2014 HOT 100: Hot 10 public sector recruiters go from strength to strength

A supplement with the November issue of Recruiter will feature the 2014 Recruiter HOT 100, the ninth edition of the benchmark league table of the UK recruitment sector’s most efficient companies, as measured by gross profit per head, or net fee income.

Tue, 4 Nov 2014

A supplement with the November issue of Recruiter will feature the 2014 Recruiter HOT 100, the ninth edition of the benchmark league table of the UK recruitment sector’s most efficient companies, as measured by gross profit per head, or net fee income.

Conducted on Recruiter’s behalf by Agile Intelligence, the 2014 HOT 100 is supported by Anderson Group and RBS.

Today we reveal the first of our HOT 10 breakouts, the HOT 10 Public Sector Recruiters from this year’s HOT 100 list. Over the next week, watch out for the breakouts of HOT 10 for IT & telecoms, technical and professional recruiters, to be published on recruiter.co.uk.

Last year’s turnaround among public sector recruiters has continued to gather pace. These HOT 10 companies, on aggregate, reported strong sales, gross profit, employees and productivity growth.
 
Net fees total from the HOT 10 rose 19%, a great improvement even on last year’s recovery, while employee numbers added a substantial 16%.

Average GP/head also rose by 2.5% to £120,330. Seven out of the HOT 10 again report an increase.
The HOT 10 represents £363m in turnover, generating £84m in net fees.

Tellingly, nine out of the 10 also expanded their workforce and six achieved higher GP/head and employee numbers. This is an endorsement of confidence in the future of public sector recruitment, at least for the markets represented by these 10 companies.

Public sector demand has undoubtedly picked up, as evidenced by results statements from several of the nationals.

However, business is perhaps being done differently, buyer behaviour has changed by some clients, including the NHS, and persistent budget pressures in government departments and local authorities have pushed the market towards even more managed service contracts.

Niche suppliers of executive level staff continue to perform well. Two locum doctor recruiters have entered the HOT 10 as the dust settles on the major buying reforms that caused near terminal problems for some medical recruiters which failed to adapt their strategy. These new entrants, with up-to-date business models, are geared to supply efficiently the compliance-ready requirements of the NHS framework whereas several old names have slipped out of the HOT 100. Other strong suppliers, such as Medacs or Team24, are embedded in their group figures.

To summarise, the HOT 10 now has four frontline health & social care specialists and one education company. A further three are in executive-level recruitment while, two more offer a mix of social care, housing and technical services.

  • Leader Interact Medical is an NHS framework supplier of locum doctors, including hard-to-fill consultant grades. As its position in Recruiter’s FAST 50 fastest-growing private recruitment businesses in the UK indicates, it has seen rapid growth based upon a combination of hitting the right market with the right model with a strong compliance culture to suit NHS requirements. GP/head becomes all the more impressive given the size of its compliance department and the tightness of the contract margin under NHS framework agreements. Small but rapidly growing RIG Locums (part of the RIG stable of companies) enters for the first time at number 10, while Mayday remains present in the HOT 10.

  • Morgan Law, GatenbySanderson and Finegreen, executive and senior management suppliers to a range of public sector clients including the NHS, all retain their place in the HOT 10. Each provides both permanent and interim/temporary staff. All three report exceptionally strong growth in sales and net fees and have increased both employees and productivity, despite public sector funding constraints.

  • Social care specialist Caritas moves up to fifth; one of its sister companies, Eden Brown, edges higher, and another linked company, Resourcing Group, offers housing, construction & facilities management.
  • Randstad Education retained its inclusion in the HOT 10, helped by a stronger supply teacher market and the higher margins derived from schools’ fragmented marketplace and reduction in local authority control over individual schools. With growth across sales, GP and employee numbers, Randstad looks to be rebuilding again after a difficult few years.

Turning to gross margin trends:

  • Most are predominantly temporary staff suppliers; GatenbySanderson still has the largest permanent mix.
  • Average gross margin is 23.1%, a fall of 80 basis points.
  • Just three companies report an increase in gross margin.

  • For the complete Hot 100, see November’s issue of Recruiter out next week. Other Hot 10 reports will be appearing on recruiter.co.uk in the next two weeks.
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