When someone clicks “Submit” on a job application, a lot happens before a recruiter ever sees their name. For hiring teams, that in-between can feel like a black box: applications go in, a shortlist comes out, and it’s not always clear what the software did in the middle. This guide opens the box and walks through exactly how applicant tracking software works, step by step from the moment a role is approved to the day a new hire is onboarded.
Applicant tracking software is now standard equipment for hiring at scale: Jobscan detected an ATS at 97.8% of Fortune 500 companies. Understanding the mechanics helps you set it up well, avoid the common pitfalls, and know where human judgment still matters most.
What Applicant Tracking Software Does
In short, applicant tracking software (an ATS) is the system that runs your hiring pipeline in one place posting jobs, collecting and reading applications, scoring candidates, automating routine steps, and keeping a record of every decision. If you want the full definition and background, start with our companion guide on what an applicant tracking system is; this article focuses purely on the how. Many teams adopt one as part of a wider business automation and digital transformation effort.
How Applicant Tracking Software Works: The 9 Steps At A Glance
Here’s the full pipeline in order. We’ll unpack each step below:
1. A job requisition is created and approved.
2. The job is published across job boards and your careers site.
3. Applications arrive and resumes are parsed into structured data.
4. Candidates are scored and ranked against the role.
5. Automated workflows move candidates through stages.
6. Recruiters and hiring managers review and collaborate.
7. Interviews are scheduled and structured feedback is captured.
8. Offers are generated and sent.
9. Hire data is handed off to onboarding and your HRIS.
Step 1: A Job Requisition Is Created And Approved
Everything starts with a requisition: a hiring manager defines the role, requirements, salary band, and approval chain inside the system. Instead of an email thread, the ATS routes the request to whoever needs to sign off and records each approval. This is where the data trail begins and where multi-level approval logic matters for larger organizations.
Step 2: The Job Is Published Across Channels
Once approved, the opening is published. A good ATS posts to multiple destinations. LinkedIn, Indeed, ZipRecruiter, your careers page, and internal channels from a single action, so recruiters don’t re-key the same listing five times. For internal mobility, roles can post first to an employee intranet portal before they go external.
Step 3: Applications Arrive And Resumes Are Parsed
As candidates apply, the ATS captures each application and immediately parses the resume turning an unstructured document into structured data the system can search and compare. This happens in seconds, which is what prevents application backlogs from piling up overnight.
How resume parsing actually works
The parser first extracts the raw text from the file, stripping away formatting, images, and layout. It then uses natural language processing (NLP) to map that text into standard fields name, contact details, work history, education, skills, and dates. Behind the scenes, the system builds an index (much like the index at the back of a book) so recruiters can instantly pull every candidate who matches a given skill or search. This is also why resume formatting matters: tables, columns, and graphics can confuse the parser, so clean text gets read most reliably.
Step 4: Candidates Are Scored And Ranked
Once resumes are structured, the ATS compares each candidate against the job’s requirements and assigns a relevance score typically a percentage or rank based on matched skills, titles, certifications, and recency. A candidate matching 90% of the criteria surfaces near the top; a 40% match sits lower. Crucially, the software isn’t deciding who is “better”, it’s giving recruiters a set of dials to filter and prioritize a large pool quickly.
What about knockout questions?
Many application forms include knockout questions binary, must-have criteria such as “Are you legally authorized to work in the US?” or holding a required license. If a recruiter sets a rule, the ATS can automatically filter out applicants who don’t meet a hard requirement. Used well, this saves time; used carelessly, it can screen out good people. Knockout criteria should be genuinely job-related to stay aligned with U.S. EEOC guidance on fair, job-based screening.
Step 5: Automated Workflows Move Candidates Through Stages
This is the engine room. You define which pipeline movements happen automatically and which require a human to approve. Candidates who pass knockout criteria can advance on their own; status changes can trigger emails, interview requests, or assessment invitations without manual effort. In enterprise environments, these workflows are often built on tools like Microsoft Power Automate, and the same logic powers automated reminders and stage transitions. If you want to see how automation removes manual work across a business more broadly, Centric’s roundup of the best automation software for digital transformation is a useful primer.
Step 6: Recruiters And Hiring Managers Review And Collaborate
With the pool scored and sorted, recruiters open the dashboard, filter by score or status, and decide who to move forward. The whole hiring team works from the same candidate profiles adding notes, tags, and ratings so feedback lives with the candidate instead of scattered across inboxes. This shared visibility is the difference between a coordinated process and five people guessing what stage someone is in.
Step 7: Interviews Are Scheduled And Feedback Is Captured
The ATS coordinates interview scheduling across calendars and collects structured feedback through scorecards, so every interviewer evaluates candidates on the same job-related criteria. Some modern systems add quizzes or one-way video reviews earlier in the funnel. Increasingly, an AI assistant or chatbot handles routine candidate questions and scheduling nudges so recruiters can focus on conversations that matter.
