Global trends in Recruitment 2014

1. Global talent trends
and the role of
Recruitment
agencies
Peter Cosgrove
October 2014

2. Global trends in Recruitment Agencies and best practice examples
Introduction
What has been the most under-managed corporate asset of the past two decades?
According to McKinsey’s War for Talent survey, it has never been more challenging to
identify the best talent. There’s an ever increasing need for technical skills, a move to non–
permanent jobs and a desire among employees to work from home. So with all these
changes, how are CEOs and recruiters managing future talent? Where do they find the bes t
people, how do they do it and how will recruitment agencies assist and support the
industry?
The Recruitment Agency Marketplace
The recruitment agency market is growing. While practices may somewhat differ across the
world, the expectation is that all sectors will continue to grow. Here are some key statistics
on the sector from the latest Ciett information in 2013:
 The Global revenue of recruitment agencies is over 350 billion dollars
 Europe has the largest share of the market (37%), followed by the USA (29%) and
then Japan (17%)
 There are over 200,000 recruitment agency branches across the globe employing
over 620,000 employees
 Agency workers will fill circa 13 million jobs in 2014
 The world average penetration rate for agency work is still at 0.9% and staying
relatively stable
 Agencies help over 12 million young people enter the labour market
 The top three global recruitment agencies worldwide are Adecco, Rands tad and
Manpower.
Why employers use recruitment agencies
The main reasons employers use agencies can be summarised as the following:
 To unearth hidden talent: many employers use recruitment agencies to find them
talent that they are unable to find themselves. With so much emphasis being placed
on the importance of talent within the organisation, this is seen as a key competitive
advantage.
 To save them time in hiring: many employers may have the capability to hire but
given the volumes and challenges related e.g. assessment, visa and sponsorship
issues, they would prefer to have an intermediary manage this for them.
 Brand challenges: Many employers have an unrecognised brand or potentially not a
strong positive image and they use agencies to help sell their message and their
brand in a positive manner. This ensures more potential hires do not say no at the
outset based on perceptions of the organisation. This is becoming a bigger issue as
more stories are relayed by employees about the companies that they work for.

3.  New markets: When employers move into new territories they use recruitment
agencies not only to hire the talent but also to give them advice on labour laws,
salary bands and other employment related matters.
Why do jobseekers use recruitment agencies
 Opportunities: It gives them access to multiple opportunities as opposed to one
opportunity with one company, many employees look at it as a good way to begin a
job search where they may just want to understand more about the current
marketplace.
 Advice: They can provide advice and assistance in obtaining employment often by
counselling employees on what they need to do to be successful.
 Flexibility: It can provide flexibility both in hours, location and duration of
employment, or it can provide them with access to the labour market that they
might otherwise not have. For many, flexible working is now a choice that they want
as more employees opt out of permanent work for temporary work.
Agency work as a predictor of economic recovery and an increase in jobs.
Agency work is the term given to non – permanent work through a recruitment agency. In
times of economic recovery agency work is often the first employment that companies turn
to. There has been a direct correlation in the last few years between GDP growth and the
number of hours of agency work which is why Ciett highlights that agency work is a leading
economic indicator.
The other key point is that in the 2013 Ciett survey it highlighted that 62% of agency jobs
would not have been created if corporates did not have access to agency work. Companies
are often reticent to hire permanent workers if an agency worker is not available so agency
work certainly promotes job creation due to its greater flexibility.
The Talent challenges
There is a growing mismatch happening between the skill-sets in demand and those looking
for work. 23 million people in Europe are under-employed yet job vacancies are on the rise,
that number world-wide is estimated at 202 million people under-employed. McKinsey have
predicted that there will be a shortfall of 16 million college educated workers by 2020. The
global trends all point to an older workforce, less people having families and a general
worldwide decline in the population.
Here are some major talent challenges:
 Ageing Workforce: There is a rapidly ageing workforce with many countries not
looking into strategies for upskilling the older workforce. Norway and Japan as much
out of necessity, are leading the way while countries like France are facing huge
challenges down the line.
 Technology will bring about a shift from a more permanent, lifetime job towards less
permanent, non-standard employment relationships, such as self-employment and

