SThree gives IT staffing local colour

25-Jan-2006

SThree's main offices are in London's Great Windmill Street, and like that colourful Soho neighbourhood, they are a sign of affluence and updated attitudes, while still retaining a link with the old and traditional.

The company is unashamed to rub shoulders with the less salubrious side of London. Sugar Reef, a popular watering hole for tabloid hacks and aspiring celebrities is yards away, and The Windmill Table Dancing Club, its colourful past recently recreated on the big screen in Mrs Henderson Presents, is across the narrow road.

For SThree chief executive Russell Clements, there is

a direct link between his firm's bright, new offices, his own professional heritage and SThree's geographical location in the seamier side of Old London Town.

“My publishing roots are in Soho. I've worked here for the best part of 20 years,” says Clements, who started his career in media sales. “It's the home of the marketing world and the spiritual home of where we started out.”

SThree's seven-month-old offices, full of natural light and sleek wooden flooring, befit a company that became the most valuable listed IT recruiter in the UK following its admission to the London Stock Exchange in November.

When it joined last year, SThree was worth £273m, and its closest rival in the specialist IT staffing market was Spring, worth £93m. When Recruiter met Clements in mid-January, the valuation was nearer £350m.

Clements has been with the company since 1986, joining its initial incarnation, Computer Futures,

as a trainee recruitment consultant. He became a sales director in 1992 and reached the position of managing director at Computer Futures in 2000, before moving to become chief executive in 2004.

What makes SThree stand out from the IT crowd is that it has arguably less than meets the eye.

The SThree website offers little in the way of a company mission statement. Four rather lonely bullet points explain the company's policy to be 'the most profitable specialist staffing business in the United Kingdom and Europe' and accompany general statements about pursuing 'its multi-brand strategy', 'organic growth through continued development of the Group's core ICT staffing business' or to 'explore niche acquisitions on an opportunistic basis'.

In meeting Clements, however, the company's concise mission statement comes more into clearer focus.

Because this is a very unusual organisation, where the individuality of the parts is far more important than the sum of the whole.

“The SThree brands are genuinely autonomous,” explains Clements. “It's crucial to how we run the company, and it's what most people are surprised about. We don't share client and candidate information.”

Unlike its major rivals, SThree operates under a number of brands - 12, to be precise, with the three largest being Computer Futures, Progressive and Huxley. It also tends to serve small to medium-sized businesses instead of focusing on large corporate clients, and is made up of 12 IT and HR brands with free rein to compete with each other.

SThree started as Computer Futures in 1986. Over time, owners Bill Bottriell and Simon Arber set up spin-off businesses. SThree was was formed 'technically' in 1999 when a consortium of venture capital companies led by Barclays Private Equity invested £50m in the business which by then comprised a total of six brands.

Today, three-quarters of SThree's business is in the UK, with 25% overseas, in Frankfurt, Munich, Amsterdam, Paris, Brussels and Dublin.

With tongue slightly in cheek, Clements compares the business to the well-documented machinations of the European Union.

“I see it as the same way that the EU works. Member states will acknowledge that they are better operating under a common banner, but sometimes they will realise that individual issues are not compatible with the issues of the EU as a whole,” he says.

“With us, it's the same. If you get too prescriptive and directional at the centre, it would question the entrepreneurial autonomy we give to the individual brands.”

“We have kept our best people in an industry where it's easy to lose them. We've given them a vehicle where they can scratch an entrepreneurial itch.”

As a market leader in the IT recruitment industry, one would expect Clements to be content with his company's lot. Not so, however. Clements is on the executive committee of The Association of Technology Staffing Companies (ATSCo), and freely admits to haranguing his fellow members to try to get a better deal for the industry.

“I believe that the government takes trade bodies far more seriously than individual companies,” he says. “Through ATSCo, what I do is influence the other members to be brave. It's not official policy, but I will bend their ear at every opportunity.”

Clements doesn't pull his punches on where the IT market has gone wrong in recent times. “I believe that some companies have lost the plot,” he says. “Our competitors have started believing that there's something wrong with being a staffing company.”

Clements slams anyone who doesn't brand themselves in this seemingly obvious way. “Not so long ago, the future was 'human capital management', and we were derided as the Flat Earth Society. I now say to anyone who has this as part of their mission statement that they should sell up now.

“Our competitors thought they could be like Wal-Mart of the recruitment world, but we provide the same service as when I joined the company in 1986.”

Clements maintains that SThree has the confidence to charge for quality. Low-margins are not its business, and he believes that IT recruiters who have chosen to chase the fast buck have ultimately paid the price.

“We gravitated away from customers who were preoccupied with price,” says Clements. “We can afford to walk away from being nickeled and dimed by customers, because no customer is more than 1% or 2% of the business. We don't compete with the low-margin players, which means that we are turning down opportunities to do business all the time.”

The organic growth of the company is also seen in how it grooms its employees. “We do not take people in from our sector or from other competitors,” says Clements. “Our typical policy is to take on graduates and train them up.”

Clements admits that this recruitment strategy can pose problems. “We compete with everybody for graduates. But I think being a public company will raise our stock for recruitment.”

The “S” in SThree's name stands for Staffing and the Three for the three main parties of the business: candidates, clients and shareholders. Little deliberation was wasted over its title. “We spent less time coming up with the name for SThree than we did for the actual brands within the company!” jokes Clements.

The name SThree is literally a coatpeg for the operating businesses, and deliberately so. Clements admits: “We're probably the best brand that you've never heard of.” As an example, he points out, “People in our industry may know Computer Futures but not necessarily SThree.”

The company sees little need to brand all its individual companies. “If you look at companies like Unilever,

you know their individual brands [Birds Eye, Persil and Wall's, among many others] but I doubt anyone would

say it's a sensible strategy to have Unilever ice cream,”

says Clements.

The company took a decisive brand awareness step in listing on the stock market, but for Clements, it wasn't simply for financial gain. “As a public company, we have to be seen to do what we say we are going to do,” he says.

“The main reason we decided to float was to give our staff something so they would not feel that they needed

to leave,” says Clements. “We didn't need the money, it was about giving the staff and management a tangible asset in the form of shares, and a vehicle by which they can feel that they can grow and go forward.”

The future for SThree looks bright, with a New York office in the pipeline this year and further European expansion planned. It's a company that has its base near the 'in-yer-face' side of London, and has the confidence to show its wares, but only for the right price behind closed doors. Not so unlike its neighbourhood at all…

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