Agency recruitment is not dying. It’s growing!

This has become a cause of great hilarity for me, to be honest.

So many buffoons predicting the demise of recruiters.

Tech-legend wannabees, internal recruiters with a barrow to push, disaffected clients, and a host of other misinformed or biased loudmouths, all spruiking the end of agency recruitment.

Some of it is so simplistic to be laugh-out-loud ridiculous. Like, the HR guy I met at a conference recently, who looked at me with pity in his eyes, as he opined, “You are a recruiter? Oh dear, LinkedIn is going to wipe you guys out.” Really? When is that going to happen then? And why has it not happened yet, seeing as LinkedIn is 12 years old, and becoming less effective as a recruiting tool by the day?

Some of this garbage comes from jumped-up self-proclaimed tech wiz-kids, convinced that have invented Facebook for recruiting, every one of them talking about ‘disruption’ and ‘disintermediation’ and ‘old school’ and ‘big data’, as if these words in themselves are actually going to change anything.

Most of it is just total nonsense!

Technology will change our industry, no doubt. Many recruiters will fail to cope, for sure. That is natural selection.

But agency recruitment is not dying. It’s growing!

I have written of the new golden era for third party recruiters, and I have outlined the changes you need to make to take advantage of the opportunity.

Meanwhile, just like the equity markets in the US have reached record highs, so has the staffing industry! Did you know that? We walk around in agency-land as if we have a huge axe over our heads. Let me tell you, it is internal recruiters, who are being found out in many cases, and they have far more to fear than Agency recruiters do. Not to mention LinkedIn, who have problems with their business model that are becoming more severe by the day.

And yet hardly a day goes by without some meat-head blogging about recruiters being on the verge of extinction.

Based on what evidence I would timidly ask?

The ‘evidence’ in fact, is all the other way!

 Look at the facts.

I will start close to home. Well, at home actually. Australia.

Some highlights from the most recent Recruitment Industry Benchmarking Report, an authoritative analysis of a large sample of Australian and NZ recruitment companies, which has been compiling such data for more than 10 years.

These figures are for the 2015 financial year up to December 2014. Feast your eyes on this!

2015 FY Sales 29% up on prior year.
Temp and Contract. 15 Months of Year-on-Year growth.
Perm placements. Year-on-year 26% up on previous FY.
GP up 25% compared to 2014 FY (YTD).
OP profit up 78% on previous FY to date.

Meanwhile, brand new (April 2015) research provides the stunning news that 86% of APAC recruitment agencies expect to increase revenue in 2015.  What is more, 84% of APAC recruiters will expand headcount this year, and and incredible 64% of agencies with 75 or more employees plan to open new offices in 2015, according to The Bullhorn 2015 Australian Recruitment Trends Report.

Oh yes, that is an industry on its knees!

I am not suggesting everything is rosy in the ANZ recruiting garden, but in a soft economy (in Australia any way. NZ is better) clients are turning back to recruiters in droves! That is an empirical fact.

Meanwhile,  the UK is a boom for recruiters!

Recent APSCo (Association of Professional Staffing Companies) research tells the story

Permanent vacancies increase 26% year-on-year
Growth across all sectors with engineering steaming ahead
Contract vacancies rise by 7% year-on-year

Professional recruitment firms now have 26% more vacancies on their books than this time last year according to APSCo. This increase in opportunities coincides with the latest research from the Office for National Statistics (ONS), which has found that the UK employment rate has hit the highest level since records began, with employment increasing by 103,000 in the three months to December driving the proportion of people currently in work to 73.2%.

The REC jumped in with more good news in March 2015.

Permanent placements rise at fastest pace in four months
Temp billings increase at sharpest rate since last September

And if you want a sense of the global scope of this trend, look at India.

But what about the US?

Well, anecdotally my mates over there tell me they have never been busier. But let’s stick with the facts and look at the US temporary staffing market, the biggest in the world

Screen Shot 2015-04-06 at 11.56.38 pm

In the US, temps working per day through agencies reached 2.9 million a few months ago, a new all time high.

