Recruitment sector reports cautious recovery

Anna Scott

The UK recruitment sector is experiencing growth and seeking to make investments despite the challenging economic environment, research shows. 

Almost three-quarters (72) of the professional recruitment firms surveyed by Deloitte and the Association of Professional Staffing Companies, recorded increased net fee income over the last year. One quarter of those also reported revenue increases of more than 30%, according to the APSCo Deloitte UK Recruitment Index 2013.

Financial growth remains a challenge for the sector however, according to 70% of the 100 firms responding. Two thirds (66%) also state that increasing headcount is another challenge in the coming year.

The data reveals evidence of the growing international mobility of jobseekers, with 63% of respondents generating fee income from international markets. Of these, 43% have physical overseas offices and 57% generate overseas income from a UK base.

International net fee income stood at £1.4 million per average overseas office, compared to just £0.3 million per average UK office, the research showed. However there is a renewed appetite for investment both in the UK and abroad with 61% of firms saying they plan to open new offices in the next year.

“Over the past 12 months, we have seen some cautious signs of recovery,” said Katie Folwell-Davies, recruitment industry services partner at Deloitte. “Whilst many of the listed companies have reported challenging conditions, specifically in the UK and European markets, a number of privately owned companies are trading strongly.”

The research also found that firms with deep, niche sector expertise outperformed organisations that operate across a broader range of industries. Those that can adapt quickly to changing client demands and deliver candidates with specialist skill sets are well placed to reap the rewards.  

For example, in both the temporary and permanent recruitment markets the media and marketing sector was one of the most profitable, experiencing 23.2% and 18% profit margins respectively.

“From a profitability perspective, the media and marketing sector is a fairly new category to emerge as one of the front runners,” said Ann Swain, chief executive of APSCo (pictured). “However, member feedback tells us that that there are far more vacancies than there is available talent.  

“This critical talent shortage could be partly explained by the fact that many organisations are putting more emphasis on their digital strategies and there appears to be fewer candidates with the marketing discipline running alongside. As businesses continue to invest in digital marketing to drive growth, those recruiters that are able to source these rare, niche skills will invariably do well.”