Slow improvement in the labor markets of developed nations has boosted demand
Los Angeles, CA (PRWEB) October 31, 2012
Over the five years to 2012, revenue for the Global HR and Recruitment Services industry is expected to decline at an annualized rate of 0.1% to $590.1 billion. The industry relies on organizations outsourcing recruitment processes and human resource (HR) management activities. “Industry performance is largely dependent on economic conditions in major markets and the flow-on effects these have on the demand for labor around the world,” says IBISWorld industry analyst Kevin Culbert. Labor market regulation is also important, particularly that relates to temporary employees. While the liberalization of labor laws in developed nations has historically been a key to the industry's growth, large players are now focusing efforts on emerging markets. Growth in these regions is expanding as emerging markets follow suit in the liberalization of labor laws.
Industry revenue plunged 23.0% in 2009 as much of the world endured recession and rising unemployment. This drastic decline caused industry profit margins (earnings before interest and taxes) to fall to about 1.5% during the year. Luckily for industry operators, slow improvement in the labor markets of developed nations has since boosted industry revenue and profit. Furthermore, continued growth in emerging markets has mitigated further declines. According to Culbert, while emerging economies represent a relatively small market for employment services, a number of these are growing strongly compared with developed economies. These factors are expected to contribute to industry performance in 2012 and beyond. IBISWorld estimates that industry revenue will increase 2.0% in 2012 and profit margins will rise to represent 2.5% of industry revenue. The industry largely relies on a high-volume, low-margin business model because the majority of industry revenue flows through to temporary workers as wages. IBISWorld estimates that industry revenue will increase over the five years to 2017; industry enterprises are expected to grow equally. During that time, the industry will benefit from improvements in the labor markets of developed nations and the continued growth of emerging markets. The governments of some countries, however, particularly in the European Union, are currently at risk of default. The default of a major government in the years to come would ultimately diminish the demand for labor, and with it, the demand for HR and recruitment services.
The Global HR and Recruitment Services industry is highly fragmented, with a large number of small and medium-sized firms operating in niche geographies and industries. IBISWorld estimates that in 2012, the top four players in this industry will account for a combined total of 13.1% of the available market share, providing this industry with a low level of concentration. The industry can be broken down into several segments. While the largest players tend to be global, catchall operators, most operators cater to specific niche labor markets. One of the largest niche operators is Robert Half International, which caters to accounting and finance professions. Many players also cater specifically to one country, due to the difficulty of breaking into a new market with differing cultural norms and labor market laws. Temp Holdings is a good example of this as it is the largest player in Japan but it has a very small presence outside of the country. For more information, visit IBISWorld’s Global HR and Recruitment Services industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry provide outsourced human resource (HR) and employment placement services. These services can include the selection and placement of permanent and temporary staff, employee leasing, listing employment vacancies, and the outsourced management of personnel-related administrative functions, such as payroll and employee benefit administration.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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