Revenue will slowly improve as unemployment eases up and businesses look to hire again
Los Angeles, CA (PRWEB) May 03, 2012
The recession placed the Employment and Recruiting Agencies industry in a tough spot, with revenue declining 21.0% in 2009 alone. While improvement in the labor market is expected to cause revenue to increase 6.1% in 2012, stubbornly high unemployment has slowed growth. Many businesses have delayed hiring decisions in light of an uncertain economy. According to IBISWorld industry analyst Kevin Culbert, “This trend has resulted in poor industry performance by decreasing the number of placements.” In the five years to 2012, IBISWorld estimates that revenue will fall at an annualized rate of 3.0% to $15.3 billion.
Employment agencies provide clients with a variety of services, including permanent placement, temporary staffing and outsourced human resources functions. Following the recession, revenue fell across most services, with the exception of outplacement, which helps laid-off employees find new work. Furthermore, many clients have brought recruitment functions in-house to reduce costs, further limiting demand due to the abundance of skilled workers looking for a job. In times of low unemployment, finding qualified candidates can be difficult because most workers have a job. Since suitable labor is readily available in the current economy, Culbert says, most businesses can find workers without an employment agency's help. The Employment and Recruiting Agencies industry is and will remain highly fragmented; no single company accounts for over 5.0% of industry revenue, and the top four firms only hold about a tenth of the market.
With so many workers looking for jobs and fewer businesses using employment services, industry operators are using competitive pricing tactics to gain new clients and retain existing ones. While this factor led to a decline in profit margins during the recession, improving demand is expected to boost profit during 2012. Nevertheless, falling margins caused some players to leave the industry, while large players have taken the opportunity to acquire smaller firms. In the five years to 2012, IBISWorld estimates that the number of firms operating in this industry will decrease. Industry performance is expected to improve as the unemployment rate declines, and firms will show continued signs of growth in 2013. In the five years to 2017, IBISWorld forecasts that revenue will increase at an annualized rate. For more information, visit IBISWorld’s Employment and Recruiting Agencies report in the US industry page.
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IBISWorld industry Report Key Topics
Employment and recruiting agencies list employment vacancies in addition to referring and placing applicants for employment. People referred or placed are not employees of the employment agencies.
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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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.