4. freelance work. These arrangements may be particularly attractive to those seeking
a better work-life balance or those with disabilities. Many companies are not yet up
for these challenges.
 Millennials are expected to make up 75% of the global workforce by 2030. Their
dominance will ensure a vital role in defining the culture of the future workplace.
Millennials are the generation born between 1980 and 2000. One of their most
defining characteristics is their affinity with technology. For them, instant access to
information, smartphones, laptops are the norm. This generation place more
emphasis on their personal needs than on those of the organisation.
 The move towards permanent flexibility: Traditionally employers have increased
their use of contract and temporary staff during a recession and then as the
economy recovers they move back towards permanent headcount. However, the
prospect of longer term economic uncertainty appears to be changing employer
behaviour. In the US, which is generally seen as a lead indicator of the recruitment
marketplace, when the economy began to recover in 2012 the incidence of
temporary and contract recruiting was far higher than ever before.
For recruitment agencies to survive or thrive
The future challenge will be less about “finding” candidates and more about building
networks. One of the key challenges for recruitment agencies will be corporates building up
in-house recruitment teams to own their own recruitment.
Job boards, LinkedIn and corporate recruiters have all been highlighted as reasons for the
death of the recruitment agent. But the industry is alive and well, thriving in fact, and there
are very good reasons for this:
 Talent is not a commodity: Unlike other things you can procure, talent has a voice
and an influence, it is complex, like any human individual. The services of
recruitment agencies involve much more than providing CVs. If that’s all an agency
does, it will struggle to survive.
 Social media is not a replacement: Tools such as LinkedIn and job boards, while very
useful, will never completely replace recruitment agencies; they only give you a list
of candidates; you cannot identify the right candidate by this means alone.
 Good business sense: Commercially, it will always make sense for companies to use
recruitment agencies. Their service is generally free until you hire (no hourly charges
like many professional services).
 Added value: Agencies can offer professional advice on the marketplace, informing
clients how their brand is perceived and investigating the availability of talent.
 Candidate’s perspective: From a candidate’s point of view, they may not want to
apply directly to the competition; they may prefer a third party to contact them on
their behalf.
 International support: huge support to employers looking to recruit overseas.
Recruitment agencies will need to specialise to a greater degree if they’re to continue
adding value. They will need to demonstrate it online and promote themselves to clients

5. and candidates as the place to go. As Greg Savage, a prominent industry blogger, often says
“whoever owns the talent, will own the market”.
Case Study, how finding candidates is going online
Hard Rock Café Firenze fills all positions using Facebook alone
The Hard Rock Café in Florence needed to hire 120 staff for its new store opening. They recognised
that their consumers and candidates were often the same person, so they launched a Facebook
campaign that allowed candidates to submit applications via Facebook.
They also ran Facebook ads targeting people around Florence who showed an interest (liked) rock
and roll bands. The page grew to over 6,000 in 4 days (bearing in mind that some companies take
years to reach 5,000). The Hard Rock team also responded to applicant questions within Facebook.
The campaign led to 4,000 applicants and all 120 were hired through the app. It was not just
incredibly quick, it was very cost effective. Also, because they targeted candidates who were
passionate about the Hard Rock brand, they had a 95% offer success rate.
The future of sourcing candidates will more and more through online channels.
The phrase “inch wide mile deep” will become more relevant as companies use agencies
who have a deep specialisation in their area and know not just the local market, but the
international market.
The major challenge for the industry will still be the recruitment agency brand. In many
countries, there is still a very negative connotation of a recruitment agency as it is linked to
forced labour and unregulated practices. Much work is currently being done on this but this
will continue to be a huge challenge. Bi-lateral agreements, while very challenging to put in
place are one of the most influential ways towards better regulation between countries.
Disrupters to the global agency marketplace
One of the biggest disrupters of the agency market is the new online staffing models. These
are models based on the fact that people can work from anywhere and they take
assignments across the globe using an online staffing site such as elance-oDesk or
freelancer. Much has been made of how organisations will change with all the technological
advances and it is happening. More and more people are working on assignments on an
output basis through these sites and can be working on an assignment from anywhere in
the world. While this opens up talent to the entire world, it will prove a key disrupter for
recruitment agencies.
The online staffing models market share, according to Staffing Industry Analysts is currently
1.6 billion dollars and conservative estimates reckon that the market will grow to around 30
billion dollars by 2020. One of the key drivers for this is the access to technology and that
everyone is connected so it is much easier to assess and hire virtually.

6. Labour Mobility
Better labour mobility is needed world-wide given excessively high unemployment in some
countries with skill shortages in others. The challenge is that anti-immigration sentiment is
growing in some countries so it is critical to make the idea of labour mobility and migration
of labour a win-win solution for countries and future employees. For ASEAN countries,
better labour mobility will need a review of some constitutional and legal objections to
employing foreigners.
Labour mobility benefits both the county of origin and the new country. The former can
increase remittances into that country and for the latter, increased competitiveness. The
World Bank estimates that 549 billion dollars is sent in international remittances, the largest
country being India (71 billion), followed by China (61 billion).
There are also some negative connotations with migration of labour, with migrants being
exploited at the hands of traffickers or employment agencies. According to the World Bank,
migrants are sometimes charged excessive commissions for recruitment services when
changing money or when sending money back home.
It is clear in the long term that more international migration from third world countries and
greater mobility in the EU remain the only possible answer to future mismatches between
supply and demand of labour and skill. Therefore, future migration and integration policies
need to be aimed at reducing the direct and indirect costs of migration.
A further challenge is that even when there is easier regulation on migration of labour, this
does not immediately mean that the visa process is simple. One of the common complaints
is that visa processes are time consuming, bureaucratic and costly which can be a further
prohibitor.
Future trends – where is it all going?
We are seeing an irreversible trend from permanent workforces to more temporary and
contracted positions.
 It has been forecast that up to 40% of the global workforce could be freelancers by
2020. Much of the outsourcing that is taking place is around flexible or contingent
talent, a fact which companies will need to bear in mind, as more of their workforce
moves to non-permanent roles.
 This trend could lead to the outsourcing of recruitment functions which can help
drive down recruitment costs. A word of warning though; while it’s good to get value
for money, do you really want cost to be the most important factor in the acquisition
and negotiation of your number one asset?
Companies are hiring talent from a global network on the understanding that they may
never meet their employees face-to-face.

