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

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.

ABOUT THE SAVAGE TRUTH

Written by Greg Savage, The Savage Truth is a resource of insights and ideas for anyone interested in recruitment and staffing. Though his views are often controversial and contrarian, Greg Savage is a sought-after speaker and presenter and is regularly asked to comment on the industry, its challenges and its future.

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