Recruiter’s 2012 HOT 100 and the HOT 10+3 IT/Telecoms recruiters (EXCLUSIVE)

At least 33 IT/Telecoms specialists populate Recruiter’s 2012 HOT 100 league table of the 100 UK recruitment companies with the highest net fee income per head.

Tue, 13 Nov 2013

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At least 33 IT/Telecoms specialists populate Recruiter’s 2012 HOT 100 league table of the 100 UK recruitment companies with the highest net fee income per head.

The November 2012 print issue of Recruiter (out at the end of this week) features the annual HOT 100 survey of the 100 UK recruitment companies who have balanced their people costs with productivity and delivered the most efficient performances in terms of net fee income. The HOT 100 is researched on behalf of Recruiter by Agile Intelligence and sponsored by Microdec.

Last year, 37 IT/Telecoms specialists placed on the list, and 28 appeared the year before. Most of the companies on the 2012 list offer contractors but also usually include some permanent placement business. 

With SThree split into its separate brands, this year’s Hot 10 list continues the approach from last year of a ‘baker’s dozen’ in IT staffing.

Despite reporting strong sales growth ITHR, the 2010 leader from two years ago, has dropped well down the rankings as its people expansion substantially exceeded fee growth. This was the result of investment in its future growth strategy which should already be beginning to yield results. The 2011 leader Real has also eased out, just below the Hot 10+3. 

The status quo shifted a little last year towards temporary versus permanent fees as gross margin declined. Evidence from the wider industry suggests that contract business was the more active of the two as the year progressed and certainly into 2012. Niche operators clearly out-performed with benefits from new skill sets/new technology applications assisting both volume and margin. With similarities in engineering, the export of IT/Telecoms skills from the UK is a growth market, perhaps affected by Eurozone weakness but nevertheless plugging a gap for contract staff in many countries. 

Key facts about the Hot 10+3:

• The 2012 Hot 10+3 represents around £1.5bn in turnover, and generated £296.8m in net fees. 

• Net fees grew by 12.4%; average gross profit (GP) per head fell 4.8% as employee numbers rose a massive 18.1%.

• A sizeable proportion of this growth is accounted for by building consultant numbers in new technical sectors such as engineering or life sciences with profit now also emerging from these revenue streams.

• Seven of the 13 companies increased both employee numbers and GP/head.  

• Red Commerce and Next Ventures invested heavily in people but saw their productivity dip and flatten respectively as a result, while Networkers reports steady progress. Conversely G2 succeeded in expanding its workforce by 20% and still achieved 19% growth in GP/head.

• Nine constituents remain from last year – at least three of these (Red Commerce, LA International and Harvey Nash) have substantial overseas business.

• Henderson Scott is the new leader as it increased gross profit, employees and GP/head. It retains its slight bias towards permanent placements but saw growth evenly spread across both its permanent and temporary business with an estimated uplift also in temporary margin percentage. 

• The SThree companies – Real (dropped below Hot 10), Progressive, Computer Futures and Huxley – all have very separate identities. They have actively developed other specialist candidate sectors contributing an estimated one third of net fees although Computer Futures remains entirely focused upon IT and generates the group’s largest net fees in IT. Progressive and Real have developed substantial life sciences business while Huxley spreads its earnings across banking & finance and banking technology, as well as IT. Overall the perm mix rose during 2011. 

• Templeton & Partners, the other very small company in this shortlist, also maintained its presence at 4th versus 3rd despite a drop in GP/head as net fees reversed by almost 7%.

• Harvey Nash is included here at group level, including substantial overseas and non-ICT operations, but nevertheless remains a major UK player, increasing its market share in the past year.

• With its single site UK business model, LA International is ever present in the Hot 10+3, expanding sales, gross profit and employees and improving its GP/head productivity once again. This, despite its high reliance upon government business at a time of public sector funding constraints. It specialises in security-cleared IT staff both in the UK and in 23 other countries.

• The large industry IT majors such as Ajilon and Experis (formerly Elan) stand closely matched at 51st and 57th respectively in the HOT 100. Business intelligence analytics specialist, SEC, is now combined in the HOT 100 as part of RDL, so is no longer separately listed – independently it would have dropped from 9th last year to 14th ranked IT company this year.

Turning to gross margin trends which are dependent not only on temporary pricing but on the mix of business between spot, volume contract and permanent: 

• weighted average gross margin of this Hot 10+3 fell 120 basis points to 20.3%. 

• seven companies increased gross margin.

• any temporary margin erosion proved relatively minor with some companies achieving small increases. 

Hot 10 IT recruiters

1 Henderson Scott

2 Red Commerce

3 Networkers International (UK) 

4 Templeton & Partners 

5 Harvey Nash Group

6 G2 Recruitment Solutions 

7 LA International Computer Consultants

8 Computer Futures

9 Next Ventures 

10 Huxley Associates

11 Tangent International Group

12 Progressive

13 Resource Solutions Group

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