Consolidation has emerged as one of the big issues facing the Western Australian recruitment industry as large players seek to increase their holdings within Australia. Noel Dyson reports in the first of a four-part series on the industry.
CONSOLIDATION is likely to be the key within the State’s recruitment industry for the next few years.
In WA there are about 300 agencies that offer some form of recruitment service. Most of them are small and likely to be targets for some of the bigger groups gathering market share.
There has been some consolidation in the past few weeks with the last vestiges of Recruitment Solutions being signed over to the Chandler Macleod Group on December 1 last year.
Other changes included the takeover by TMP Worldwide of Morgan and Banks, and more recently Robert Walters’ acquisition of Dunhill Management Services.
Indeed, TMP Worldwide is due for another change. It will be spun off from the rest of the TMP business into a stand-alone recruitment agency in either March or April. No new name for the recruitment agency is available at this time.
The consolidation within the recruitment industry is not that unusual when industries such as information technology, accounting or even the automobile sector are considered.
Internationally the big five recruitment firms are TMP Worldwide, Kelly Services, Drake, Manpower and Adecco.
According to the latest WA Business News Book of Lists employment services providers list, the largest recruitment operation in WA is The Salvation Army’s Employment Plus, followed closely by Employment National.
The size of these groups in the WA market is not surprising given that both are involved with the Federal Government’s Job Network program, which was started in 1998 to replace the (then) Commonwealth Employment Service.
Indeed, Employment National is a Federal Government business enterprise.
The next largest player in WA is the US-based Drake International, followed by ChoiceOne, UK-based Hays Personnel Services, the European-based Adecco and US-based TMP Worldwide.
Even before its acquisition of Recruitment Solutions (ranked 12th in the list) Chandler Macleod had a large operation in WA. Its WA operation is well known for its psychological testing and the company also owns Ready Workforce.
Kelly Services is ranked 16th in the list.
TMP Worldwide WA general manager Barry Knight said consolidation had already been occurring in the industry but was likely to gather steam.
“People are starting to realise that they either have to be big or small and boutique and specialised,” he said.
“The middle-sized agencies will become a wasteland.
“Firms will have to decide whether they will get big and service the whole market or stay small and specialise.
“However, some other firms are starting to form alliances and share information. That’s quite smart. In some cases these firms may spend an annual fee to be part of the alliance or it’s just a name on their letterhead to give it some weight. But it also gives them some leverage when it’s needed.”
Mr Knight said these arrangements had been in place for years with mid-sized WA firms sharing national clients and splitting fees with eastern States-based businesses.
“Now these arrangements are starting to become formalised,” he said.
Chandler Macleod general manager Stephen Cartwright said the trend for consolidation had already been demonstrated in the US and Europe.
“I don’t think the consolidation here has really started,” he said.
Despite the talk of consolidation, the recruitment industry is looking forward to a more positive year after the doom and gloom of 2002 driven by reactions to September 11, the technology crash and the collapse of several major companies.
Firms such as Drake International and ChoiceOne have done extremely well out of their businesses, particularly their healthcare recruitment sides.
ChoiceOne general manager Scott Van Heurck said nursing recruitment had been a large area for his company.
The firm supplies staff to most industry sectors.
He said there were some problems emerging in that sector, with Health Minister Bob Kucera’s reported comments over nursing agencies and the Victorian Government placing a moratorium on their use in Victorian public hospitals.
“We’re starting to get improvements in a lot of other sectors. Even IT, which has been in the doldrums for the past two years, is starting to pick up,” Mr Van Heurck said.
“We’re doing a lot of medics and occupational safety and health people on the mines. That area’s certainly getting a lot busier.
“Everyone you talk to is suddenly busier.”
Drake senior consultant Diane Dale said medical recruitment was a particularly hot area for the company at the moment, given the shortage of nurses.
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