Some would argue that the recruitment industry has enough participants and we really do not need any new recruitment start-ups. While that would be great for those already entrenched, that is just not how the free market operates. If the existing recruitment agencies were delivering with perfection, no new agencies would be able to break into the industry. The opposite is true…many existing firms are not delivering the results needed by employers or by job seekers.
Some reasons more recruitment start-ups will happen and are needed:
- Low Barrier to Entry. A recruitment agency has a very low hurdle to clear in order to get into the business. The tools required to support a start-up are fairly simple and quite inexpensive.
- Big Agencies Train Start-ups. As recruitment consultants become frustrated with the incomes and the process demands of large agencies, they can easily leave. The big firms are literally training the start-ups as they sack, downsize, reorganize and generally frustrate a group of newer recruitment consultants that they have prepared and trained.
- The Market Size. As a market like recruitment continues to grow globally, the opportunity for more players to enter the market is evident and unstoppable.
- More Job Seekers. Those that track employee satisfaction tell us that more than 50% of all employees are open to considering a change and a slightly smaller percentage are actively looking for a change. These sheer numbers require more recruiters to handle the transactions that will be a result of these statistics.
- New Employers. New employers are entering the market and most of these are small- to medium-size businesses. These are not the targets of the large multi-national recruitment chains; these are a best-fit with small and nimble recruitment agencies. In some cases, a one-recruiter to one-employer relationship is what works best. Depending on the size of the new employer, every 3 or 4 new employers can deliver the volume of placements need one to support one new start-up agency on an annual basis.
- Vacancies Exist. There are many vacancies that go unfilled for months. In-house recruitment and the large operators are not able to fill all the openings presented. Additional more-focused effort is required by someone with a singular focus to fill these roles.
- Poor Candidate Experience. The existing agencies are not always delivering the candidate experience desired. While not all recruitment start-ups will necessarily deliver superior results in this area, there is a need for candidate focused start-ups.
- Frustration with Existing Providers. Some employers are frustrated and dissatisfied with the existing providers in the market. They will pull new competition into the industry, seeking to solve for the frustrations others have created.
- New Tools Make Entry Easier. New services are being provided to recruitment agencies that make entry even easier. There are services that collect job vacancies from employers and share them with any recruiter willing to do the work. In this case a recruiter can just recruit and does not need to spend time or energy marketing to attain clients. This further lowers one of the existing barriers to entry.
- The Pendulum Effect. After a significant downsizing to the recruitment industry that started in late 2008 and lasted through even as late as 2012, it is typical to see a rebound back to prior levels. By many accounts, the industry lost as many as one-half of all those employed in recruitment globally. It only makes sense that we will continue to see a rebound until the next big financial dip occurs.
So if you are in the industry and you are not doing all that you can to get better, to improve your skills and service to employers and candidates, then you better beware. There will be new providers calling on your accounts and candidates. They are hungry, they are focused, they are recruitment start-ups!