Recruitment the Other Side of the Pond - SIA Conference Roundup

By REC CEO Kevin Green  

I attended the Staffing Industry Analysts executive forum last week in San Diego and found some surprising differences between what's happening in staffing and recruitment here in the UK and in the States.

Firstly their market has been growing for much longer than ours. They had a good 2011 and 2012 with 2013 being a little slower, where as we have only really started to motor in the last year. The other fact was that while the States is the largest market in the world at $131 billion (SIA, 2013) and the UK is the third largest at £26.5 billion, our penetration rates are nearly double that of the US. This means we use a lot more flexible resource than the US as a percentage of the available workforce.

However the most startling fact was that even though the States lead the way with the deployment of vendor managed service (VMS) and managed service programme (MSP) models, margins and profitability are still much higher there than in the UK.

In my session last Friday we explored this in some detail and the conclusion was that there were two factors at play. Firstly regulation in the UK is more pervasive and clients expect the agencies to pay for their compliance this clearly reduces profitability. Second was that our market is much more competitive with an oversupply of agencies, which has enabled procurement to relentlessly drive down the margins at which agencies operate.

This market pressure has also created two structural response from recruiters in the UK where there seems to be much more specialism with a focus on niches and even mini niches. The other the emergence of low cost operators in the commercial and industrial markets where there are ever decreasing margins. These low cost operators have built economies of scale with a robust focus on efficient processes and world class back offices. This also seems to have enabled the UK to have a much higher percentage of high growth firms turning over more than £30m.

The shape of the market in the USA seemed quite different with a few very large global players but also many more generalist agencies operating with a tight geographical focus often a state or two neighbouring states. The ownership seemed to be older and many more of the businesses also seemed to be family run.

What also became apparent from those that attended the event was that a number of entrepreneurs from the UK in specialist sectors are entering the USA market. Now this looks like a trickle at the moment but I had the feeling that this might become a stream. As recruiters with deep expertise work back into North American from their corporate clients. So it's too early to say watch out the Brits are coming but opportunity does seem to beckon.

It was clear to me just from this trip that we need a more detailed analysis than is currently available to help inform our members about overseas markets.

We will be talking to both Ciett and the SIA in the next few months about this important work.