Step 8: Offers Are Generated And Sent
When a candidate is selected, the ATS generates the offer letter from a template, routes it for approval, and sends it for electronic signature capturing the full decision trail along the way. For regulated employers, this is where compliant documentation (including adverse-action records for candidates who weren’t selected) is produced and stored.
Step 9: Hire Data Is Handed Off To Onboarding And Your Hris
Finally, when an offer is accepted, the candidate’s data flows into onboarding and your HR system of record (your HRIS) no re-keying, no lost information. The ATS owns the pre-hire journey; the HRIS takes over once the person becomes an employee. Getting this hand-off to work cleanly is largely an integration job, the kind handled by Microsoft Cloud Solutions and enterprise software / SharePoint consulting teams.
Where Automation Ends And Human Judgment Begins
The most important thing to understand about how applicant tracking software works is that it is not making your hiring decisions for you. Automation is excellent at the repetitive, rules-based parts parsing, scoring, sorting, scheduling, sending. Judgment stays with people at the moments that matter:
· The ATS ranks candidates; a recruiter decides who to interview.
· AI scores a resume; a human can see the reasoning and override it.
· Knockout questions enforce hard requirements; everything subjective stays with the hiring team.
· Well-designed systems flag uncertain candidates for human review rather than auto-rejecting them.
Setting those gates deliberately, what runs automatically vs. what needs a person is what separates an ATS that helps from one that quietly screens out good candidates.
Where Your Data Lives At Every Step
Each step above creates and stores sensitive candidate data, which raises a question most “how it works” guides ignore: where does that data actually live, and who governs it? If your ATS is a standalone tool, that data sits in another vendor’s cloud and another silo your security team has to audit. If it’s built natively on Microsoft SharePoint as Centric ATS is the data inherits your existing Microsoft 365 security, retention, and access policies at every step. Enterprise-wide controls like Centric Governance Central then manage retention and deletion requests centrally, and data and analytics tooling turns the pipeline’s audit trail into reporting you can actually use.
How Ai Changes Each Step In A Modern Ats (2026)
AI has moved from simple keyword matching to genuine assistance across the pipeline. It can draft and optimize job descriptions at Step 1–2, parse and rank candidates more accurately at Step 3–4, coordinate scheduling at Step 7, and flag compliance gaps before they become audit exposure. The key is transparency: the best systems show how each score was reached and keep a human in control. Centric’s Artificial Intelligence services build exactly this kind of accountable, agentic automation on Azure OpenAI. You can see connected HR workflows in practice in the Basamh employee portal case study and the Abu Dhabi Media digital workplace project.
Frequently Asked Questions
How does an ATS read a resume?
It extracts the raw text from your file, strips out formatting and images, then uses natural language processing to map the text into standard fields (name, experience, skills, education). It builds a searchable index so recruiters can instantly find candidates who match specific criteria. Clean, simple formatting parses most reliably.
How does an ATS rank or score candidates?
It compares each parsed resume against the job’s requirements and assigns a relevance score based on matched skills, titles, certifications, and recency. Higher matches surface near the top. The software prioritizes the pool; it doesn’t make the final call.
Does an applicant tracking system automatically reject applicants?
Only when a recruiter sets a hard rule, such as a knockout question for a required license or work authorization. For everything else, well-configured systems rank and flag candidates for human review rather than auto-rejecting them.
How long does the ATS process take?
Parsing and scoring happen in seconds after an application is submitted. The overall pipeline from posting to offer depends on your workflow, but automation removes the lag between application and data availability.
Where do humans make decisions in the ATS process?
At every meaningful gate: who to interview, whether to accept or override an AI score, how to evaluate interviews, and who gets an offer. The ATS automates the repetitive steps in between.
Can applicant tracking software run inside Microsoft 365?
Yes. Some platforms are built natively on Microsoft SharePoint, so the entire pipeline runs inside your existing Microsoft 365 tenant candidate data inherits your Azure AD security and governance at every step, with no separate login or new vendor to audit.
The Bottom Line
Applicant tracking software isn’t a mysterious black bo, it’s a connected, mostly-automated pipeline with clear human decision points. It parses and scores applications in seconds, automates the repetitive movements between stages, and keeps a record of every decision, while leaving the judgment calls to your team. For enterprises, the step that matters just as much as the workflow is where the data lives and how it stays governed at every stage.
If you want to see this pipeline running end to end inside the Microsoft stack you already use, Centric helps US teams modernize hiring with an AI-powered, SharePoint-native platform. Explore the Centric ATS pipeline to see each step in action or talk to our team to map it to how your organization actually hires.
