Report reveals sustained growth in the recruitment sector

Nick Elvin

The UK recruitment sector has experienced strong growth over the past year, according to new research carried out by Deloitte and the Association of Professional Staffing Companies (APSCo).

The second annual APSCo Deloitte UK Recruitment Index found that 69% of professional recruitment firms reported an increase in net fee income over a 12-month period. Average annual growth across all respondents was 29%.

Yet despite these positive figures, many recruitment firms are concerned about getting the talent required to cope with growth. Some 59% of respondents highlighted this as their number one challenge in the year ahead, while more than a third said developing a strong management team would be central to achieving success. Around half of the firms surveyed cited challenges relating to financial growth and profitability.

The research also indicates that many UK based businesses have the confidence to grow. Just under half of respondents said they plan to expand by opening new offices, 65% of which will be overseas. Both firms that were based solely in the UK and those with an international presence reported that the majority of new offices will also be in new markets.

Katie Folwell-Davies, human capital services partner at Deloitte, said: “Last year’s inaugural report identified some cautious signs of recovery among professional recruitment firms. This year, optimism appears to have increased but there are variations in the performance of businesses across the sector.

“In 2013, talent was very high on the agenda and will continue to be a main priority over the next year. Results indicated that 40% of respondents had some level of M&A [mergers and acquisitions] activity on their agenda, and it was clear that increasing headcount will be key to achieving growth and profitability targets.”

The research shows that recruitment firms are becoming more innovative with candidate attraction techniques both for their clients and for their own firms. Initiatives include diversity and inclusiveness agendas to improve candidate engagement and connect with communities to identify talented candidates and plan for the future.

Ann Swain, chief executive of APSCo said: “Flexible working has moved quite a way up the agenda of what potential recruitment consultants are looking for when they join a firm and the more forward-looking businesses have updated their offerings to accommodate this. This is not just about keeping good women in the business – although it obviously helps – but also about adapting to what different generations’ motivations are.”