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IBISWorld Industry Report Employment & Recruiting Agencies in The US 2019
IBISWorld Industry Report Employment & Recruiting Agencies in The US 2019
Industry Definition This industry comprises establishments companies with employee recruitment
engaged in listing employment and placement. Individuals referred or
vacancies, referring job applicants to placed are not employees of the
potential employers and assisting employment agencies.
Industry at a Glance
Employment & Recruiting Agencies in 2019
NV 4 6
%
8.4%
0 4
-4 2
Year 11 13 15 17 19 21 23 25 Year 11 13 15 17 19 21 23 25
Revenue Employment
SOURCE: WWW.IBISWORLD.COM
p. 25
Products and services segmentation (2019)
3.4%
Key External Drivers 6.0% Other
Independent contractor placement services
National
unemployment rate 7.8%
Temporary staffing services
Corporate profit
Number of businesses
External competition
for the Employment 47.8%
Permanent placement
and Recruiting services
Agencies industry
35.0%
Executive search services
p. 5
SOURCE: WWW.IBISWORLD.COM
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33
Industry Performance
Executive Summary | Key External Drivers | Current Performance
Industry Outlook | Life Cycle Stage
Executive Summary The Employment and Recruiting hesitant to invest in new permanent
Agencies industry has performed well as hires, resulting in a brief lull in demand
strengthening labor markets boosted for industry services. However, industry
demand for recruiting and job placement revenue shot up 6.5% in 2014 as
services over the five years to 2019. businesses revitalized their investment
Furthermore, rising corporate profit in new hiring, causing the national
levels and heightened management unemployment rate to fall more than a
restructuring activity during most of the full percentage point over the course of
period led to increased demand for the year. Technological development
executive search services. Although new has had a major effect on industry
hiring activity in industrial markets has structure, with online profiles and job
decelerated in recent years, strong listing platforms creating opportunities
recovery in most service sectors has for new businesses. Meanwhile, larger
helped boost industry performance. operators have adopted online services
Overall, industry revenue is projected to to increase the efficiency and accuracy
of candidate selection and interviewing.
Combined, these trends have helped the
S trengthening
labor markets have unemployment rate reach historic lows
boosted demand for recruiting and job in 2019.
Over the five years to 2024, the
placement services industry is expected to benefit from
increasingly stable labor conditions.
increase an annualized 4.7% to $25.0 While the national unemployment rate is
billion over the five years to 2019. In not expected to continue declining, a
2019, revenue is expected to rise 2.6% as stabilizing and more-fluid labor market,
corporate profit growth coupled with coupled with strong business sentiment,
increased corporate restructuring activity will continue to encourage businesses to
promotes demand for permanent and engage in new hiring and restructuring.
executive placement services. Profit margins are expected to remain
Industry performance is dependent on stable as industry operators rely more on
the national unemployment rate, cloud-based recruiting systems and focus
corporate restructuring activity and on offering higher-margin services, such
overall demand for permanent new hires. as executive search and temporary-to-
Just prior to the period, the industry placement transition. IBISWorld expects
experienced sluggish growth as online industry revenue to increase an
technology continued to change business annualized 0.6% to $25.8 billion over the
practices and companies remained five years to 2024.
Key External Drivers National unemployment rate revenue. Conversely, stronger employment
The national unemployment rate measures opportunities boost total revenue. The
the proportion of Americans aged 16 or national unemployment rate is expected to
older who are currently unemployed and decline in 2019, representing a potential
looking for work. An increase in the opportunity for the industry.
unemployment rate represents declining
demand from businesses for employees Corporate profit
and, therefore, reduces the number of Corporate profit measures profit across all
placements available along with industry industries, not just the Employment and
Industry Performance
Key External Drivers Recruiting Agencies industry. An increase listings and candidate profiling. The
continued in corporate profit boosts available salary number of businesses is expected to
budgets and increases business increase marginally in 2019.
confidence, which encourages operators
to hire more staff, particularly on a External competition for the Employment
permanent basis rather than on and Recruiting Agencies industry
temporary contracts. Corporate profit is Operators in this industry compete with
expected to increase in 2019. companies that manage their own
recruiting, usually through online job
Number of businesses portals and listings. Additionally, the
The number of businesses measures the industry competes with temporary
total number of companies in the United employees that mitigate demand for
States with at least one employee. An permanent placements. External
increase in the number of businesses competition for the Employment and
increases the need for new workers, Recruiting Agencies industry is expected
which boosts demand for industry- to increase in 2019, posing a potential
relevant services, such as online job threat to the industry.
