Looking to cash in
Published: 06 August 2008
Recruitment companies are creating new revenue streams by using extensive contact networks and expertise to move into completely new areas of business.
Several large recruiters have used this approach to increase profits, either setting up distinct, new businesses or selling services and software already used internally.
The nature of the recruitment process means staffing companies build large networks of contacts that can be used in other business projects. Tony Goodwin, chief executive officer of generalist recruiter Antal, wants to use the business's Russian contacts to his advantage in new markets.
"I have 15 years' experience working in Russia. I want to continue to work there and use my experience of the Russian market and the contacts I have there," Goodwin told Recruiter.
He said networking with clients, candidates and colleagues in the recruitment industry has helped to create a personal contacts database numbering 7,000, of which 1,500 are based in Russia.
Antal has recently been in discussions with companies in several different sectors with a view to forming partnerships.
"I'm looking at high-tech, in-house appliances, coffee shops and a beauty product that helps reduce cellulite with non-invasive surgery," says Goodwin.
Reed Group has recently started selling its candidate-screening technology to external companies, aiming to take advantage of the resources it has built up to service its internal needs.
"Within the last six months it has been a policy decision within Reed to make screening a stand-alone business that faces externally as well as internally," Steve Bailey, director of Reed Screening, told Recruiter.
Bailey explained it was a natural progression as the technology, skills and resources were in place and could be put to further commercial advantage. Bailey highlights the advantages of using Reed's brand when expanding into new sectors.
"Reed is a very trusted name and service in the recruitment sphere — the ability to use that name for a screening service is quite phenomenal," he says.
Generalist recruiter Spring has recently begun marketing its contractor portal to other recruitment agencies and businesses.
Peter Searle, chief executive of Spring, told Recruiter that selling the software it has invested in to external clients was a natural step in Spring's business evolution.
"It gives us economy of scale, because it's an online portal we can run any number of contractors through it without any increase in cost.
"If we were to run other people's contractors through that portal, giving them the same cost benefits, it would save them having to develop it and we would get some of the investment back," says Searle.
"We don't lose competitive advantage in the long term, because everybody would have developed these kind of portals in the future. We may as well syphon the money to us, as opposed to being in the same position as everybody else in six months time."
Spring is currently in discussion with several companies about using the software.
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