Recruitment Sector Insight

FUTURE MARKET PROJECTION

Revenue in the industry is climbing thanks to a solid demand for recruitment services. Over a five-year period through 2023-24, online recruitment site industry revenue is expected to increase at a compound annual rate of 7.3% to £892.1million. Those figures are expected to increase further over the five-year period to 2028-29, to 8.8% and £1.4billion respectively. Offline employment agencies’ revenue is forecast to grow to £18.8billion over the five years through 2023-24 and to £24.9billion through 2028-29, with the personalisation offered by placement services ensuring they will remain highly relevant. Among the growth drivers is a greater focus, especially among younger people, on using their free time for professional development, a trend which saw an uptick during the Covid-19 pandemic when national restrictions meant more time became available to learn new

skills that would enhance career prospects. ‘Gen Z’ individuals who are entering the graduate recruitment market are increasingly technologically literate and place an intense focus on self-improvement and an aspirational lifestyle. Health and social care will remain key recruitment sectors in the short term, due to labour shortages exacerbated by industrial action, while the IT and technology sector is a booming market. Investment is pouring into UK tech, with high demand for employees skilled in coding, web design and data management, leading to a surge in job listings. In addition, the government and education sectors are understaffed and leaning on recruitment agencies while industrial, construction and related trade companies are hiring more workers as supply chains improve.

HOW ARE UK RECRUITMENT COMPANIES FARING?

According to Recruiter.co.uk, insolvencies of UK recruitment agencies have increased by 14% in the year to 2023-24 from 363 to 413. That represents a third consecutive year of insolvency increases. This is partly a knock-on effect from the Covid-19 pandemic when the income for many recruitment companies fell to near zero during the months of lockdown, which meant the need to take out government-backed Bounce Back Loans to survive. The weakness of the economy as a whole has affected many companies’ ability to make repayments on those loans and forced them into insolvency.

WHICH COMPANIES ARE ACQUISITIVE?

In the online recruitment sector, the top four companies – Recruit Holdings (Indeed and Glassdoor), Totaljobs, LinkedIn and Reed – account for two thirds of industry revenue and therefore have a tight grip on the market. Many recruiters have acquired smaller companies to enter and expand their presence in other markets, for example, Totaljobs acquired Milkround to specialise more in graduate recruitment. The offline market is much more fragmented as leading operators Hays and PageGroup have market shares of only 3.9% and 1.4% respectively, with both companies investing in new technologies to boost productivity amid a particularly buoyant market for temporary positions.

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