Why Are There So Many Recruitment Firms? - Image

Why Are There So Many Recruitment Firms?

Anyone who has been unemployed or uploaded a CV online whilst searching for a new job in recent years will more than likely have found themselves inundated by emails and phone calls from recruiters. There seem to be thousands of recruiters and recruitment firms in business these days, not only looking to find workers for specialised industries but also for the recruitment sector itself.

How can it be that there are many people struggling to get a job but the recruitment industry is booming? At Touch Financial we decided to investigate the issue and found a number of reasons for the continuing rise of recruitment firms.

Resurgent Market

During the global recession the recruitment industry suffered heavily, with many firms going out of business. This was mainly due to there being fewer jobs available, leaving most recruitment agencies with less work and therefore unable to turn a profit. In the last few years the economy has picked up which has seen the recruitment industry thrive.

In 2013 1,489 new recruitment businesses were set up in the UK alone, that’s around four every day. With more businesses expanding and starting up there is a greater need for workers, so many companies are reaching out to recruitment firms, increasing the demand for them in the market.

The New Hiring Process

It was only really after the Second World War that recruitment agencies started to take off, getting returning soldiers into professional positions. Since then the traditional process of applying for a job, having an interview and then getting or being rejected for the job has changed quite a bit, to the advantage of recruitment firms.

Nowadays many companies outsource this task to recruitment firms in order to get the best candidate possible. Data shows that businesses’ spending on recruiters increased by around 6% from 2012 to 2013 and the trend has continued. Businesses want the best value for money and, with more money around now, they can afford to pay recruiters to get the best employees.

Increased Job Competition

Even though the economy has improved there are still around 39 applicants for every graduate job and high levels for every other position. This has actually reduced since the recession, with more companies hiring, but it still represents a lot of competition for every job that is advertised.

With such competition, companies want to get the right employee first time and are happy to pay a fee to recruitment firms to do so. As there are more people going for each job, recruiters don’t want to miss out on the perfect candidate so will contact as many jobseekers as possible, which is why there can seem to be a lot more jobs on the market.

Ease of Setting up a Business

When the recession hit a lot of people were made unemployed and with the recovery many saw an opportunity and decided to set up their own recruitment firms. There are hundreds of specialised sectors and each one seems to have at least one or two recruitment agencies working within it, which has increased the number around.

Starting up a company is a lot easier and a lot more popular too. People can make the most of recruitment finance and other financial options to get up and running, with plenty of jobseekers and companies providing plenty of business from the start. Even though a lot may not last that long there will be new ones popping up to take their place.

High Turnover

Another factor that jobseekers will have noticed is the large number of jobs advertised to work as recruitment consultants or other positions in the recruitment industry. This may seem surprising but in essence it is due to the large turnover many recruitment firms experience due to the high pressure of their positions.

Recruiters are set targets and often receive pay based on commission, and if these aren’t met can either be fired or quit, leading to high turnover. This explains why there are many positions advertised regularly. Hopefully this provides something of an insight to why the recruitment industry is currently booming.

Image courtesy of iStock.

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