And temporary workers, through staffing agencies, now account for 2% of that nations workforce, an all time record.

Temporary and contract staffing sales were 7.9% higher in the fourth quarter of 2014 compared with the same period the prior year, totaling $30.54 billion.

The U.S. temporary staffing industry grew 5 per cent in 2014, and an anticipated 6 per cent in 2015, to reach a market size of $115.0 billion in 2015, according to the ‘U.S. Staffing Industry Forecast’

(Meanwhile, temporary staffing in Australia is worth 19 Billion a year, and growing rapidly.)

But get this. Agency worker penetration in Australia has grown from 2.9% of the Australian workforce in 2013, to 3% in 2014. That means 3% of everyone working on any one day in Australia are in temp jobs, placed by recruitment agencies. That is a higher penetration rate than the US (2%) and way above the global average (which is 1.6%).

It means quite simply, employers are increasingly turning to temps as a staffing solution, and increasingly they get those temps through recruitment agencies.

Not LinkedIn. Not Freelancer.com. Not job boards.

Recruitment agencies.

Most of my (recruitment company owner) clients tell me temporary demand is booming and “real’ temp jobs are back.

Industrial temps are growing as the economy recovers, but so are medical locums, engineering, clinical/scientific, marketing/creative, and education staffing. All these segments are near or at record levels.

Meanwhile, the global staffing market in 2013 was worth an estimated USD$ 416 billion.

It grew 10% in 2013, and early numbers indicate a further strong growth in 2014. That takes it to at least $440 Billion spent by employers on recruitment agencies, like yours.

Only this week the NPAworldwide, a global recruitment network,  announced that 53% of its global members reported business as improved in the last 180 days. (29% the same, and 18% as worse.)

And yet we get the clowns and buffoons and assorted fuckwits, telling us we are history?

To thrive going forward as a third party recruiter, it’s going to require change. But if you do not make money and have fun as a recruiter in the next decade, it will be your own fault. Nothing to do with anyone ‘disrupting’ anything.

Talent is not an online commodity. Our industry will change, but not die.

In fact I am prepared to bet there will be plenty of recruiters reading this right now, who will still be recruiting long after LinkedIn has joined MySpace.

Put your money on it.

I am.

What is your opinion? You seeing growth? Or are you dying as a recruiter? Lets hear please in the comments below

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  • Posted by Greg Savage
  • On April 14, 2015
  • 36 Comments
Tags: Coaching recruiters, future of recruitment, LinkedIn, recruitment, recruitment advice, Recruitment Trends

