Stuart Gentle Publisher at Onrec

Recruitment industry hits record number of start-ups in a single year new figures reveal - depsite fears job market may be stalling

An average of 818 new agencies registered each month since January, with the total number of agencies trading in the UK now at a record 35,275

The number of newly registered recruitment agencies in 2017 has risen at its fastest ever rate, with 9,001 started since January, according to the specialist PR firm for the Recruitment industry, ClearlyPR.

Using data obtained under a Freedom of Information Request from Companies House, ClearlyPR has found that between 1st January and 30th November this year, an average of 818 agencies were formally established each month. This is a 28% higher start-up rate than the number registered during the whole of 2016 (6,485 in total, averaging 540 per month).

The total number of recruitment agencies currently registered as trading in the UK now stands at 35,725.

The highest number of recruitment start-ups were registered in March (1,208), followed by January (1,132) and August (1,067). 5,709 were established in the first six months of 2017 compared to 4,297 in the final half of 2016.

“This pours cold water on the hypothesis that employer confidence is waning. In fact, the opposite would appear to be true,” said Paul MacKenzie-Cummins, Managing Director at ClearlyPR.

“Last year saw a doubling in the number of recruitment agencies that were founded in 2015, with the sharpest rise coming in the six months after the Brexit vote. Our research has shown that the momentum not only continued into 2017, it gathered pace.”

“The dramatic rise in new agencies being started over the last year is testament to the overwhelmingly positive mood within the recruitment industry.

“Ambitious recruiters are not only seeing an increase in demand for the services of recruitment agencies, they’re taking advantage of favourable market conditions and the opportunity this present for aspiring recruitment entrepreneurs.”

Indeed, the Recruitment and Employment Confederation (REC) predict that 56% of all vacancies over the next 12 months will be filled by recruitment agencies – an increase of 10% since 2015. This is against a backdrop of the nation’s low productivity, lagging wages, and a predicted slowdown in economic activity in 2018.

“2016 was a landmark year for the Recruitment industry, yet 2017 has defied the expectations of even the most optimistic of forecasters,” said Mr MacKenzie-Cummins.

“While uncertainty remains over the possible ramifications over how the UK’s withdrawal from the EU will impact on businesses and the economy, the research suggests that the growth in new agencies entering the market is down to three key factors.

“First, there is the ongoing skills crisis, which is being worsened by growing concern over the future use of workers from overseas. Employers need to plug the gaps in their workforces but the pool of available talent makes it harder for them to find the people they need; hence, the need for additional support from external staffing providers.

“Second, employer hiring continues to remain high. This mitigates the risk many recruiters may see over whether to strike out alone. Third, recruiters appear to have learned the lessons for the recession and are gearing themselves up for life after Brexit – where they are in greater control of their careers and futures.”

The recession saw as many as one in five recruitment agencies close their doors as a direct result of economic decline and mass redundancies. This prompted a slow and steady rise in the number of recruiters opting to go it alone, with a tripling in the number of recruitment start-ups since 2015.

Indeed, just 1,074 new agencies were registered at the height of the recession in 2010 and by 2014 that figure has risen to 2,504 followed by a marginal increase to 3,250 in 2015. In 2016, that figure doubled to 6,485 and has since increased by almost a third during 2017 to date.

“To say that the Recruitment industry is resilient would be one of the greatest understatements of the year,” adds Mr MacKenzie-Cummins.

“It took a battering during the downturn only to emerge in stronger shape and since then it has grown to become the largest it has ever been - both in terms of the number of players operating in the market and revenues generated.

“However, although the industry is in greater shape than ever before, there is no room for complacency. The focus for recruitment businesses must remain on sustainable growth, quality of delivery and the ability of agencies to differentiate themselves from their competition.

“With more and more new agencies entering the industry, the need to position themselves as the agency-of-choice has never been greater, or harder. This is has seen a sharp rise in the number of agencies ramping up their promotional activity. We have seen this at first hand.

“As one of the few providers of public relations, social media and content marketing services for the Recruitment industry, we have seen a four-fold increase in our client base since the turn of the year.

“From fast-growing and ambitious recruitment start-ups, to national and international large-scale agencies and executive search firms, clients are quickly realising that employer hiring decisions are increasingly being influenced by what they see, hear and read about a company; it’s the age of influencer marketing.”

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