Specialist IT and accountancy recruiter SThree is to increase its focus on contract placements after a 16.6 per cent fall in pre-tax profits at the end of last year.
Although gross profit (the firm’s net fees) rose slightly during the same period, the disappointing results have prompted a shift in business focus. SThree’s recently appointed CEO, Gary Elden, said: “We’ve focused on our contract business. In a difficult market contract [placements] tend to hold up a lot better than permanent.”
Presently, the recruiter’s business is evenly divided between contracting and permanent placements, although contract placements usually yield appreciably higher commissions. Some of the recruiter’s staff will now be redistributed so that more resources will be trained on placing contract staff.
Although Elden claimed the profit results were “satisfactory” in the context of a “deteriorating backdrop”, he laid the blame for lower hiring on diminishing confidence amongst client companies. Following trends set by other recruiters, SThree hopes to capitalise on faster-growing overseas recruitment markets by opening offices in Kuala Lumpur, Calgary and Tokyo during 2013.
He added, “Whatever 2013 has in store for us, we remain confident that we will make the best of it.”
However, a less optimistic appraisal came from business analyst Paul Jones of the stockbroker and investment firm Panmure Gordon. He said, “There’s no light at the end of the tunnel for the recruitment industry…These guys have got no visibility.”
Jones endorsed SThree’s decision to increase its proportion of contract placements, calling it a wise move.
Recruiters may be struggling, but contractors look set to be the principal beneficiaries of tough economic conditions.