February 7th, 2020 | Industry News
The Recruitment and Employment Confederation has recently reported that on any given day in the previous year, the recruitment industry had placed over 1.1 million people in temporary and contract roles. It’s a great success story for the industry, especially as the report goes on to say that 82% of the firms that used recruitment agencies were satisfied with their service. A warning note is sounded by the average operating profit of 3.8%… suggesting that many agencies are not able to convert enough of their gross profit to operating profit. The reasons for this may be:
1. Excessive agency costs
The best online recruitment software helps agencies streamline their back office costs so they can reduce expenditure and create more operating profit.
2. Fire fighting
Recruiters can get stuck in a cycle of working on last minute placements or filling and refilling temporary placements in hard to recruit sectors. Over focusing on this kind of problem recruitment means they miss out on opportunities to expand. Recruitment management software that is sophisticated enough to automate many processes can free up consultants to look past the immediate issue and pursue longer-term strategies to grow their sectors.
3. Inability to grow
Almost the opposite of the previous problem, some recruitment consultancies become locked into narrow recruitment sectors. While specialising is valuable, overspecialisation prevents agencies from being able to develop their capacity and move into adjacent areas of employment. SaaS recruitment agencies tend to be better able to spot these opportunities as they have more scope to see real-time recruitment changes and to capitalise on them.
Research published by National Grid shows that the UK will need to find people to fill 400,000 jobs by the end of the decade. A fifth of those working in the energy sector are due to retire by 2030, and engineers and tradespeople will be at a premium to fill those vacancies. Recruitment database software is expected to be crucial in helping the industry to up-skill and discover transferable skills.
IR35 and the recruitment sector
An ongoing area of concern for recruiters has been the new IR35 legislation that is due to be extended to medium and large organisations who will be expected to take on responsibility for deceasing the tax status of their contractors. A letter from major recruiting consultancies to the Chancellor has suggesting finding an independent body to review the changes, as well as learning from the first roll out to ensure that responses such as projects being taken offshore don’t damage growth in the UK, and actually reduce revenue. Recruiting software needs to be sensitive enough to take account of taxation regimes whilst robust enough to ensure easy compliance.