As industry leaders in the recruitment business are focusing their efforts outside the UK, the stage may be set for small firms to step into the vacuum and increase market share.
In the past year, Hays International has been forced to close the doors on 23 branch offices. Citing the continuing stagnation of the UK economy, they are relying on international growth to bolster their falling profits. While some see such things as a sign that smaller businesses will falter, David Lyons, MD of eBoss recruitment software
has a different opinion:
"A recession causes a flood of closures for small businesses early in the recession cycle. Lacking the cash reserves and credit lines of the more established and diversified companies, many flounder almost immediately. After that initial wave of closures though, the remaining small firms are able to adjust to the current conditions. Huge businesses, on the other hand, easily weather short term difficulties, but lack the versatility to combat a prolonged recession.
Think of the huge businesses as the top of the food chain. Yes, in times of plenty they are an unstoppable juggernaut. This power comes at a price. The massive body that allows the predator to shoulder aside smaller competition requires a great deal of food, or in the case of recruitment firms, profit. The growth that allows a business to become an industry leader creates a massive amount of overhead. There is a diminishing return that comes with growth and, past a certain point, these huge apex predators will starve on food upon which smaller competitors can flourish.
For a small firm that has weathered the difficult early stage of the recession, large competitors seeking greener pastures represent a terrific opportunity. While there may not be enough local business to support a massive company, by focusing on international efforts, the large companies are often abandoning local profits that a small firm would welcome.
For proactive firms, stepping into this void and servicing the needs of the abandoned clients could see them becoming more profitable than ever. Market share and visibility only tell half the story. The other half centres on the efficiency of the firm. Firms that have adjusted to tough times will continue to do well."
Times have been difficult. Small recruitment firms that were unprepared have fallen by the wayside. Those that remain are lean and efficient. With larger, better funded competition stepping out of the picture, the pieces are in place for them to step up and establish themselves as tomorrow's super recruiters.