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Keynote Market Report : Recruitment Agencies (Permanent) : January 2005

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This report covers: Recruitment Agencies (permanent), skills shortages, rising slary levels, lack of recruitment staff, blue collar, computing/IT, drivers, education, financial , hotels/catering, nursing/medical professional, managerial, secretarial, clerical, technical, engineering,

EXECUTIVE SUMMARY

This Key Note Market Report examines the UK market for permanent recruitment agencies. It covers firms engaged in general and executive permanent appointments and executive search. According to the industry's trade body, the Recruitment & Employment Confederation (REC), the market was worth £1.7bn in the year to March 2004, when the number of placements reached 565,581.

The market is segmented into the following employment sectors: blue collar computing/IT, drivers, education, financial, hotel/catering, nursing/medical, professional/managerial, secretarial/clerical and technical/engineering. Secretarial and clerical appointments represent approximately half the market by volume, with computing/IT accounting for around 20%. Hotel/catering is another important sector.

Among the major firms are: Adecco Holdings (UK) Ltd, Brook Street (UK) Ltd, Carlisle Group PLC, Extra Personnel Ltd, Human Resource Group PLC, Michael Page International PLC, Pertemps Recruitment Partnership Ltd, PSD Group PLC, Robert Walters PLC, SThree Ltd, TMP Hudson Global Resources (formerly known as TMP Worldwide Ltd) and Whitehead Mann Group PLC. Most of the industry is UK owned.

This market has grown substantially in value since March 2003. Sectors such as IT, engineering and construction have gained importance, while others, such as professional and managerial, have experienced sharp declines. Education and health/medical appointments have grown in volume. Key Note's discussions with recruitment firms revealed that the market began to improve from around November 2003, picking up further in summer 2004, before experiencing a further burst of activity in November and December 2004. Everyone interviewed mentioned skills shortages, in terms of both their clients' requirements and their own, as recruitment firms find it increasingly difficult to attract the calibre of staff needed.

Assuming that the UK economy will grow by around 2.5% each year, Key Note forecasts steady growth in the market's value between 2005 and 2009. The major questions on the horizon concern interest rates and the exchange rate of sterling against the dollar and the euro. Sterling, along with most other currencies, was rising against the dollar in the closing month of 2004. If this continues in 2005, it could dampen growth throughout Europe and the rest of the world, hindering growth in the UK and its recruitment market.

TABLE OF CONTENTS

Executive Summary

1. Market Definition

REPORT COVERAGE

MARKET SECTORS

MARKET TRENDS

Skills Shortages

Rising Salary Levels

Rising Fee Rates

Lack of Recruitment Staff

A Strengthening Market

ECONOMIC TRENDS

Population

Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 1999-2003

Gross Domestic Product

Table 2: UK Gross Domestic Product at Current and Annual Prices (£m), 1999-2003

Inflation

Table 3: UK Rate of Inflation (%), 1999-2003

Unemployment

Table 4: Actual Number of Unemployed Persons in the UK (million), 1999-2003

MARKET POSITION

Table 5: The Permanent Staff Recruitment Market Within the Overall UK Recruitment Market by Turnover (£bn and %), Years Ending March 2000-2004

2. Market Size

THE TOTAL MARKET

By Value

Table 6: The UK Permanent Staff Recruitment Market by Turnover (£bn), Years Ending March 2000-2004

By Volume

Table 7: Number of Permanent Staff Placements, Years Ending March 2000-2004

BY MARKET SECTOR

Blue Collar

Computing/IT

Drivers

Education

Financial

Hotel/Catering

Nursing/Medical

Professional/Managerial

Secretarial/Clerical

Technical/Engineering

3. Industry Background

RECENT HISTORY

INDUSTRY SYNOPSIS

NUMBER OF COMPANIES

Table 8: Number of UK VAT-Based Enterprises Engaged in Labour Recruitment and the Provision of Personnel by Turnover Sizeband, 2000-2004

EMPLOYMENT

Table 9: Number of UK VAT-Based Enterprises Engaged in Labour Recruitment and the Provision of Personnel by Employment Sizeband, 2004

REGIONAL VARIATIONS IN THE MARKETPLACE

HOW ROBUST IS THE MARKET?

LEGISLATION

KEY TRADE ASSOCIATIONS

Recruitment & Employment Confederation

Other Professional Bodies

Association of Executive Search Consultants

Chartered Institute of Personnel and Development

4. Competitor Analysis

THE MARKETPLACE

General Permanent Recruitment

Executive Recruitment

Executive Search

MARKET LEADERS

Adecco Holdings (UK) Ltd

Company Structure