education for faster review.

• Candidate ranking Matches keywords from job descriptions to resumes and scores accordingly.

• Stage tracking Monitors each applicant’s journey, from application to offer.

• Team collaboration Centralizes notes, feedback, and decisions in one shared workspace.

• Compliance tools Ensures hiring follows labor laws and diversity benchmarks like EEOC and GDPR.

These features help businesses stay on the right side of regulations while fostering a more inclusive hiring environment.

How Does an Applicant Tracking System Work?

Step 1: Job Posting Distribution

The first step begins with reach. An ATS lets you post to dozens of job boards, LinkedIn, your website, and even niche industry sites—automatically. You can also customise the listing based on the platform to improve response quality.

Step 2: Resume Parsing and Screening

Once the applications start rolling in, the ATS parses each resume using natural language processing (NLP) to extract structured data. Instead of manually reading hundreds of CVs, recruiters see a streamlined database of candidates filtered by keywords, skills, location, and experience.

Step 3: Candidate Ranking and Shortlisting

The system compares candidate data to the job description and assigns fit scores. Top candidates are highlighted, saving time and reducing the chance of overlooking quality applicants buried under generic resumes.

Step 4: Interview Scheduling and Communication

Built-in scheduling tools sync with team calendars and let candidates pick interview slots, reducing back-and-forth. Automated email templates help maintain communication and keep candidates engaged.

Step 5: Reporting and Analytics

The ATS offers visual dashboards that provide insight into your recruiting funnel. From time-to-hire to source effectiveness, these metrics help refine your process and justify hiring budgets.

Key Features of Modern ATS Platforms

• Resume parsing – Extracts and organizes candidate data automatically.

• Job distribution – Publishes openings across job boards and platforms.

• Workflow customization – Tailors hiring steps to fit your process.

• Team collaboration – Centralizes notes and candidate feedback.

• Scheduling tools – Syncs interviews with calendars for ease.

• AI scoring – Ranks applicants based on relevance.

• DEI support – Promotes inclusive and fair hiring practices.

• Analytics dashboard – Tracks metrics like time-to-hire.

• Mobile-friendly access – Lets recruiters manage tasks on the go.

• System integrations – Connects with HRIS, payroll, and background checks.

Each feature is designed to improve efficiency, eliminate guesswork, and help hiring teams focus on what matters most—finding the right talent fast.

Benefits of Using an ATS for Employers

Used wisely, an ATS becomes an indispensable partner in the hiring process—streamlining workflows, improving collaboration, and giving your team a competitive edge.

Saves Time Through Automation

Manual tasks like job posting and resume sorting can drain hours from a recruiter's day. An ATS automates these steps, freeing up time for more strategic decisions. This speed leads to faster hiring cycles and better overall efficiency.

Reduces Hiring Bias With Structured Data

When every candidate is evaluated using the same metrics, the hiring process becomes more objective. An ATS standardizes assessments to reduce unconscious bias. It supports fairer hiring by relying on data, not instinct.

Enhances Candidate Experience

Communication gaps often leave candidates feeling ghosted. With automated updates and timely responses, ATS platforms keep applicants informed throughout. That consistency builds a better impression of your brand.

Improves Collaboration Across Teams

Hiring isn’t a solo job. With shared access, scorecards, and notes, teams can evaluate applicants together in one place. Everyone stays aligned, even across departments or time zones.

Enables Data-Driven Hiring Decisions

Gut feelings have their place—but data tells the real story. ATS dashboards surface insights like source effectiveness and time-to-fill. You get clearer answers and better results.

Ensures Legal Compliance

From EEOC to GDPR, compliance is non-negotiable. Modern ATS platforms include built-in safeguards to help you stay legally sound. It’s peace of mind in every hire.

Scales Easily for Growing Teams

Whether you're onboarding one new role or opening offices in five cities, an ATS adapts. It supports high-volume hiring and complex workflows with ease. Your growth won’t outpace your process.

Challenges and Limitations of ATS Software

Even the best systems have their drawbacks—understanding these upfront can help you avoid common pitfalls and get the most value from your ATS investment.

Missed Candidates With Unconventional Resumes

ATS algorithms sometimes struggle with resumes that don’t follow standard formatting. This can cause qualified but non-traditional candidates to slip through the cracks.

Solution: Regularly review your parsing logic and include training examples with diverse resume formats to broaden the system’s recognition capabilities.

Requires Continuous Configuration

Unlike static tools, ATS platforms evolve with hiring demands and tech upgrades. Without routine optimization, you risk inefficiencies and poor user adoption.

Solution: Assign internal ownership or work with an external consultant to manage updates, customizations, and team training.

