Three Quarters of Recruiting Firms Expect Revenues to Rise in 2018

January 30, 2018 – Seventy five percent of recruiting firms anticipated an increase in 2018 revenue versus 2017 revenue, according to Bullhorn’s “2018 North American Staffing & Recruiting Trends Report: The Industry’s Outlook for 2018.”

Overall, the report showed that recruiting professionals remain optimistic for a successful 2018, as they did for 2017, despite increasing concerns and emerging challenges related to automation, digital staffing platforms, macroeconomics and politics. Recruiting firms identified their top three priorities for 2018 as increasing profitability (45 percent), driving top-line revenue growth (43 percent) and improving candidate sourcing (42 percent).

Their next five priorities represented operational strategies. These included: improving the management of client relationships (27 percent), expanding into new markets (26 percent), automating and accelerating recruiting and placement processes (23 percent), engaging candidates and improving the candidate experience (23 percent) and increasing employment brand development and marketing (21 percent).

The survey found that firms anticipated revenue growth with limited margin expansion for 2018. A majority of staffing firms expected increases in hiring needs (70 percent), billable hours (62 percent) and temporary placements (59 percent) in 2018. On the other hand, a majority of firms (about 55 percent) predicted that both bill rates and margins would stay flat or decrease in 2018, and about half of respondents (49 percent) ranked pricing pressures and margin compressions as a top-three challenge.

“2018 holds tremendous opportunities for North American recruiting firms as they look to continue growing their businesses during a period of relatively strong economic growth,” said Gordon Burnes, chief marketing officer of Bullhorn. “While there are long-term strategic decisions to be made, especially around automation and digital recruiting platforms, adoption of these new technologies has been relatively slow, and recruiting firms should feel encouraged about the industry outlook for 2018 and prepare for another successful year.”

Key Findings

• Promote or Replace – the Impact of Automation on Recruiting:North American recruiting firms identified automation as both a top priority and a top challenge – 23 percent of firms ranked automation as a top priority and 36 percent marked it as a top challenge, signaling more opportunities for improved adoption and utilization. Additionally, 40 percent of respondents attributed automation’s greatest value to increased efficiencies and the same percentage to increased engagement. When asked if automation would create more jobs or eliminate them in the staffing industry, respondents were divided, with 38 percent on each side and another 24 percent undecided.

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• Friend or Foe – the Rise of Digital Staffing Platforms: Sixty three percent of respondents said they were unsure about how digital recruiting platforms such as Upwork, Shiftgig, Catalant, and others would impact their business. However, 21 percent of respondents said those platforms could help their business, compared to 16 percent who thought they could hurt their operations. Sales teams were more enthusiastic as 29 percent of respondents expressed positive opinions about digital recruiting platforms, seeing them as a potential source of low-cost talent.

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• Confidence Levels Slip – Concerns about Macroeconomic and Political Factors: Examining broader macroeconomic and political factors, 68 percent of respondents said they were very or somewhat concerned about the rate of economic growth, and large portions worried about healthcare policies and regulations (66 percent), inflation (59 percent), restrictive labor policies (57 percent), and the current administration (57 percent). Overall confidence levels for industry performance have slipped, with one-third of respondents (33 percent) feeling more confident about the future heading into 2018, compared to 38 percent last year.
• More Technology, Less Expansion – Planned Investments of Firms:Recruiting firms said they were planning to considerably boost their technology investments, with 52 percent of firms anticipating an increase, compared to 40 percent last year. About half of firms (49 percent) also said their operating budgets would increase in 2018, an increase over last year’s 43 percent. However, firms weren’t planning to focus as much on market expansion. With 26 percent of firms ranking new market growth as a top priority – and far fewer interested in acquisitions – only 28 percent expected to increase their number of offices, according to the Bullhorn report.
• Text over Phone and Email – the Communication Methods that Millennial and Generation Z Candidates Demand: Recruiting firms listed text messaging as the fastest-growing communication channel in 2018, with 69 percent of firms expecting their usage to increase – especially communicating with Millennial and Generation Z candidates.

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• Missed Opportunities in Referrals and Redeployments – the Importance of Capturing Them: Referrals from existing candidates jumped to the top of the list of single best talent sources this year – nearly 30 percent of respondents said referrals were the absolute best source of high-quality talent. Twenty six percent of recruiting firms said they placed less than 10 percent of candidates on their next assignment, and half of respondents said they redeployed less than 25 percent of candidates, indicating missed opportunities and missed revenue.

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Looking Ahead

With persistent talent shortages and pricing pressure, Bullhorn asked how should North American recruiting firms plan to achieve a productive and profitable 2018?

Here are 10 takeaways from the new North American Recruiting Trends Report to help you weigh competing priorities and focus your thinking:

1. Plan for revenue growth in 2018, but be realistic. Three quarters of survey respondents predicted a revenue increase in 2018, although about 15 percent of firms fell short of their predictions last year.

2. Expect quantity over quality in hiring. Expect strong hiring demand, anchored by the temporary/contract market. But be prepared to defend your bill rates and margins against constant pressure.

3. Boost technology investments. Don’t delay enterprise spend on technology that boosts efficiency or innovation. Half (52 percent) of North American firms are investing in enhancements to their tech profile.

4. Share responsibility for candidate experience across the firm. Recruiters may be your firm’s face to the talent universe, but creating a positive candidate experience requires a commitment from every functional department and executive leadership. Get creative.

5. Pay more attention to your placed candidates. It doesn’t take much, but a little love goes a long way. Placed candidates are the single best source of referrals to grow your business; plus you’ll have a better chance at redeployment.

6. Text all your candidates (not just Gen Z). While phone and email outreach still dominate recruiting, texting is increasingly utilized to communicate with candidates of all ages.

7. Automate both sales and recruiting tasks. Using automation to minimize low-value tasks – such as scheduling interviews and onboarding candidates—pays off in increased engagement with candidates and clients.

8. Rethink the competitive landscape. If (like most survey respondents) you’re not sure what impact digital staffing platforms will have on your business, start educating yourself. Consider the possibility they may be an untapped talent source.

9. Balance new and existing business. Recruiting firms still rely heavily on existing accounts to drive revenue. Make sure you’re building relationships across different organizational levels and investing in talent to aggressively pursue new clients.

10. Use both subjective and objective performance metrics. Client satisfaction counts, but it’s hard to measure. Build an arsenal of data-driven metrics that give you unbiased insight into specific areas where you can improve performance.

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Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Will Schatz, Managing Editor – Hunt Scanlon Media