36 Comments

James Chessum
I think the technology and access to social networks has had to make us evolve as recruiters. And as a result placed us even more in demand as recruitment and finding good people becomes more fun and complex. A large number of my clients use LinkedIn as well as CV search facilities on job boards, but still continue to use us just as much. Point is it takes time, an in depth understanding of the market and a specific skill set to be a good recruiter, something internals cannot match.
Andrew Gemmell
Thanks Greg for providing an insight into other parts of the world. Interesting and exciting times for the industry indeed! Now...if we could just get our politicians sorted out we might even get a boost beyond what's happening now! We are seeing our clients with internal recruiters running with a high volume (40+) jobs. A good sign for us.
Neil Bolton
"seeing as LinkedIn is 12 years old, and becoming less effective as a recruiting tool by the day" Hi Greg I agree with you, but what are your reasons? I remember in April 2013 when LinkedIn announced they had three million Australian profiles I said "Well that's made it pretty much useless" - the uniqueness had disappeared. And in browsing the profiles of people I know I can't believe how inaccurate they are - for some reason people seem to exaggerate (putting it mildly) far more on LinkedIn than they do in a resume. And now that LinkedIn is cutting off its integration with 99% of ATSs in order to sell copies of LinkedIn Recruiter they're starting to seem like any other monopoly which believes they are secure in their power. From a personal business perspective I have given up completely on using LinkedIn as a source of candidates - I use it like Facebook, as a potential veto. I cross-check LinkedIN with other sources and if there's a disparity - veto. And there almost always is.
    Greg Savage
    Will write a blog on this Neil, but mostly the fact that transparency means LI is no advantage. In fact it has made recruitment LESS efficient. Best candidates are being spammed by 40 recruiter "headhunts" a day. Many are taking key words out of profiles or closing accounts. In any event the value in recruiting is not in identifying people, which is all LI does, its in seducing them, which is what a great recruiter does
      Steve Sykora
      Very much looking forward to that blog Greg!! Couldn't agree more!
      erin Wilson
      While I admire your enthusiasm in the selling of "agency recruiter kool-aid", I am going to have to respectfully disagree. I remember paying my dues at an agency job many years ago, like it is today, that is just part of entering a career in recruiting. The vast majority of recruiters eventually move on to higher paying and more respectable corporate recruiting positions; leaving behind the few "salesy' types to continue filling empty seats with fresh faces, short skirts, greasy spikey hair and an obligatory copy of The Boiler Room or Glen Garry Glen Ross. Over the years I have noticed a refreshing shift....corporations are not using agencies nearly as much as they used to. They have caught on to the fact that agency recruiters are not providing anything different than an internal recruiter would provide (and for a fraction of the price). From the standpoint of a seasoned recruiter, why on Earth would i work for an agency for commissions when I can make six figures working directly for a corporation where ALL the jobs are real, I can speak directly with the manager, and the best part.....none of that ridiculous sales nonsense that permeates agency recruiting. (Im sure you have a poster of Mt Everest with the word Inspiration written across it..dont you). With that in mind...what would motivate a corporation to continue to pay outrageous fees when they can do all that in house? Nothing, thats what. Here in Seattle some of our biggest companies no longer use outside help, at least not exclusively anymore. (and therein lies the key to your survival) Corporations almost always have internal recruiting departments these days....and while some of the positions end up with agencies do you really think that agencies are being sent the best positions? Probably not. While I dont think agency recruiting is a dead profession, it is certainly one that has long since past its glory days. Until agencies can figure out a way to provide a different approach to recruiitng that internal departments aren't already doing...they are screwed. (you have to do more than search job boards, linkedin, and your own internal database filled from those places.) Unfortunately, agencies dont seem to learn lessons which might have something to do with all the ego agency managers tend to house within themselves. There is no environment more toxic, more frustrating, and more eyeroll inducing than the agency environment. Until that changes you will never be able to keep talent and if you cant keep talent in your own organization how can you be expected to provide that type of service for someone else. As long as recruiting is viewed as a "sales" function in the agency world...I doubt anything will change. Recruiting is an administrative/marketing/HR role. If you find yourself selling a candidate on any position, you are doing damage to the candidate, to your client, and to the agency you represent. I could go on and on but in the end....if agencies dont wake up and make changes to how they do things then they will continue to be the big fish in a dying pond.
    David Robinson
