Is the long tail wagging the recruitment sector?

Proliferating recruitment start-ups were fragmenting the sector before COVID 19, but very few have achieved scale. As redundancies are likely to drive another start-up boom, what impact will this have on the sector?

To help answer that question, TALiNT Partners spent the last six months researching the financial contribution of the top recruiters. Our newly published Recruitment Power List ranks the top 500 UK recruiters by turnover, NFI and PBT using verified data and Companies House records for the 2019 fiscal year.

While the true impact of the pandemic will be measured in next year’s Power List, this reflects the final year of a ten-year growth period for the sector.

There are 40,000 recruitment, search and staffing businesses registered at Companies House, but these 500 UK recruiters generate 80% of total sector sales. TALiNT Partners estimates there are only 1,000 companies with a UK turnover above £5 million per annum. Our research also indicates that there are just 128 companies with turnover above £50 million and only 328 with sales over £20 million. Why are there so many start-ups and so few scale-ups?

Our TALiNT International Recruitment Power List Report found that the 500 biggest companies by turnover grew revenues by over £2 billion to £39.4 billion (up from £37.1 billion in 2018). With revenues almost doubling over the last decade, we estimate that total industry turnover is now just over £50 billion.

While the long tail of 39,500 recruitment start-ups generates over £10 billion between them, the top 500 are still achieving growth. So, who will have the biggest impact on the sector over the next few years?

To put this into a broader economic context, the number of scale-ups across all sectors increased by 12% to 35,210 in 2019 according to the Scale-Up Institute. Collectively, they generated £1trillion in revenues and created 3.5m jobs, according to the Office for National Statistics.

A record 8,488 new recruitment agencies were registered in 2018, up 46%, and record 681,702

new companies were founded in 2019 but how many will achieve scale – or even survive? ONS figures indicate that 60% of start-ups fail within three years.

Do we need more start-ups? Probably not. Do we need more scale-ups? Definitely. Should the top recruiters be doing more to stop top performers leaving to start their own businesses? Undoubtedly.

The future of the recruitment sector is in the hands of those who have scaled their businesses. There is enormous unrealised potential that can be released by technology and training.

Our Recruitment Power List Report includes insight from Agency, Inhouse, RPO and HR Tech leaders on how recruiters can optimise talent and technology for growth. An Executive Summary is now available, with insightful features on the best use of technology and how to deliver more value with candidate experience, employer brand and D&I.

Subscribe now to access the full Report, with ranking information on financial performance for all 500 recruiters nominated for the 2020 Recruitment Power List.

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