This is a guest post for us from Chris Pollard, who is a marketer and commentator on Staffing, SaaS and Fintech who shares his thoughts on why there has never been a more exciting time to be part of the recruitment industry.
A red hot job market, accelerated by the pandemic, has created sky-high demand in 2021, with businesses rushing to hire new staff as they reopened and reshaped to meet changing needs.
The changing nature of the global labour market has brought about huge opportunities for employers, candidates and recruitment entrepreneurs as millions of people are rethinking how they work and live.
Over 6,000 recruitment businesses were registered in 2021, a 3% increase on the previous year numbers according to data from Companies House. 50% are registered in London and the South East, mirroring previous years data, with recorded growth in Midlands, Wales and North West on 2020 numbers.
Whilst the ‘war for talent’ is stimulating the appeal to start a business, the number of new business registrations has been growing at 20% YoY in the last decade.
The continued evolution from corporate to niche consultancy has resulted in nearly three quarters (73%) of UK recruitment businesses classed as micro enterprises with fewer than 10 employees. 80% of the 50 fastest growing businesses listed in the Recruiter Fast 50, 2021 focus on one sector, marking a shift away from ‘generalists’ to ‘super specialists’.
This trend to ‘super specialist’ has been observed by GrantThornton who cite it as one of three M&A trends to watch in 2022, alongside a focus on diversity and inclusion and integrated training.
There are a number of reasons why the UK recruitment industry is so attractive for startups. As the first global staffing industry, the dynamic between employer, recruiter and candidate is well defined. Favourable regulations and ease of doing business are cited by the Staffing Industry Analysts (SIA) too. Another key reason is the rise of technology and its influence on the recruitment process.
The recruitment industry has long championed technology. LinkedIn is one of the biggest success stories and has undeniably been shaped by the recruitment industry with over 650,000 live jobs in December 2021 and 95% of recruiters regularly active on the platform.
Through a number of acquisitions, including Careerify, Connectifier and Bright, and a developer friendly environment, LinkedIn has created an environment for SaaS platforms including Vincere, Bullhorn and SourceWhale, to name a few, to integrate and accelerate recruitment processes.
LinkedIn’s importance to the recruitment industry is huge and has given rise to a whole ecosystem of SaaS products keen to grow and expand in global staffing markets.
Over 100 vertical SaaS platforms accelerate growth in the recruitment market. Many integrate with a host of the world’s software giants including Slack, Zoom, Salesforce, Hubspot and LinkedIn to seamlessly connect the end-to-end recruitment process from acquisition to referral.
Video, data, and all-in-one growth platforms are some of the fastest growing tools attracting strong investment. Data enrichment tool, Lusha achieved unicorn status in November 2021, with a $1.5 billion valuation, and at a time when demand for video recruitment technology is soaring Odro and Hinterview received £5m+ and 3m funding respectively in 2021.
A fast emerging trend in the startup and scaleup scene is the growth of “all-in-one” growth platforms. This new breed of SaaS platform provides advisory, finance, branding, accounting and operational services into one easy-to-use product. Platforms including RecruitHub, SSG, Davidson Gray and 11Investments enable businesses to get up billing quickly with little to no capital outlay.
The relationship between recruitment technology providers and business owners is creating a “win-win” scenario. Figures from BDO, highlighted that recruitment tech remains the most active sub-sector of the recruitment market in terms of deal activity with 35% of deals completed in H1, 2021. Recruitment businesses that prioritise their tech stack and operations scale quickly and earn higher multiples. The year to September 2021 was strong for UK recruitment M&A, with 80 deals completed at an average of 13x multiple according to Grant Thornton.
There has never been a more exciting time to be part of the recruitment industry. Low barriers to entry, access to finance and an explosive growth of the recruitment technology platforms are making it incredibly easy to scale faster.