7.  Many of these trends are coming about because of advances in technology. Sites
such as elance-oDesk enable freelancers to make money from their talents, by
connecting them online with companies. In this way, technology is making it simpler
to link employers with employees. This will fundamentally shift the way we do work.
Bring the work to the worker instead of the worker to the work
 Currently, many workers cannot enter the workforce because they have to stay at
home due to childcare commitments, a long term disability, or becaus e they’ve been
out of work for a long time and are perceived as unsuitable. In circumstances
however, where the only requirement is the completion of a particular task within a
given timeframe, many people who are currently not working could find a regular
earnings stream. Such new ways of working will make more talent available to
companies; they just need to be open to it.
 Access to newer ways of finding talent e.g. professional networking sites such as
Linkedin, does not necessarily help time efficiency as the to and fro nature of the
communication does not meet the timelines of the corporate.
The rapid change of the jobs of the future
 Skill-sets of the future: with such rapid technological innovation employers are
finding it increasingly difficult to predict the skill-sets of the future. Roles like “data
scientists” did not exist five years ago for example. Intel highlighted last year that
80% of its current revenue comes from products that did not exist two years ago.
 Millennial Generation: known as the generation of digital natives, for whom the
internet has always been there. The view is that they will be much more radical and
will reject traditional employment contracts favouring contract or freelance options .
 Your home-grown workforce: even in countries where the home grown talent is
strong and the education remains a huge focus, the challenges will come from other
countries who, more and more will be looking to hire the top talent wherever they
exist around the world. With the ability to work from anywhere becoming more
prevalent, talent will be accessible from anywhere in the world which can be an
opportunity but also a threat.
Changes to labour mobility
 More and more companies will see the importance of an efficient labour market and
while we are not seeing it yet, more countries will make the access to migrating
talent an easier proposition within their country. Currently, there is still much mis-trust
and fear around this but the demographics don’t lie and it will become a
necessity. Labour migration will also bring benefits to the migrants themselves in
terms of higher wages and opportunities to acquire to gain new skills. Alongside this

8. there will be much stronger regulation around recruitment agencies to ensure that
employees are being treated fairly at all times.
Conclusion
Here is a summary of the top priorities for recruitment agencies and for employers if they
are to survive the talent challenges in the future:
Recruitment Agencies
1. Specialisation: it will be critical to be a specialist in a specific geography, a specific
technology or a specific sector to thrive. Companies will look to find the talent
themselves and will only be using agencies when they know more about the
marketplace and where to unearth the talent.
2. Networks: as more candidates become available online it will be much more about
building the relationship with communities of candidates to source them for future
roles. It will be these connections that will be more valued by corporates looking for
their services.
3. Candidate experience: the experience a candidate has with an agency will be more
important than ever, given their ability to let the world know through social channels
about that experience. With more people trusting the views of their colleagues and
peers over advertising, it is critical to get this right regardless of how many
applications you need to handle on a daily basis.
4. Keep up to date with the technology: while technology will not take the place of
recruitment agencies, it will certainly disrupt the market and it will be important that
agencies continue to evolve their service by utilising the newest technologies.
5. Look at the future: all the challenges in terms of technology, flexible working,
globalisation need to be looked on as opportunities to get into new markets and
geographies.
Corporates
1. Understand what your brand says. There’s little point identifying the top 100 people
for your company if 99 of them don’t want to join you. What matters is not what you
say, but what others say about you. Ask yourself if you would be inspired to join your
own company or if you would refer others to work there.
2. Appreciate the importance of social media in attracting future talent. Be clear on
what you want to achieve and dedicate resources to it, only then will it become
more powerful.
3. Ensure your recruiters are part data scientists and part sales people; they need to
understand how to find candidates amid the vast amount of data, but they also need
to be able to sell them the opportunity.
4. Understand the importance of creativity and new ideas. These will differentiate your
company from the competition. Are you clear on how you are getting the best out of
your current staff?
5. If your talent is the number one reason you will succeed, re-think the role of
procurement that says you must get the lowest possible price from all recruitment
partners. Talent is not a commodity but there is a right price.