Recruiter FAST 50: At full throttle

Recruitment firms are achieving record levels of growth, this year’s Recruiter FAST 50 reveals. Marcus Archer and Mark Maunsell of Clearwater International look at what lies behind the figures

Mon, 25 Jan 2016



John Atkinson

Head of commercial business, Hitachi Capital Invoice Finance

It’s been a positive but challenging year for recruitment firms. In a general election year, the potential of a new government left some companies adopting a ‘wait and see’ approach, which had a direct impact on recruitment. The expected upturn in the jobs market following the general election didn’t quite come to fruition and more uncertainty followed around the possibility of a ‘Brexit’. Yet the UK economy is proving still to be one of the most prosperous economies.

It is within this environment that we recently surveyed over 100 managing directors and business owners of temporary recruitment agencies, and the positive news is that they feel the sector as a whole is growing. Recruiters specifically witnessed an increase in demand for candidates in the retail, manufacturing, healthcare and logistics & construction sectors. 

However, that doesn’t mean that there aren’t challenges. Managing cashflow will always be a test for the temporary recruitment agencies, as their candidates expect to be paid on a weekly or daily basis. Getting back office processes and systems right can also be a challenge, with over three quarters (78%) of recruiters agreeing that establishing a client base is one of the biggest challenges when starting up a business and is essentially why most fail.   

The fact that the businesses within this supplement find themselves on the Recruiter FAST 50 list shows that they have equipped themselves with a strong candidate pool, effective cashflow management and efficient back office support, and can now plan ahead to continue to grow quickly and enjoy success.  

We’re looking forward to supporting the next generation of recruitment firms and helping some of the most exciting businesses in the sector to grow. Congratulations once again to those that have made the Recruiter FAST 50 list and we wish you a bright and successful 2016. 

Recruitment firms are achieving record levels of growth, this year’s Recruiter FAST 50 reveals. Marcus Archer and Mark Maunsell of Clearwater International look at what lies behind the figures

“If anyone is still in doubt about the state of the UK recruitment sector, the 2016 Recruiter FAST 50 results will provide absolute clarity. Private recruitment firms have delivered unprecedented levels of growth against the backdrop of a favourable economic environment, data compiled by international mergers and acquisitions (M&A) specialist Clearwater International demonstrates.

Constituents of this year’s 2016 

FAST 50 grew by an average compound annual growth rate of 44%, up from 36% in 2015 and 34% in 2014. The figures emphasise how recruitment firms are achieving pre-recession growth rates. They also support data recently produced by the Association of Professional Staffing Companies (APSCo) that suggests that 75% of recruiters grew during 2014.

As with previous years, multi-sector specialists came out on top. Led by BIE Executive, a leading interim management and executive search firm, multi-sector recruiters occupied 18% of this year’s FAST 50. However, this figure was somewhat down from the 30% in 2015 and 36% in 2014. 

While recruiters with broad exposure to multiple sectors were well positioned to achieve rapid growth as the industry recovered, single-sector recruiters operating in attractive markets are now benefiting from a more focused strategy.

Healthcare is a good example of a niche sector with strong underlying market conditions. Despite the recent announcement from the Department of Health of plans to curb agency spend, compliant healthcare recruiters are benefiting from increasing patient numbers, chronic skills shortages and high levels of staff turnover as NHS employees switch to agency work. 

This trend is evidenced by the inclusion of nine specialist healthcare recruiters in this year’s FAST 50, with two appearing for the third year in a row. A special mention should go to the inclusion of larger firms Sanctuary Personnel and ID Medical, which managed to fight off several smaller recruiters to rank 21st and 25th respectively. Large recruiters typically struggle to grow at similar rates to smaller companies. 

The IT sector again had little representation in the rankings, occupying only six places. While this is attributable largely to the managed-service providers continuing to take marketshare, there is also an increasing level of M&A activity in IT. For example, previous 2014 and 2015 FAST 50 constituent Eurostaff was acquired by Cordant Group in June 2015. 

The engineering, industrial and technical sectors are three markets that face severe talent shortages. Recent statistics from EngineeringUK’s ‘Engineering UK 2015’ report suggest that 19% of firms have difficulties in finding suitable candidates, up from 12% the previous year. Recruiters with extensive talent databases are well positioned to take advantage of these skills gaps and achieve rapid growth. In this year’s FAST 50, a total of 18 firms appeared that had exposure to these end markets. 

This year’s FAST 50 is unique not only in that companies are achieving unprecedented levels of growth, but also because the growth is coming from a new breed of progressive recruitment companies, with many appearing in the FAST 50 for the first time. In fact, a total of 33 companies were new entrants this year, beating an historic high of 31 in 2015. 

One reason for this trend is the fragmented market and low barriers to entry; another is the increasing number of recruitment agencies that are being launched in the UK each year. Analysis from contract finance firm Sonovate suggests that the number has been doubling since 2010 to reach 4,083 in 2014, with many of these now being of sufficient scale to be considered for inclusion in the FAST 50.

Unsurprisingly, two of the largest UK-headquartered oil & gas recruiters, Fircroft and Air Energi, were absent from the list in 2016, having been present in 2015 and 2014. The oil & gas picture continues to be one of struggle, as Brent crude oil prices have fallen 43% in the last 12 months to November, and extensive job cuts have followed. Further, with the market still in a state of glut, there are no immediate signs of improvement. While the effects have not yet been fully felt by recruiters — with six oil & gas recruiters still appearing in this year’s FAST 50 — it will be interesting to see how this trend develops through 2016.

Organic growth continues to be the overarching theme for constituents of this year’s FAST 50. This growth, typically, was driven by either expansion of their office networks or diversification into new sectors. BIE Executive, which recently completed a management buy-out from parent company the Cornhill Partnership, has achieved significant growth off the back of opening a London office in January 2014 and the founding of a South African-based subsidiary to better access the growing African market. 

Others have adopted a different growth path. For example, Spencer Ogden has diversified into the rail, marine and construction sectors — a move that will help to reduce the company’s exposure to the energy markets. A further strategy is to leverage strong balance sheets and deploy capital through engaging in M&A activity. This approach has proven particularly successful for NRL, which purchased Surrey-based Petrolic Consultants in June 2013 and, in doing so, added around £30m of revenue for the group.  

Private equity funds continue to play an increasing role in shaping the recruitment landscape, as they look to invest in fast-growing, profitable and often single-sector-focused recruiters. Consequently, many FAST 50 companies are often considered key acquisition targets for mid-market private equity groups, or already operate under private equity ownership. 

To illustrate this point, three of this year’s FAST 50 constituents completed transactions with financial investors. Both Nurse Plus and nGAGE Specialist Recruitment — previously known as the Human Capital Investment Group — completed secondary buy-outs, while GatenbySanderson secured an investment from Primary Capital. 

While the future prospects for the recruitment sector are overwhelmingly positive, the necessity to attract and retain talent is more prevalent than ever and is the most commonly cited growth restraint for recruiters. In a sector that is characterised by high levels of churn, the ability to retain key employees will be an ever-greater differentiator in the future. Also in the distant future is the threat of increasing levels of automation and the use of robots over human capital, which in turn may have a profound effect on the job market. 




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