pivot

Our market

The stage of the macroeconomic cycle and outlook, and prevailing sentiment in each of our markets, have a direct and often significant impact on activity levels within our business. This can be both positive and negative, particularly with respect to the confidence levels of businesses to invest in hiring, and candidates to move jobs. We call this ‘job churn’, and it is the primary driver of activity in the short term.

In addition to these short-term macroeconomic conditions and competitive trends, we see many other factors that influence our business, which can represent opportunities and/or risks or challenges to our existing business model.

The emergence of structural growth markets in specialist recruitment, skills shortages in certain recruitment markets and the globalisation of the flow of labour all have an influence. In addition, we identify four ‘mega trends’ which also have an impact on the future shape and direction of our industry and inform how we run the business and develop our strategy:

Mega Trend 1: Labour Force Evolutions

These include the rise of the digital economy driving new job creation in more niche areas such as social media, increased IT spend and demand for more flexible, project-based work or greater mobility of experienced workers and globalisation of labour.

Many of the factors above are why we believe Contracting is a key structural growth market and has become one of our fastest-growing business sectors. We have made further strategic progress rolling out our market-leading IT Contracting business from Germany into other markets where we believe the model can be successful, including Canada, France and Japan. This, coupled with the established IT contracting business we now have in the US following the acquisition of Veredus, means we are at the forefront of this evolving market trend.

Opportunities for Hays

  • Further build scale within our Contractor business
  • Offer a truly globally-integrated service to respond to increased candidate global mobility, capitalise on cross border client relationships
  • Continue to build our brand in new emerging country markets and industry niches

Potential challenges or threats

  • Sourcing highly-skilled contractors to place with clients
  • Jobs are created in new, niche specialisms in which Hays has limited presence
  • Being able to quickly understand and adapt to changing regulatory environments in many local markets
  • Technological and demographic factors which may constrain growth

Mega Trend 2: Changing Client Behaviour

Many companies are increasingly employing skilled people on a contract or project basis, introducing more flexibility in their cost base and benefiting from a workforce with a wide portfolio of relevant experience. For an increasing number of businesses therefore, contract and temporary workers make up an essential, and in some cases substantial, part of their workforce. Hays act as intermediary for highly skilled professionals searching for short-term vacancies.

Opportunities for Hays

  • Work with existing clients to help them manage and shape their skilled Temp & Contractor workforces
  • Establish new client relationships as more businesses adopt this model
  • Bring the expertise of our existing Temp & Contractor businesses to bear in new and opening markets

Potential challenges or threats

  • The risk of more 'in-house' recruitment and direct sourcing of temp and contractor labour by corporates
  • Adverse changes in local market regulations governing the Temp & Contractor markets

Mega Trend 3: Changing Business Practices

These include increased outsourcing of recruitment in many immature markets around the world where most professional recruitment is still done by in-house HR teams, as well as the increased levels of centralised procurement seen in large corporates in more mature markets

We operate in both mature, cyclical and less mature structural-growth markets. We have been building a strong presence in markets like Germany which, despite being a developed economy, has a low penetration rate when it comes to the outsourcing of recruitment services. Therefore, notwithstanding our market-leading position there we still see many growth opportunities as more businesses start to outsource their recruitment of skilled labour. Our services must be tailored to these different client needs, whether SMEs or large corporates and the way we provide those services has to be adapted to match those unique requirements. For instance we offer Managed Service Programme (MSP) services, where we manage contingent workforces, as well as Recruitment Process Outsourcing (RPO) services, where we manage all permanent recruitment needs. Additionally, to help clients of any size tracking all aspects of their contingent workforce we also offer technology-enabled solutions like our 3 Story Software, a cloud-based vendor management and workforce management software solution.

Opportunities for Hays

  • Open-up markets where the majority of recruitment is still performed by in-house teams
  • Drive growth over-and-above the economic cycle, capitalising on first time outsourcing

Potential challenges or threats

  • Margin pressure as more recruitment purchasing decisions are actioned by procurement teams
  • The need to continue to invest in developing new tools and resources to provide first-class large-scale HR services
  • The risk of disintermediation by newly developed technology tools embedded within our clients
  • Sourcing and retaining skilled people and management depth in newer markets

Mega Trend 4: Evolving Technology

Technology is in many ways transforming how people work, enabling remote working and impacting on how clients and candidates engage and interact with the jobs market and with Hays. Also, the digitalisation of both supply and demand creates vast quantities of data to be analysed and put to use.

Our sector-leading technology and partnerships help us drive growth by improving our consultants’ productivity. We also have an Innovation team which is tasked with assessing the technology landscape, identifying new industry trends, opportunities and threats and building partnerships with key emerging players.

Opportunities for Hays

  • Leverage our IT architecture to efficiently handle the increasing volumes of data in our business, enabling our consultants to focus on the relationships with clients and candidates
  • Understand and manage the data within our business to drive better results for clients and candidates

Potential challenges or threats

  • Invest in understanding and responding to new trends, routes to market and disruptive technologies
  • Continue to develop our systems and capabilities to interact with external data sources, new routes to market and to be able to offer clients and candidates the products and systems they demand such as mobile and social media technologies