Recruitment. The best it’s been for a decade!
Three years ago, in response to a barrage of predictions that the recruitment industry was on the verge of destruction, I wrote a piece called ‘Agency recruitment is not dying. It’s growing.’
And it was.
And it is now too.
I have done a quick review of recent recruitment company results (mostly published in industry newsletter Shortlist) and the news is overwhelmingly good.
No one, least of all me, is suggesting our industry does not have challenges. It does, and I have written at length about those too. However, the fact is neither technology, economic cycle nor in-house teams are destroying third party recruitment. It’s changing, but not dying. In fact it’s thriving!
Have a look at the global staffing revenue growth from 2008 to 2018, expected to reach an all time high of USD 464 billion in 2018 (That’s BILLION BTW). Source Statista
Global Staffing Industry Revenue: 2008 – 2018 (USD)
In fact, growth seems to be accelerating, as this comment from Staffing Industry Analysts suggests;
SIA predicts that global staffing revenue growth will accelerate from 5% in 2016 to 6% in 2017, with the 6% trend continuing through 2018. The Japanese, German, French and Italian markets have helped drive the acceleration this year. In particular, improving trends in some of the major continental European markets balanced out the weakness in the UK market stemming from uncertainty following recent local elections and Brexit negotiations. The UK is the only one of the 15 largest staffing markets not expected to grow next year, and double-digit revenue growth predictions are in place for six of the 15 markets detailed in the report: China (16%), Italy (15%), France (11%), South Africa (11%), India (10%) and Sweden (10%). Growth in the US, the world’s largest staffing market, is expected to remain flat (3%).
In Australia the temporary staffing market alone is worth $21 Billion (The permanent market is estimated to be worth $3 Billion on top of that), and is growing at 2.1% annually.
And permanent hiring for agencies is growing! Data just released by Staffing Industry Metrics and published on the APositive blog reveals many Australian recruitment agencies recorded their best ever perm sales performance in 2017. The majority of firms polled recorded four quarters of year-on-year growth in perm sales.
So, to the individual company results, all recently announced: (To read the links you will need to be a Shortlist subscriber)
The productivity of executive search specialists at Heidrick & Struggles, measured in terms of annualised search net revenue, increased to US$1.6 million per consultant in the March quarter, up from US$1.4m a year earlier. The company’s latest financial results show executive search net revenue grew 17% year-on-year to US$145.8m (A$191.8m), contributing to a record March quarter result of US$160.1m (A$210.6m, up 14.3% YOY). Executive search net revenue was up 12.6% in Asia Pacific, 11.9% in Americas, and 36.2% in Europe.
Global revenue for the (March 2018) quarter was US$5.5 billion, up 5% in constant currency, with operating profit of US$154 million, up 8% in constant currency.
Hays Australia and New Zealand has reported a 12% year-on-year increase in gross profit for the March 2018 quarter, in constant currency.
People2people’s NSW division has reported 56% revenue growth in the past financial year, primarily driven by contracting demand.
PageGroup in Australia has reported a 6% year-on-year increase in gross profit during the March 2018 quarter, in constant currency (cc). Overall, it was a record quarter for the group, with gross profit up 12.3% (cc).
Robert Walters has reported “good performance in Australia and continued strong double-digit growth in New Zealand”, in results for the March 2018 quarter. The company doesn’t break out Australian figures, but across Asia Pacific, revenue was £32.6m (A$59.5m), up 11% in constant currency year-on-year. The group posted £88.5m (A$161.7m) in gross profit during the quarter, up 17% (cc). Total headcount at the end of March was up 101 during the year to 3,894.
Australian brands owned by UK-listed Impellam Group performed strongly in 2017. Among the highlights announced to the market late last week were a 183% increase in adjusted EBITDA in Australasia. The business delivered gross profit growth of 30%.
Korn Ferry has reported another quarter of record fee revenue, driven by organic growth in all three businesses. In the three months to January 2018 (Korn Ferry reports to a March year-end), Futurestep (RPO) revenue increased 29.4% year-on-year; executive search was up 18.1%; and Hay Group (consulting) revenue rose 12.7% (Korn Ferry acquired Hay Group in 2015).
Revenue across all streams was up 17% (13% in constant currency).
Adecco’s Australian revenue growth accelerated to 15% in the December quarter. Across Australia and New Zealand, the year-on-year growth for the quarter was 14%, the global results show.
Australia and New Zealand led Hudson’s growth in Asia Pacific in the 2017 calendar year, with gross profit up 6% in constant currency. In the December quarter alone, GP was up 18% year-on-year, driven by double-digit growth in all product lines.
IT recruitment specialist HiTech grew revenue by 19% year-on-year (to $13.3m) and gross profit by 9% (to $2.1m) in the six months to December.
Randstad’s Australian and New Zealand revenue increased by 8% year-on-year in the December quarter. For the full year, revenue rose 10% year-on-year, with some non-central metro areas growing by as much as 30%.
Technology and digital recruitment specialist, Talent, has reported 19% year-on-year growth in both its APAC revenue ($232m) and gross margin, and EBITDA up 100% in the December half. Globally, revenue was up 21% year-on-year, gross margin rose 24%, and EBITDA increased 126%.
Recent data put out by Staffing Industry Metrics tells the story;
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So the stats prove that agency recruitment is alive and well.
To round it off, some anecdotal evidence.
I am on the Advisory Board of 10 Recruitment and HR tech companies, and I speak annually to hundreds (no exaggeration) of owners and mangers of recruitment businesses in Australia, NZ, Asia, UK, Ireland, Europe, US and South Africa. The vast majority are reporting record growth and profits. All have challenges, but optimism is high.
I believe two things;
1) The conditions for agency recruiters are as good now as they have been for a decade or more.
2) Complacency is your enemy and profits will make you blind. We must adapt to take advantage of new and different opportunities that need fresh skills and strategies.
But one thing is for sure. Just as they were three years ago, the doomsayers and critics and trolls have it wrong.
We are not dead yet! In fact we are looking pretty perky!
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Photo by Collin Armstrong on Unsplash
- Posted by Greg Savage
- On May 8, 2018
- 3 Comments
3 Comments