Press Coverage
Dicing with the future
www.professional-recruiter.co.uk - 2003-01-14
Dicing with the future - After a difficult 2002, Recruiter takes a look at what lies ahead
Will 2003 bring prosperity and wealth to your business? After a year of uncertainty and discord in the global economy, it's anyone's guess what lies ahead for the recruitment industry - and the rest of the world - over the coming year.
The upturn - once forecast for the second half of 2002 - is now predicted for the second half of 2003 by the analysts.
Recruiter asked the movers and shakers of the industry for their predictions for the next 12 months. As we move into another tricky year, will the size of your agency or the sector you're in spell the difference between winning and losing? Or does it all depend on the roll of the dice?
Public sector
As one of the few sectors that flourished in 2002, public sector recruiters can expect another boom year in 2003. Increased government funding to the public sector will fuel the recruitment of key workers.
"There will be a lot more public sector jobs in 2003, particularly for people in 'frontline' roles, such as classroom assistants, police and transport workers," predicts Chris Melvin, managing director of public sector specialist Reed in Partnership.
He forecasts that the role of the private sector in public recruitment will continue to increase.
Agencies that don't embrace new legislation and quality standards will be left behind, says Lesley Healey, MD of public sector recruiter Recruitment Solutions Group.
"For the relationship between agencies and the public sector to develop as it should, there is a real need to work in partnership." Clients are ready for closer relationships, she says. Private agencies that have built up high levels of trust will benefit.
It's going to be a busy year in the healthcare sector, particularly for agencies that are part of the National Framework Agreement. Consolidation among locum agencies is a strong possibility, Healey predicts.
The public sector is also planning to increase its graduate intake, according to Paul Boateng, Chief Secretary to the Treasury. "We have to meet rising public expectations, we need to recruit the brightest and the best," he says.
Professional and Financial Services
With the raft of redundancies, hiring freezes and profit warnings in the City, financial and professional services recruiters are bracing themselves for another 12 months of tough trading. Add to this the threat of war and any optimism from their business forecasts evaporates.
Nurturing strong supplier relationships will sustain recruitment companies through the lean times, believes Richard Wright, chief executive of accountancy specialists Martin Ward Anderson.
While clients' recruitment needs are currently slim, he anticipates an increase in volume in the latter half of this year.
The race between recruiters to provide better service than their competitors means clients will get the best deals this year, says Laurence Pengelly, operating director at Michael Page Finance.
With a surplus of candidates on the market, many are prepared to take a pay cut and hirers can afford to be fussier.
But he warns: "Clients have to think about the implications of what they're doing because those people will move when the market picks up."
IT market
Conditions in the IT sector will get worse before they get better, experts predict. So be prepared. As companies look to cut costs, contractors are often the first to be culled. Staff must now justify their worth to employers. Many have had to accept lower salaries to hold on to their jobs.
The number of IT contractors opting for permanent status is also rising, according to IT recruiter Elan Computing. 76% of contractors would now consider a permanent position within a company, claims Kate McClorey, Elan's UK sales director. Last year it was 21%.
However, the public sector is offering a lifeline to the IT market. The government's target to have all its computer systems online by 2005 is a massive task that requires mighty manpower.
Computer system upgrades are also long overdue. Although IT directors have budgeted for this, many have been clutching the purse strings waiting for an upturn, explains Nick Daniels, director at IT recruitment firm Preferred International.
Recruitment to recruitment
The rec to rec industry suffered a few casualties in 2002. Established names can afford to feel "cautiously optimistic" about this year's prospects, but many that limped through last year may not make it across the finishing line in 2003.
Some sectors (including healthcare, pharmaceutical and biotechnology and rail) are now good markets for consultants to cross into, says Zena Everett, director of recruitment to recruitment firm Perriam and Everett.
But the industry cannot hang around for something as significant as Y2K or the dotcom boom to fuel phenomenal growth levels again, she warns. "We need to be realistic and accept that the market was overheated and has now stabilised," adds Everett. "There's no point waiting to come out of this period. We need to cut our cloth accordingly."
Clients will be pushing for better service levels from their rec-to-rec partners this year, predicts Robin McKee, director of rec-to-rec company Intrinsica, with many moving to preferred supplier agreements.
"Recruitment consultancies will be going the extra mile to deliver for their clients and they'll expect us, their suppliers, to do the same thing."
The reluctance of consultants to move companies in a climate of weakened business confidence will further compound matters. "The best candidates are currently in a job and they just don't see the grass as being greener elsewhere at the moment," contends Simon Lewis, director of rec-to-rec company Piranha.
To convince them otherwise, there will be a move towards headhunting in the rec-to-rec arena, he says. Several rec-to-rec specialists may be forced to move into other sectors of recruitment.
Executive search and interim
The executive search market forecasts an improvement in business for 2003, according to the Association of Executive Search Consultants (AESC). After 2002, when many companies made large numbers of staff redundant, the search market could certainly do with some good news.
AESC predicts the biggest challenges for the sector will be the speed of client decision-making, the number of cancelled or postponed search assignments and the negotiations needed before searches can begin.
But fees should hold up even in the choppy market, says Anne Murray-Smith, HR and marketing director for search firm Longbridge International. "We also expect salaries to remain competitive despite a high degree of market uncertainty driven by redundancies and the economic climate."
Recruiters' roles may become less international as domestic markets sort themselves out and "globalism goes on hold," she adds.
Commentators predict the market won't pick up properly until the fourth quarter. Clients will remain cautious about conducting a search, while some candidates may be loath to change jobs in an uncertain market.
The interim management market is more international however, says Chris Behan, managing director of Odgers Interim. Behan forecasts an "encouraging" first quarter, based on current trends, but says interim providers are being rightly cautious in their plans for 2003. Repeat business will form the bulk of assignments - it'll be a tough market for any newcomers.
2003 promises to be another turbulent year. The best recruiters can do is to face them head on, be prepared for further regulation and look to the future. And whatever happens in the world, people will still move jobs. You never know, at the end of 2003 the industry could be telling a completely diffent story.
High street / temp market
The temp market fared better than permanent recruitment last year, but it will also face testing times in 2003.
Further regulation of the industry is inevitable, says operations director of high street recruiter Pertemps, Janet McGlaughlin.
But she is still confident recruiters will cope with the eventual implementation of the Agency Workers Directive (AWD), which calls for equal pay for temps.
"When the Working Time Directive came in everyone said businesses wouldn't be able to afford it, but we overcame that," she says. "Agencies need to educate clients about what the AWD means, examine the costs and implications and make alternative arrangements."
Sue Driscoll, operations director at Kelly Services, also sees some advantages. "Improved pay and conditions for temporary staff could help to attract higher calibre candidates," she says.
Increased National Insurance contributions will sting the temp market from April 2003. Initially, this could put employers off using temps, reducing agencies' margins, predicts Tom Atkinson, managing director of CashFriday.
"If agencies want to maintain current profit margins they'll have to increase their billing rates by 1% or 2%," he says. "All employers are going to suffer additional tax costs - and agencies might have some difficulty passing this increase on to their customers. If they start the discussion now they may stand a better chance than if they are taken by surprise in April."
