2,926 new recruitment agencies launched in the first half of 2016: a 10% increase on the number of agencies launched in the same period in 2015, according to research from leading recruitment finance provider, Sonovate.
The data, taken from Companies House, suggests that despite recent economic uncertainty, the recruitment industry is in good health. During the first and second quarter of 2016, the number of new recruitment agencies increased by 10% and 7% respectively compared to the same periods last year. In 2015, a total of 5,110 new recruitment agencies launched in the UK: a 144 % increase on the 2,092 agencies launched in 2010.
Richard Prime, Sonovate co-founder and co-CEO comments, “The UK recruitment sector is thriving, and the industry’s rapid growth is showing no sign of slowing. This is good news for the economy, especially during the current climate of uncertainty following the Brexit vote.”
A number of factors are responsible for the sector’s success. Last year saw the UK employment rate rise to the highest level since 1971, according to the Office of National Statistics, and APSCo data shows that vacancies in core sectors are growing year on year.
Prime continues: “Record employment levels present challenges for employers to retain staff as confidence amongst job seekers grows. As wage growth continues upwards, and the war for talent intensifies, skilled recruitment professionals are able to use their industry experience and networks to source the best talent."
An increase in contract recruitment, which is often the result of businesses having to take on extra staff to fulfil demand for expanding workloads, is also responsible for the sector’s growth.
In 2015, 90% of the industry’s £31.5bn turnover came from temporary or contract business. However, agencies looking to launch a contract division face significant obstacles, the biggest one being cash flow. Both new and established recruitment companies are being held back by inflexible and outdated finance products.
Using traditional invoice finance, it can take companies up to 5 years to access the finance required to fund contractors, whilst with an alternative finance provider it can take 3 to 4 years. With Sonovate, flexible finance, industry leading contractor management technology and expert support means companies can start running contractors from day one.
“At Sonovate, we are committed to supporting the recruitment sector’s continued growth and helping even more recruitment companies access the funding they need to prosper,” concludes Prime.