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This report covers: temporary recruitment, contract recruitment, secretarial, clerical, computing, IT, financial, technical, engineering, hotel, catering, professional, managerial, nursing, drivers, blue collar,

Companies covered include: Adecco Holdings, BNA, Nestor Healthcare Group, The Corporate Services Group, Harvey Nash Group, Hays Personnel Services, Interim Services UK, Michael Page Group, Kelly Services, Manpower, Modis International, MSB International, Pertemps Group, QA Myriad, Hays IT, Reed Executive, Select Appointments, Spring Group,

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Executive Summary

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EXECUTIVE SUMMARY

This report looks at the market for temporary and contract recruitment in the UK. Previously, this market was covered in the Key Note report, Employment Agencies, which has now been separated into this report and Recruitment Agencies (Permanent). It covers all those organisations that recruit on behalf of clients for temporary positions, whether they call themselves recruitment consultants, recruitment companies or employment agencies.

The market for temporary and contract workers was worth £17.14bn in 2000, according to the Recruitment and Employment Confederation (REC), having grown by 15.4 percent since 1999. The sectors most important to the industry are secretarial/clerical staff and blue-collar staff appointments. Although the financial appointments sector is small, it is growing more quickly than any other. Between the middle of 1999 and 2000, the number of temporary financial appointments made by recruitment agencies has risen by 97 percent.

The industry is split between a dozen or so very large companies and hundreds of small- to medium-sized firms. The major firms are: Adecco Holdings (UK) Ltd, Hays Personnel Services Ltd, Manpower PLC, The Corporate Services Group PLC, Interim Services UK PLC, Spring Group PLC, Select Appointments PLC, BNA, Reed Executive PLC, Kelly Services (UK) Ltd, Pertemps and Modis. All these firms have a turnover of more than £200m according to the latest published full-year accounts for 1999. The importance of the major firms is becoming greater as they expand — largely by acquisition — both in the UK and abroad. Since the middle of 1999, the industry has seen a large number of takeovers. One reason for the spate of mergers and takeovers is the poor profitability of many recruitment companies.

Entry to this market is easy, but clients can be fickle and costs are rising, so it is fiercely competitive. The Internet is proving both a benefit and a worry for recruitment companies. Its benefits include the ease with which recruitment companies can now advertise and receive notice of vacancies. It also enables firms to scan hundreds of online applications. However, the Internet is also encouraging ‘virtual’ recruitment companies to set up. These have much lower costs and will undercut the ‘bricks-and-mortar’ recruitment companies.

Arguably, the biggest concern is the new tax rule for self-employed contractors working under a company name. The IR35 tax code has been challenged by the recruitment industry and also by the Confederation of British Industry (CBI), because it is encouraging the outflow of scarce talented workers to continental Europe. Recent legislation on the rights of part-time workers is another concern, but this cannot be overturned, whereas the IR35 code might be.

Nevertheless, despite all these concerns, the UK recruitment industry is looking forward to strong growth in 2001. The requirement for temporary staff is insatiable. Key Note estimates that the value of the market will almost double over the next 5 years, from £17.14bn in 2000 to £32.4bn in 2005.

Text © 2000 Key Note

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Last updated by Paul Tucker 12th February 2001