    This is awesome news about the arrogance, greed, and ineffectiveness of Linkedin. Recruiters were understandably worried that Linkedin were concurrently pretending to be a recruiters friend and also cannibalizing their best new friend (the recruiter) at the same time. Greg you are a great ambassador for the recruitment industry. And... thank you;... for helping to Keep It Simple; and Keeping it Real. warm regards, David Robinson.
Alan Allebone
I think Andrew (above) has hit the nail on the head! Educate our pollies! I am still finding my biggest competitor is my clients! Thanks Greg
Peter Gleeson
Good thoughts Greg, lets face it, we have apparently been a dying industry for at least 3 or 4 decades! I can confirm that the US market is enjoying tremendous growth. The strong economic recovery has resulted in a shortage of skilled labour. Many of the normal factors which are affected by growth exist, additionally, much regulatory change in certain sectors (such as health) have meant that astute management treat attraction and retention as a key strategic initiative, their internal teams are often underpinned by flexible workforces Professional recruiters required! The only constant that has remained throughout the "decades" is change (as you mention). Those successful in this terrific industry are very aware that ongoing adjustment to the way we recruit and offer that service to a demanding client and candidate base, is needed to remain competitive. Many of the critical success factors remain the same, its how you apply them No need to hang up your hat just yet!
    Greg Savage
    Good to hear Peter. Thnaks for the US insights. Hope all well, and lets catch up in Sydney when you are back in town, cheers Greg
Richard Triggs
Greg, I think the reality is I would not trust 95% of "recruitment professionals" to walk my dog. With no formal qualification required, no accreditation and virtually no barrier to entry, it is no wonder our industry is populated by a bunch of muppets. If we want to get serious and be respected like our professional services counterparts, in Law, Accounting, Architecture, Engineering etc., then lets introduce a degree level qualification that is mandatory for participation in the industry. Until then, the broader business community will continue to view the recruitment industry in its current light - as a bunch of body shopping, white shoe brigade salespeople. I believe that LinkedIn will see the demise of a very large percentage of the traditional, generalist, contingent third-party recruitment industry. I believe this is a good thing and I for one say, good riddance.
Chris
Interesting article and well written thanks Greg. I was asked to use a third party reference checking app recently when giving a reference for a prior employee. The company she was going to used this system. I felt it side-stepped the Privacy Act as I could not identify who I was dealing with, other than "The Team" at the reference checking company. Any thoughts on such a service.
    Greg Savage
    Unaware of this Chris, but it sounds dubious at best, regards Greg
Bullhorn
An interesting read, you never fail to entertain and inform, Mr. Savage. On behalf of Bullhorn, Thank you for using our trends report to support your post. We definitely agree, the future of the industry is very strong and has plenty of room for growth. We see social as a tool to support the industry rather then a threat to the industry itself (how ridiculous). Look forward to reading more of your content, Zane Bacic - Bullhorn Marketing APAC
Ian Reid
Interesting what you say about internal recruiters "being found out". I've been thinking for a while now, in a lot of cases how are companies saving money by employing large teams of internal recruiters? I work with one company who have a team of ten who are struggling to fulfill their needs. I'm estimating the cost of the team as about £35k each so in the region of £350k annually. The total cost is a lot higher when you take into account the benefits and bonuses that may be paid and any recruitment tools that the firm may also pay for. The really low end stuff could be dealt with in the traditional way by a HR department advertising. Anything more senior and slightly specialised (I'm in mid/senior end IT recruitment) seems to be a real struggle for them. So much so that I'm working directly with senior stakeholders once again and making placements where, in theory, I shouldn't be. Anybody enjoying similar situations?
    Greg Savage
    Ian, I think many (not all) internal teams are feeling the heat now that the market is shifting to a candidate short one in many markets, as a result of skills shortages. The role has shifted from a "screening" one to a "talent hunting " one and those skills are totally different. So now we see the bizarre situation of companies paying for expensive internal teams, but paying agency fees anyway because the internal teams cannot deliver. That is not sustainable
Craig Burton
Thanks Greg, again for reassuring me I'm sane All the best Craig
Mike Hard
Greg, thanks for a great post. Anyone that predicts the demise of agencies, even if it's to make a point about the value of their own recruiting platform, is in for it. That story of the pundit you met at the HR conference is classic, and happened to me 6 years ago (my doomsayer was wrong as well). To your main point, agency use in the US has been robust to say the least. Growing every year (although we're starting to see % fees flatten a bit and most of the growth is now coming from higher starting salaries. Could the way companies use agencies improve? Sure. Agency fees are often the largest part of a recruiting budget and often the least understood. But the smart companies aren't choosing one or the other: LinkedIn (or OneShift for that matter) instead of agencies. The right companies are determining the right mix of those strategies and tools. What job is best recruited through college recruiting, through a job board, through Linkedin, through agencies? That's the better debate.
