Growth in corporate profit and a decline in the unemployment rate caused slow growth in prices for personnel recruitment as businesses began to increase hiring.
Los Angeles, CA (PRWEB) June 01, 2014
Permanent personnel recruitment services have a buyer power score of 4.3 out of 5, representing a high degree of leverage in the purchasing process for buyers. Price growth for personnel recruitment services has remained relatively stable and is expected to remain so; suppliers compete with fees charged; and commission is transparent. However, according to IBISWorld procurement analyst Andrew Krabeepetcharat, “Negotiating power is limited by low profit margins among suppliers, which reduce the vendor's ability to reduce prices.”
Several external factors have had an effect on prices of permanent personnel recruitment. “An improving economy and labor conditions have incentivized suppliers to raise prices in response to growing demand,” says Krabeepetcharat. The declining unemployment rate has increased the demand for job searches and consequently boosted demand for personnel recruitment. Also, the growing level of corporate profit in the United States has allowed businesses to hire more employees and ultimately outsource the hiring process to personnel recruitment agencies. These factors boost demand for personnel recruitment, cause prices to rise and slightly hamper buyer power.
Buyers of personnel recruitment services also benefit from a low level of market share concentration. Due to the higher number of suppliers in the market, competition mitigates price growth. The majority of suppliers are small regional agencies due to low barriers of entry into the market. Despite the presence of large multinational suppliers, no single supplier controls a substantial percentage of the market's revenue. The low level of market share concentration benefits buyers because it promotes price competition among suppliers and gives buyers several options in choosing a supplier. Major suppliers in this market include Adecco SA, Allegis Group Services, Hay Group and Kelly Services Inc.
Competition from substitutes has also offset the price growth of personnel recruitment services. The rising popularity of professional social networks such as LinkedIn gives buyers a cost-effective alternative to personnel recruitment services. The moderate level of substitutes ultimately gives buyers more negotiating power.
For more information, visit IBISWorld’s Permanent Personnel Recruitment procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to help businesses recruit employees on a permanent basis. Permanent personnel recruitment agencies help businesses find potential employees by listing employment vacancies and referring and placing applicants for permanent employment. Personnel recruitment offices earn revenue from commission for successful employee job placements only; people referred or placed are not employees of personnel recruitment offices.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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