From the lows of the pandemic to the highs of the subsequent bounce back, the last few years have been a rollercoaster for recruitment agencies, presenting new opportunities but also many new challenges.
It is a pattern that looks set to continue through 2023, as the UK grapples with the impact of some major world events that are seeing budgets squeezed and further pressure piled onto businesses.Faced with the prospect of a tougher recruitment landscape, there is one thing no agency can afford to do - and that’s sitting still – and those who simply coast along trying to ride out the storm may quickly find themselves left behind.
So, what is the recruitment industry landscape looking like right now? And what trends might we see accelerating amongst the most ambitious and forward-thinking agencies, as they look to respond?
Recruitment industry landscape
Although the UK is no longer expected to go into recession, growth remains slow.
Job vacancies have fallen for the eighth time in a row, with companies blaming economic pressures for holding them back from hiring new staff. Potential candidates are also feeling the pinch, with high-interest rates and the spiraling cost of living impacting on both workers’ willingness and desire to change roles.
But it’s not all bad news.
The UK economy has proven more resilient than many expected. According to the Office for National Statistics (ONS), retail sales saw a 0.5% increase in January compared to the previous month and business activity rebounded in February.
Despite the unprecedented challenges of recent years, the recruitment industry also remains buoyant. The sector is estimated to have grown by around 6% in 2022 and is expected to contribute more than £51.3 billion to the UK economy by 2025.
And while agencies are up against it right now, the industry has faced far worse!
For recruiters looking to maintain post-covid rates of growth, it is a business landscape that will call for working harder and smarter. This means we are likely to see some key trends emerging in the coming months, particularly around the use of recruitment technology.
Capitalising on recruitment tech
RecTech will remain a core focus for agencies in 2023, as recruiters look to capitalise on the many benefits of specialist technology to help them stay ahead and maintain a competitive advantage.
Here are three of the key trends to look out for this year. You can find out more in our blog ‘The top RecTech trends to watch’.
1. Automation
In 2023, automation will increasingly help teams stay ahead of the curve, accelerate the search for talent, overcome core challenges, eliminate repetitive tasks and streamline their systems and processes.
2. The RecTech stack
Teams will be focused on optimising their rectech stack meaning they implement and integrate different technologies at each stage of the recruitment process, which together helps strengthen the agency’s performance and results.
3. Streamlined back-office
From timesheets to invoicing and compliance, teams will be streamlining their back-office with technology that supports their core functions to run smoothly and professionally, while aiding transparency for recruiters, clients and contractors.
Looking beyond the tech
Agencies will also be looking beyond the tech they are using and to the companies behind them, to ensure they are working with tech partners who are continually investing in and improving their offering.
In tandem, those that use the technology day-to-day will want to maximise its benefit and ensure they are getting the most out of it by fully exploiting new releases and functionality as well as customer support elements provided by the tech partner. (Something we’re proud to excel in, here at 3R).
Being human
It’s not all about the tech though. When times are tough, the difference between good and average recruiters is more noticeable and the ‘human’ element becomes a strong differentiator.
The top-performing agencies recognise this and know that the route to sustained growth will always be driven by the relationships they are building, and the human experience being provided.
Successful client, candidate and consultant relationships are ongoing - not just about filling a single position. By providing the strongest possible human experience and going the extra mile, agencies are setting themselves up for success despite ongoing market challenges.
Getting the basics right and using those old-school recruitment skills is going to be crucial.
Alongside this, a modern approach will come into play with teams using data and analytics to help them maximise potential efficiencies and opportunities. They will be going the extra mile to fully understand the market, acting on insights and considering how projects might create peaks and troughs in demand, as well as staying close to the candidate and contractor community.
Staying strategically sharp
Strategy is everything and we are already seeing a trend for SME recruiters to pivot and refocus. This doesn’t mean they are making knee-jerk reactions that may have a negative impact. Any redirection is being strategically thought through to ensure it will strongly align with current capabilities.
For example, one area growing agencies are keen to explore is entry into the US market, where clients can often find UK recruiters’ niche expertise a huge draw. To successfully make the move involves investing a lot of time and money and understanding that it is a complex market (having 50 states, all with different rules!) so you can’t just wing it. Success there depends on having the right partners to support you.
For start-ups who are new to the game, seeking extra support to ensure they are being both strategic and business savvy will also be invaluable. For example, here at 3R, we've partnered with The Recruitment Network to develop a 12-month strategic Start-up Accelerator Programme that supports recruitment entrepreneurs in launching and scaling their agencies.
In summary
The recruitment landscape may be a little tougher right now but that’s not going to stop ambitious agencies from doing all they can to grow. From capitalising on specialist technologies and data, to honing their strategies, pivoting, and building great relationships to maximise opportunities, we are likely to see some key trends accelerating in 2023.