Veronica Scrimshaw
Another great post, Greg - thanks for the link to our business barometer! We are certainly seeing signs of robust demand for recruitment services across our network.
Corinne Winter-Rousset
Dear Greg, As always, like your sense of humour and carrying the torch for all of us working in this fun world of executive recruitment. We work global and couldn't be busier. The UK has spawned a number of new boutique recruitment groups in hospitality, most of whom are old colleagues from the days I worked for larger firms. We're all loving it!!! None of us believe bigger is better, select and small is much more personal. There is enough work in the world for all of us, if you're really good and people relate to you. Keep writing! Kind regards, Corinne Winter-Rousset co-Founder Earth Talent www.earthtalent.co.uk
Scott Small
Brilliant, up to date, hard hitting, cheeky, factually based assessment Greg. Much more than I regularly hear from the "disruptors" whom I believe have much more vested self interest in their "disruption" than presenting the real facts. Agree totally with Peter Glesson's comments regarding our industry's demise and ability to adapt. Keep up the good work Greg. Cheers.
Tanya Guerin - Randstad
Agreed! There seems to be a feeling of almost embarrassment being identified as a recruiter when in reality we are ones who go out of our way to understand,source and fill the need of a company, working long hours to ensure your client and job seekers requests are being fulfilled. Our industry would not be in existence if there was not a need for what we do. I attended a presentation on the use of LinkedIn recently, the presenter is the MD of a digital marketing firm based in Christchurch, during this very boring and unimaginative presentation, parts of which were incorrect! he asked were there any recruiters in the audience, out of curiosity I didn't reveal myself, what he said next utterly shocked me, he said that all recruiters were "dicks"! Said it a few times actually. I paid to attend this presentation and to blanket an entire industry to a room of 200 professionals disgusted me and the people I was sat with at this presentation. A complaint was quickly lodged and he will no longer be presenting for this organisation again. Great article Greg, I look forward to the next read.
    David Robinson
    Thanks from that feedback from the Industry Seminar you paid good money to attend. So: "All recruiters are dickheads". Charming. And from a spokesperson for Linkedin. Nothing much more, really needs to be said. best wishes, David Robinson.
Adam Gordon
As a recruitment research and marketing business, it makes no difference to me whether we support recruitment agencies or in-house teams but what I would say is, the majority of our (direct) clients are DIYing most of their recruitment internally and very effectively. The world's biggest Pharma company is at 100% direct sourcing in EMEA (98% globally) just as one example. They didn't always fill all their own jobs. I'm not trying to start an argument Greg before you call me a meat-head or a fuckwit but doesn't this comprehensively contradict your point?
    Greg Savage
    I am sure you are none of those things Adam. I am also sure that individual examples, or even dozens of examples, of companies doing internal well (which many are!) in any way contradicts my primary point, which is that agency recruitment is thriving. You can see that I am sure.
Adam Gordon
Ok so if we're agreed a chunk of traditional rec agency work's gone (probably forever) where's this growth coming from? Incidentally I don't disagree with you; Page Group announces growth every year!
    Greg Savage
    https://gregsavage.com.au/2015/03/11/hurrah-for-the-new-golden-era-of-agency-recruitment/
Adam Gordon
OK, some interesting and valid points but one area I believe you're completely underestimated is in-house teams. In fact, are you actually predicting the demise of in-house teams? I think you think they're agency rejects. They're not. The in-house teams I know are progressively becoming excellent. They are: - KPId to the max on TtH - they're creating 'warm benches' for all their regular hire areas - KPId to the max on QoH and measure 'time-to-performance' and retention forensically - Developing best-ever sourcing methods and candidate engagement You're right; when they fail, that creates opportunities for agency recruiters. But they're failing less and less. Recruitment's now almost identical to B2B business development and the in-house team's the sales and marketing force. Why don't companies get 3rd parties to do their sales (or very rarely)? Because they are confident they can sell it better themselves. NB *I've no beef with agency recruitment and I am confident it will always have a place*
    Mike Hard
    Adam I'm pretty sure I get (and agree) with your basic points: you have no beef with agency recruiters, but in-house recruiters are strong as well (so denigrate them). But two areas where I might disagree with you. First off, I doubt that the world's largest pharma company has 0% agency usage. Even if it's just EMEA. I've heard a few large companies claim that as a goal, or business principle, but there's low likelihood they have the systems or org structure to track or enforce that. Second, I doubt any smart company should even want the two extremes sometimes debated in these forums: either 0% agency or 100% agency usage. It's not a question of either/or, it's a question of the best mix. There are many reasons a company with a great in-house team would still use agencies.