Unintentional Bias From Filters

Even the smartest ATS can introduce bias if filters are too rigid or based on outdated criteria. This can affect diversity and reduce hiring fairness.

Solution: Use built-in DEI features, implement inclusive language prompts, and audit candidate scoring algorithms regularly.

High Costs and Complexity for Small Businesses

Some ATS platforms come with steep learning curves and premium pricing models that don’t fit lean teams. This creates adoption friction for startups and small HR departments.

Solution: Start with lightweight, scalable platforms that grow with your team, offering intuitive dashboards and cost-effective plans.

Who Should Use an ATS?

Small Businesses and Startups

Lean teams often lack time and HR resources, making recruitment feel overwhelming. An ATS helps automate manual tasks and reduce hiring chaos. Many entry-level systems are affordable and built to scale as the business grows.

Midsize Companies

As hiring volumes increase, managing multiple roles, departments, and locations becomes challenging. An ATS brings structure, standardizes workflows, and improves internal coordination. This allows mid-tier teams to hire smarter without adding overhead.

Enterprise Organizations

Large companies require deep integration with HRIS systems and compliance frameworks. An ATS at this scale provides robust analytics, automation, and global reach. It supports high-volume, complex hiring without sacrificing control.

Staffing Agencies and Recruiters

Recruitment firms handle thousands of applications across industries. An ATS helps manage speed, volume, and client-specific workflows. It’s essential infrastructure that drives performance and profitability.

How Job Seekers Can Optimize Their Resume for ATS

Use ATS-Friendly Formatting

Stick to clean, minimal designs without complex structures. Columns, tables, headers, or graphic elements can disrupt how resumes are parsed. Simple text formatting ensures the system can read every detail accurately.

Tailor Keywords to the Job Description

Align your resume with the exact language used in the job ad. Repeating specific terms like “project management software” helps match keyword filters. This tactic boosts your chances of being shortlisted.

Stick to Standard Headings

Avoid creative section names and stick with common terms like “Experience,” “Education,” and “Skills.” ATS software is trained to recognise standard headers. Unusual labels may cause your content to be skipped.

Save as .docx or .pdf (if allowed)

.docx is the safest and most compatible file format across most ATS platforms. Some systems don’t handle PDFs well or strip them of key data. Always follow the employer’s preferred format for submission.

How to Choose the Right ATS for Your Business

Define Your Hiring Goals and Volume

Begin by identifying how many people you plan to hire and for which roles. The needs of a small business hiring occasionally are very different from an enterprise recruiting across departments. Your hiring strategy should guide the complexity and features required from your ATS.

Prioritize Essential Features

Make a list of features that are absolutely necessary versus those that are nice to have. Depending on your team size and workflow, you might need automation, AI matching, or custom approval flows. Avoid paying for extras you won’t actually use.

Consider User Experience

Your team needs to adopt the software for it to be successful. A clunky interface leads to frustration, low usage, and missed opportunities. Choose a platform that’s intuitive, fast, and enjoyable to use.

Evaluate Pricing and Scalability

Different vendors use different pricing models—some charge per user, others per job or module. Consider what you’re getting for your budget and how costs will grow with your company. Look for scalable solutions that won’t require a total overhaul as you expand.

The Future of Applicant Tracking Systems

AI and Machine Learning

Expect more predictive analytics, smart candidate matching, and even automated sourcing bots. These features reduce manual screening and help recruiters prioritize quality leads. AI is fundamentally transforming how we identify and engage top talent.

DEI and Ethical Hiring

Bias-aware filters, demographic analysis, and inclusive language checkers will become standard as DEI expectations rise. Ethical algorithms will help hiring teams recognize unconscious bias and build more diverse teams. ATS platforms will continue evolving to support transparency and fairness.

Remote and Global Hiring

With more companies hiring internationally, ATS platforms must support multilingual postings, timezone-sensitive scheduling, and cross-border compliance. Remote-friendly tools are essential for sourcing and interviewing candidates globally. These capabilities allow companies to expand their reach without compromising candidate experience.

Is an ATS Worth It in 2025?

Absolutely. The hiring landscape has become too complex to manage manually. Whether you're a founder juggling multiple hats or an HR director overseeing dozens of roles, the right ATS turns chaos into clarity. It's an investment in efficiency, fairness, and ultimately, better teams.

At Stardex, we know firsthand how critical it is to find the right people to help elevate a brand. As we continue to grow and innovate, our ATS ensures that we attract top-tier talent who match our passion and vision. If you're ready to take your hiring to the next level, we’re here to help you find the perfect fit—because great teams don't happen by accident.