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REC Findings: Recruitment companies key to future business growth

The Recruitment and Employment Confederation recently published its annual report into recruitment industry trends. As well as being vital for recruitment companies to see how they measure up against the rest of the industry and the current and predicted shape of the UK’s recruitment industry, there are some interesting and stark findings about the future of the labour market which we thought it worth highlighting.

Lee Baty, Head of Corporate and Business Banking, Global Trade and Receivables and Finance UK, at HSBC Bank Plc says “Recruiters provide a vital service, not only to clients making use of a recruiter’s expertise in matching candidates to roles, but also to jobseekers, for whom their choice of job and employer can be one of life’s biggest decisions. This means the people expertise that recruiters provide is critical. Recruiters will seek to understand an individual client’s needs, and match solutions to these. This can only be done by building lasting relationships between recruiter, their clients, and prospective candidates.”

The move to outsourcing

The findings of the report show that hirers have continued to develop their direct sourcing capabilities – either internally or via an external partner. While the proportion of employers who operate all of their recruitment in-house dropped from 69 per cent in 2013 to 54 per cent in 2017, this is viewed by the CIPD as a shift towards employers combining in-house and outsourced approaches (44 per cent of employers in 2017 versus 28 per cent in 2013).

Why is there a move away from in-house recruitment? The Office for National Statistics (ONS) job vacancy data shows that the average monthly number of recorded vacancies increased from 745,000 in April–June 2016 to 770,000 in January–March 2017. While demand stayed static amongst the largest employers (2,500+ employees) across that period, it notably increased within the significant majority of UK employers – SMEs (1–249 employees) and large enterprises (250–2,499 employees).

At the same time, the availability of staff to fulfil permanent roles declined markedly – As recorded in the REC’s Report on Jobs monthly publications, the number of candidates available to fill permanent roles continued to decline markedly in 2016/17, with the rate of reduction reaching a 13-month record in February 2017.

More employers are turning to agencies to find permanent staff as the shortage of candidates intensifies, backed up by the fact that permanent recruitment volumes have increased steadily reaching an all-time high in 2016/17 of 999,946.


The REC surveyed recruiters about their expectations for 2017–20 alongside other relevant market data, including forecasts for the general economic situation in the UK over the next three years, wage growth, and expected changes in employment legislation and business confidence.

With Brexit looming nobody really knows what the future holds. Although growth for 2018 has been projected at just 1.4%, lower than expected, the UK is still experiencing its lowest unemployment rate since 1971.

This provides recruiters with a challenge as well as an opportunity. The REC states that agencies with deep vertical specialisms, that are able to source candidates for employers that are increasingly struggling to find talent, will become more and more vital to employers.

Despite talent being harder to find, Newman Stewart has successfully fulfilled 95 senior roles in 2017, an increase on the same period last year, and is about to achieve a significant financial milestone. Backing up the REC’s findings, we have done this through our carefully nurtured network of candidates across our specialist sectors which include industrial manufacturing and services, and compliance and business services. Through our long standing client and candidate relationships in these sectors, and our exceptional research capabilities, we pride ourselves on finding the best candidates (many of whom may not be looking for new opportunities), engaging with them and delivering them to our clients. 82% of our clients in 2017 have used us before, with a large number of candidates coming back to us as clients, a statistic that we’re very proud of.

So, despite the uncertainties, many recruitment companies have consolidated their positions in the market in 2017. Strong performance has enabled Newman Stewart to invest in growing our team, improving our operational infrastructure, training and the implementation of standards, ensuring we’ll be even better placed to deliver that elusive talent in 2018 and beyond.

Download the Report Here

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