10 12
8 8
% change
6 4
%
4 0
2 -4
Year 11 13 15 17 19 21 23 25 Year 13 15 17 19 21 23 25
SOURCE: WWW.IBISWORLD.COM
Industry Performance
% change
search companies that specialize in 4
recruiting upper management candidates,
as well as online job listing and professional 0
networking websites. Over the five years to
2019, rising corporate profit levels and -4
growth in the number of new businesses Year 11 13 15 17 19 21 23 25
have led to increased demand for staffing
services for permanent employees and SOURCE: WWW.IBISWORLD.COM
Employment This industry’s success is highly dependent the five years to 2019. The national
opportunities surge on changes in the national unemployment unemployment rate has dropped steadily
rate, corporate restructuring activity and from a five-year high of 6.2% in 2014 to
growth
overall demand for permanent an estimated five-year low of 3.7% by the
employment. Over the five years to 2019, end of 2019.
significant recovery in the US labor market Although growth was sluggish just
and an ongoing shift toward specialized prior to the current period as employers
jobs have boosted demand for permanent turned toward temporary staffing
placement services, executive recruiting agencies to fill workforce vacancies,
and other professional services offered by revitalized demand for permanent
industry operators. Although demand for placement services has boosted industry
employment and recruiting agencies tends revenue during the entirety of the period.
to surge during times of economic duress, More Americans returning to the labor
when individuals seek increased assistance market and seeking recruiting services
finding work, operators are typically not have boosted demand for the industry;
paid until they have placed a client. revenue rose 6.4% in 2014, as the
Accordingly, the industry performed poorly unemployment rate fell by more than a
during the financial crisis, as deficient full percentage point that year. Likewise,
economic performance forced most increasing corporate profit levels and
employers to cut back on staff and reduce increased restructuring activity are likely
new hiring. However, improving corporate to have boosted demand for executive
profit levels have encouraged employers to search services provided by industry
resume operations and boost hiring over operators as well.
Industry Performance
Profitability and Industry profit margins (measured as Greater focus on these services has played a
industry structure earnings before interest and taxes) are role in boosting industry profit margins.
expected to grow from 5.2% of industry Additionally, recruiting companies are
revenue in 2014 to 5.3% in 2019. Stronger expected to take on more employees in
demand from businesses for recruiting anticipation of stronger demand for their
assistance has precipitated greater services. The number of industry
transaction volumes and enabled operators employees is forecast to grow at an
to increase the cost of providing annualized rate of 0.1% to 298,062 workers
recruitment services. Furthermore, over the five years to 2019. Similarly, the
demand for higher-margin services such as number of industry establishments is
middle- and upper-management expected to increase an annualized 1.1% to
recruiting, as well as traditional executive an estimated 13,050 over the five years to
search services, has increased as a share of 2019. Although the total number of
total revenue over the five years to 2019. enterprises is expected to grow slowly
Industry Performance
Profitability and during the period, there has been significant by Microsoft Corporation and Monster.com
industry structure merger and acquisition activity involving was purchased by Randstad Holding NV.
large industry operators in recent years. In This trend is expected to continue industry-
continued
December 2016, LinkedIn was purchased wide, affecting operators of all sizes.
Industry Performance
Job openings provide highly personalized processes. A based recruiters, see the Online
consistent growth personalized recruiting process will remain Recruitment Sites industry report
particularly important for executive search (IBISWorld report OD4590).
continued
companies, which leverage their extensive Traditional industry operators, such as
network and talented recruiters to find the major players Randstad Holding NV and
most appropriate candidate for vacant Adecco SA, are also expected to increase
middle- and upper-management positions. their online presence in response to rising
However, industry operators that readily demand for these services from employers
adopt the latest technology as a tool for seeking middle- and upper-management
recruitment and employment will continue candidates. However, technology will also
to outperform the industry as a whole. In continue to pose a potential threat to
broad terms, the percentage of services industry operators. More US corporations
conducted online is expected to increase are likely to post and manage their own
from 18.5% in 2019 to an estimated 23.2% job listings as online portals permit
in 2024 as both consumers and businesses candidates to easily upload information
transition services online for greater and fill out other key details. Furthermore,
efficiency and convenience. Consequently, third-party IT consulting solutions such as
internet-based operators such as LinkedIn Oracle’s Taleo Cloud Service will threaten
Corporation and Indeed.com will continue online recruiters, since these software-as-
to be successful as they increase the size of a-service platforms enable businesses to
their user base and respond to online conduct candidate searches and
preferences through intuitive job listings placement on their own without
and mobile application development. outsourcing to a professional recruiting
For more information on internet- agency (IBISWorld report 54151).
