The internet is providing little salvation for recruitment
agencies which appear to be using the web for little more than
publishing job listings and displaying 'brochureware', according to
a recent report by research firm, Richard Holway Ltd.
"We're pretty sceptical about so called 'e-cruitment services,"
comments analyst Heather Small, co-author of the report. "We can
see how the web can bring agencies closer to their clients and
candidates - that's true in most industries. But it's tough to see
how the complete recruitment process can be handled entirely over
the internet, particularly when you're dealing with highly
technical candidates and clients with complex requirements."
"The other problem," she continues, "is that job billboards like
Jobserve are a great 'leveller'. All the agencies use them, but all
the ads looks the same, so how do you differentiate yourself from
the hundreds of agencies advertising their vacancies on the same
website?"
According to the report, the UK IT recruitment industry is still
suffering the effects of the post-Y2K "doldrums", but there is hope
on the horizon. Market growth slumped to seven per cent last year
after reaching figures of 27 per cent in 1997, and 25 per cent in
1998, reveals the report. This year it is predicted to grow just
five per cent, making the market worth some £4 billion.
"The Y2K micro-climate has had a devastating effect on IT staff
agency revenues and profits," admits Small. "Most agencies were
expecting a return to healthy trading pretty well right after the
new year - but few have seen contractor numbers return to anything
like normal levels."
Small believes many agencies are pinning their hopes on a
"stonking fourth quarter", but Holway is not so optimistic.
Revenues from leading UK IT staffing agencies grew 14 per cent last
year, she notes, but profits fell by six per cent. Some agencies,
such as Spring and Lorien, even went into loss.
Despite this however, Holway believes the market will recover.
"Most of the agencies are telling us that internet and telecomms
skills are 'hot, hot, hot'," comments Small. "We're also hearing
that permanent recruitment is picking up much faster than the
contracts side of business. That doesn't do much for top line
revenues, but packs a real punch at the bottom line where it really
counts."
Small also believes that the current skills shortage will help
ensure there is still a "healthy trade" in IT staff, but notes
there will be fewer players around to do the business. She adds:
"The survivors will be the agencies that can make their presence
felt on the web - they've got to attract candidates to their own
websites, even if they go to the billboards first."