Bullhorn’s recent Global Recruitment Insights and Data (GRID) survey was based on responses from over 2,000 recruitment professionals globally. Among UK recruiters, 56% predicted their firms will see an increase in revenue this year. But despite this optimism, 58% also identified economic uncertainty a crucial business challenge.
How, then, does economic uncertainty affect the UK recruitment market? And how should recruiters respond?
Key factors include:
- Fluctuating employment levels
- Changes in the way people work
- The role of globalisation
- Digital transformation and automation
Let’s look at each of these in turn, along with what recruitment companies can do to prosper in an uncertain economy.
The UK is currently experiencing a low rate of unemployment, at around 4%. However, employment rates can change due to a sudden recession or economic slump. And businesses may have little influence over the macroeconomic events, such as Brexit, that trigger major change. For the recruitment industry specifically, both high and low levels of employment pose potential challenges.
High employment levels can mean that fewer people are seeking work and fewer companies are hiring. And this may reduce demand for recruiters, leading to less revenue. And while higher unemployment rates result in a wider pool of candidates and a greater need for recruiters, a depressed economy could discourage companies from hiring because they don’t have the budget available to take on more staff.
The relationship between employment levels and recruitment is therefore complex. But even in times of low unemployment, skills shortages can continue to exist. This means that firms that are the best at plugging gaps in scarce talent areas, such as IT, cyber security, software development, and engineering, are always in demand.
Recruitment firms need to evolve their business models to meet specific talent demands. That could amount to developing specialisms in specific areas and becoming a boutique outfit, but it could also amount to providing more comprehensive workforce solutions that look to provide various ways to plug key skills gaps. For example, if internal upskilling is a better option than a new hire, a recruiter should be able to advise their clients accordingly.
Furthermore, to offer greater value, firms must embrace the latest sourcing techniques and technologies. This will help recruiters connect clients with the best possible candidates and, in turn, strengthen their client relationships.
Changing ways of working
There has been a noticeable shift away from traditional, 9-to-5 work. Self-employment, for instance, is far more common than ever before, and millions of people now work in the UK’s growing gig economy.
We see this in the GRID survey, with 65% of recruiters anticipating increased demand for workers in new labour models this year. But does the shift to self-employment and contract work mean recruiters will eventually no longer be needed?
One thing to remember is that the gig economy is not new. People have been working on a self-employed or contract basis for decades, but this has not reduced demand for recruitment services. In fact, many recruiters specialise in contract recruitment.
And while digital talent platforms make it easier for employers to contact candidates directly, finding the absolute right fit for a role is challenging. Employers therefore still need specialist recruiters to carry out background checks, interviews, and other assessments.
Nor is the current trend towards alternative work models necessarily permanent. In an economic downturn, people are less likely to risk freelancing, preferring the safety of full-time work. And in this case, recruiters will be as valuable as ever.
The key is flexibility. Traditional recruitment agencies may need to adapt as the gig economy grows, perhaps by expanding their number of contract placements or their use of digital talent platforms – or, indeed, both. But the ways people work will continue to shift with the economy. And success in the recruitment industry depends on responding successfully to these changes.
For some time, globalisation has seemed inevitable. As a result, talent has become increasingly mobile. But 21% of UK recruitment professionals identified potential restrictions on foreign labour as a major challenge in the GRID survey, with uncertainty over Brexit a significant source of concern.
Where, then, does the recruitment industry stand right now?
In the UK itself, recruiters have access to some of the best talent available anywhere. Nevertheless, they will have a smaller talent pool to draw from if post-Brexit restrictions on movement of labour prompt workers from Europe to look elsewhere.
At the same time, globalisation remains a golden opportunity for recruitment firms seeking to expand. Having an established presence in countries that skilled workers find most attractive can offer significant commercial advantages.
It may be the case, therefore, that Brexit prompts UK recruitment firms to expand overseas to gain access to the wider European labour market. But such expansions also pose challenges, with job markets, economic environments, and cultural norms varying between countries.
Consequently, any recruitment firm with ambitions to expand abroad must prepare accordingly. This demands significant research, planning, and a willingness to adapt.
Business growth, digital transformation, and automation
In any industry, economic uncertainty requires companies to cut costs and spend wisely. We see this in the GRID survey, too, with 54% of recruiters citing margin compression – when the cost of delivering a service is higher than its price – as a top challenge.
This makes it especially important to consider how technology can help to support business growth. The automation of key recruitment processes, for instance, can both create efficiencies and cut costs. Many of the world’s leading recruitment firms are already benefitting from automation, as well as exploring the potential applications of artificial intelligence.
However, the GRID survey shows us that only 36% of respondents currently consider investment in new technology a top priority. This may not seem like a problem, especially if recruitment companies are experiencing success with tried-and-tested methods. But to ensure growth in trying economic conditions and an increasingly competitive industry, companies need to explore the potential for technology to boost productivity and, by extension profits.
Adapting to a changing economy
The uniting theme above is the need to adapt. The economy is always shifting, much like the expectations of employers and candidates. Success in the recruitment market will always depend on one factor in particular: how well a company can acclimatise to change.
The modern recruitment firm must factor in economic uncertainty when evaluating its current operational model and go-to-market strategy. And by embracing the latest innovations, recruiters are better positioned to take on the challenges posed by macroeconomic and social changes.