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New data reveals the REAL growth of temp and contract placements in recruitment

Posted by Nigel Harse FRCSA on 12 July 2017
New data reveals the REAL growth of temp and contract placements in recruitment

SIM shows why large and small Australian recruitment firms should be nimbler and more flexible.

It's no secret that the temp and contracting market is growing but did you know, it's growing almost three times faster than permanent sales, regardless of firm size?

New SIM data shared with APositive this week, shows just over half (55 per cent) of 119 Australian recruitment firms surveyed have recorded growth in permanent sales.

GOOD NEWS FOR SMALL TEAMS

The data reveals smaller, nimbler teams of one to 10 are growing permanent placements at a much faster rate than all other team sizes in Australia.

What's more, smaller companies that are doing well tend to be more niche focused and have less staff churn. After all, when you lose a consultant, the permanent billing stops immediately and staff churn tends to rise as teams grow.

This chart shows the change in permanent sales from March 2016 until March 2017.

LARGE FIRMS ARE ALSO FIRING

While large firms are still growing permanent sales, it's been sluggish in the past 12 months to March 2017 and, for many, growth levels are just keeping up with inflation rates.

However, during the same period of time, larger firms especially those with teams between 21 and 30 have experienced significantly higher growth in flexi workforce sales. The only downside is; it's coming at a cost of heavily reduced margins.

So why are the larger teams growing faster?

The data suggests that many of the smaller firms appear to be either walking away from, or are being out priced on, the lower margin higher volume work and this is reflected in the strength of their percentage margins and negligible erosion.

Also, the data shared with APositive this week, shows that two out of three (61 per cent) of the 119 Australian recruitment firms surveyed have recorded growth in temp and contract sales.

 

This graph shows the changing trend in flexi workforce sales from March 2016 until March 2017.

HOW TO AVOID MISSING OUT

Both small and large recruitment firms can enjoy the benefits of this period of change, but to grow your temp and contract desk successfully you must have the funds available to do so. And, generally, there are three key ways to ensure this:

  • Boost your cash funds from having a healthy perm contribution
  • Get your debtor days under control; and
  • Introduce funding to smooth out a lumpy cash flow.

Author: Nigel Harse FRCSA
About: Highly regarded and widely sought after for his knowledge, unwavering passion and innovation, Nigel is a 40-year veteran of the recruitment industry.
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Tags: Business Profitability Insights Blog Successful Recruitment Market Growth

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