Adam Gordon
That's what they told me Mike and they're proud of it - 2 years on the trot (although I should have said initially, we're talking about perm roles here). This isn't unusual. London's most famous retailer's at 100% (except in IT). One of the major Virgin companies I know's at 99%. The world's biggest media agency's at 100% in EMEA from grad all the way to the top. Extremely common. And they have systems and org structure better than most international recruitment agencies. The common attributes? They are all have amazing employer brands and superb internal talent and employee referral initiatives. Now, I am definitely not saying that's the right way to go. I always believe in a healthy blend.
Steven McConnell
This is exactly the kind of granularity we need in this argument. Generalisms like "recruiters are getting wiped out" are not serving anyone. However, while it's not difficult to demonstrate that the industry is growing, it's important to reiterate that sales figures are a bad litmus test of the current state of things. They're also a bad predictor of the industry's future. The industry might not be dying, but it's vulnerable. Just like uninspiring politicians of today, recruiters are often "least worst" option compared with LI, job boards, etc. As long as recruiters are primarily salespeople and not HR-minded professionals, they won't be able to view the job beyond matching keywords, fitting pegs fitting into holes and meeting sales targets. It's not enough for them to seduce, Greg, they have to be able to provide savvy, strategic advice as well. Steven
    Greg Savage
    You are quite right Steven, the fact the industry continues to grow does not mean it is not still vulnerable. However I feel I have made that point repeatedly in my blog, and this article contains many links to my previous articles which suggest if recruiters do not change, they will be wiped out, cheers Greg.
Erick Peterson
Greg, Your never ending promotion of this industry is to be admired, but I must disagree with you to a degree. Firstly, as an ex National Manager of a Global recruitment company myself, I worked in the industry for 15 years and have no bad feelings for the job or industry that looked after me very well for many years. Now I reside on the other side of the fence, running & chairing many large companies in more of a HR/IR business consultancy mode and from working with the countless number of companies that I do, I would estimate at least 80% of these would be now totally agency free and only ever use an agency for that very rare/specialist type role and that would only be after they have turned over every rock themselves first. The other 20% would still be using agencies, but in a far reduced capacity than they were back in the late 90’s early – mid 00’s. Companies building their own internal recruitment teams will always promote their brand, message, vision, values & goals far better than an agency and with the ease to find candidates today, building an internal candidate base is quite simplistic to do. The issue I have is I just cannot see the value an agency adds today which I am very sorry to say after spending so many years promoting the opposite when I was working in the industry. There are far too many ‘average’ recruiters working the industry today (I was going to say bad, but that wouldn’t be appropriate and perhaps a tad unfair). I don’t believe agencies will ever be totally removed from the landscape, but they will certainly decrease in numbers and I think that is a good thing. The times when I am sitting within a clients building to listen to a recruiters ‘cold call’ come in, or see their mass spammed email to everyone about the ‘size of their database’ etc…. is embarrassing and cringe worthy. I agree with one of the above posters that whilst your industry still has no restrictions as to who can work within the agency and call themselves a ‘consultant’ will never, ever improve the reputation of the industry you hold so dear to your heart. Greg you command respect and speak from authority and the passion you have for recruitment is absolutely admired – but you are let down incredibly many thousands of others who work in your industry that will drag you back further each & every day. Business may have picked up for you all in 2015 which is great, but the industry as a whole must be diminishing slowly as it is far more companies I speak to today that have little to no want to even speak to an agency anymore, rather than yourselves being the first and only choice made to assist on these matters.
    Greg Savage
    All great points Erick, and I would be a fool to suggest that there is not much truth in what you say. Many recruiters DO add little value, many companies HAVE stopped using recruiters. But I prefer to see this as a moment in time. Part of a cycle. Poor recruiters will die out as they will no longer be viable. Sophisticated recruiters who can add value will thrive as talent shortages really bite and in house teams find it harder to deliver. Of course, my views are pure speculation, and I see things the way I WANT them to be, as do we all :). Thanks for reading my blog and for taking the time to add your insights, cheers Greg

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