Online recruitment is on the increase

Online recruitment websites represent the largest long-term threat to recruitment agencies. A new report, Recruitment Agencies (Temporary & Contract), examines the market for temporary and contract recruitment in the UK; and looks at the effect of the Internet as a means of recruitment. The traditional recruitment companies are already losing some of their business through online recruitment.

Online recruitment - particularly by large well-known companies - is on the increase, raising concerns for the high-street recruitment companies. If effectively used, the Internet can be a source of opportunities in that recruitment companies can benefit from having their own websites and the ability to reach more candidates. However, in order to exploit their potential, the operators need to manage their sites properly and promote them more extensively.

The temporary and contract recruitment market in general improved considerably during 2004. There was an increase in demand for staff, but some sectors underwent considerably more growth than others. Profitability in the industry has improved dramatically since the end of 2003, with hardly any public companies reporting a loss - in contrast to 2003, when it was common for organisations to announce that they had made a loss or that they had sharply reduced profits.

Between the years ending March 1999 and 2004, the value of the market rose by 53.6%. 2004 has turned out to be one of the best years for the industry since 2001. Even so, when considered within the long-term context, the growth in the year ending March 2003 is still modest.

It is apparent that online recruitment by some of the UK’s largest companies is increasing. In particular in the retail sector, some of the major companies (such as Woolworths and ASDA) are recruiting directly via their own websites - using their sites along with the major online job sites to bypass the recruitment firms. By reaching out directly to their candidates, these companies are achieving their aim of reducing costs. The IT staff sector is one of the functional areas where online recruitment is said to be increasing.

Key Note forecasts that the year ending March 2005 will see a 3.9% increase in the value of the market overall, to 23.7bn. There appears to be an increasing sense of optimism that the market is continuing to improve on the back of sustained growth for 2003. It is not clear, however, whether the level of growth in 2005 will match the pace of the growth in 2004. Public-sector jobs, including health and education, and IT are likely to be major growth areas.