From Shortlist, Wednesday 22 August 2018
Agency leadership, Research, analysis & reports
Recruitment leaders across the board are reporting record financial results, with staffing challenges the primary obstacle to realising further growth predictions, new research shows.
Some 76% of agencies expect to grow net revenue (after temp and contractor costs) by at least 10–20% in the December half, compared to June, according to the Recruitment Industry Business Confidence Index survey (RIBCIX), run by Navigator Consulting MD Tony Hall.
The RIBCIX survey, based on responses from more than 100 recruitment businesses around Australia so far, shows 66% of companies are forecasting net profit (before tax) growth of 10–20% or more for the quarter.
“Many managing directors I’ve been speaking to have said they’ve had one of the best financial years on record, and therefore it’s no surprise their forecast for the next quarter is going to be quite strong,” says Hall.
About 58% of companies will grow their consulting headcount by 10–20% or more, and 42% intend to increase the size of their resourcing teams by the same amount.
The key challenge these businesses will have is finding and adding staff to manage growing workloads, as a marked shortage of quality recruitment talent persists and, Hall says, “the good people simply won’t move”.
As a result, more recruitment leaders are looking at alternative strategies to hiring from within the industry, such as offshore resourcing and hiring graduates, and an increasing number are hiring professionals from the industries in which they recruit, says Hall.
These latter professionals tend to have deeper knowledge of the industries they’re recruiting for and can communicate “at a much higher level with their clients and candidates, with more credibility”, he adds.
Staff training spend is also increasing, although not quite in line with revenue and staff growth forecasts, with 42% of business leaders saying they will increase their investment in that area by 10–20% or more.
And more than half predict spending more on technology, yet 50% of companies expect no change in operating costs, “which is a little unusual because you would think you’ve got to increase costs and [add] staff, and it takes some time for those new staff to become productive”, Hall says.
Temp and perm forecasts on an even keel
The RIBCIX shows a similar proportion of companies expecting to grow their temp/contracting (58%) and permanent (57%) revenue.
Hall says this is unusual – the market usually favours one or the other – and the main conclusion to draw is simply indicates “very positive market conditions”.
The RIBCIX survey is still collecting data for the current half-year, and recruitment companies are invited to participate here in order to receive the full report.