Industry Performance
Life Cycle Stage Industry growth typically follows the overall
economy, although recent growth has been
driven primarily by a recovering labor market
Technological change is quickly altering
the way the industry operates
The industry is expected to continue consolidating,
although it remains highly fragmented
Industry Performance
Industry Life Cycle The Employment and Recruiting onset of the US recession, which
Agencies industry is in the mature phase decimated the overall industry in 2009
of its life cycle. Industry value added and 2010. Over the five years to 2019,
Thisindustry (IVA), used to measure an industry’s rising corporate profit and a rapidly
is M
ature contribution to the overall economy, is declining national unemployment rate has
projected to grow at an annualized rate of reinvigorated new hiring and management
1.9% over the 10 years to 2024. In restructuring, thereby boosting demand
contrast, the overall economy is forecast for recruitment services.
to grow at a slightly slower annualized The industry is undergoing significant
rate of 2.2% during the same period. change, driven primarily by the
Growth in IVA is primarily a result of widespread adoption of online
recovering profit margins and sales in the recruitment services and other
postrecessionary economy. Over the next technological developments. Industry
five years, IVA growth will be relatively players such as LinkedIn are becoming
slower as industry revenue grows roughly increasingly relevant through online
in line with the overall economy. operations, which attract consumers
The industry is characterized by a because of their user-friendly and
moderate rate of technological change, a convenient services. Furthermore,
growing number of industry players, traditional operators are able to increase
wholehearted acceptance of industry their efficiency by investing in
services and a well-defined portfolio of technologies that help cull potential
standard services offered by the industry; candidates based on keyword and criteria
these traits are all characteristic of an searches. Operators that can successfully
industry currently in the mature stage of implement these new technologies are
its life cycle. Over the past five years, the likely to be able to reduce the need for
industry has largely recovered from the human input over the five years to 2024.
Products and Services Permanent placement services heightened business activity and improved
Permanent placement services are business sentiment has made companies
estimated to account for 47.8% of industry more comfortable with hiring permanent
revenue in 2019. Permanent placement staff, rather than relying on temporary
services include recruiting, selecting and staffing agencies (IBISWorld report 56132)
referring candidate to clients to fill to fill temporary roles. Consequently, this
positions on a permanent or indeterminate segment has grown as a proportion of
basis. Services involved include candidate revenue over the five-year period.
testing, interviewing, reference checking,
evaluation and counseling of prospective Executive search services
employees. Service providers act as an Executive search services are forecast to
employment intermediary as candidates comprise 35.0% of revenue in 2019. This
are finally selected and hired by the client. segment includes the same services as
Companies are then paid on a contingency offered in permanent placement services,
basis, meaning that only successful although it focuses on corporate executives
placement of a candidate will result in and other upper management and
revenue. Over the five years to 2019, professional positions. Industry operators
47.8%
Permanent placement services
35.0%
Executive search services
provide detailed interviews with client staffing as a part of their diversified service
management teams, develop specific job portfolio. Unlike executive search and
profiles, conduct original research and permanent placement services, industry
advertising, screen candidates and present operators of temporary and contract
and discuss confidential lists of highly placement services do not necessarily
qualified applicants. Additionally, industry require up-front fees and retainers. Over
operators negotiate compensation and the five years to 2019, this segment’s share
provide post-hire follow-up with successful of industry revenue has declined slightly as
candidates. The provision of this service rising business sentiment has encouraged
typically includes assurance clauses such as employers to seek permanent hires over
the repeat of a search at no extra charge temporary workers.
should a successful candidate subsequently
fail for reasons attributed to lack of due Independent contractor
diligence by the company, and not to placement services
recruit from the company for a given Independent contractor placement services
period of time. This segment has grown as are estimated to account for 6.0% of
a proportion of revenue over the five years revenue in 2019. Recruitment and
to 2019 due to stronger business activity, employment agencies find individual
higher corporate profit, increased corporate contractors to fill positions based on
globalization and significant management written contracts that stipulate job
restructuring following the recession. duties negotiated by clients. Under
these agreements, the service provider
Temporary staffing services has legal rights with respect to the
Industry operators typically do not provide individual contractor, who is
temporary staffing services, which are responsible for its own payroll
included in the Office Staffing and Temp deductions and government filings.
Agencies industry (IBISWorld report This segment experienced growth in
56132). However, temporary staffing the immediate aftermath of the
services are estimated to account for 7.8% recession as companies remained
of revenue in 2019 since several larger hesitant to increase the size of their
traditional recruiting companies, such as workforce and instead opted to hire
Randstad and Adecco, offer temporary independent contractors who were not
Products and Services officially employed by the company and a proportion of revenue recently as
continued assigned to complete specific roles. operators resume seeking full-time
However, this segment has declined as employees over short-term fixes.
Demand Demand for the Employment and Recruiting Service industry, although
Determinants Recruiting Agencies industry’s temporary agencies offer a greater
placement services follows the ebbs and degree of flexibility than permanent
flows of the economic cycle, particularly work agencies. While all hiring can be
with sudden changes in the labor force expected to suffer during an economic
and the unemployment rate. As the downturn, temporary workers are
unemployment rate increases, demand often hired more readily over full-time
for permanent placement services will employees, as companies are wary to
increase among unemployed workers in invest in permanent workers until
search of permanent work. For industry economic conditions improve.
recruiting agencies, however, there is Accordingly, demand for temporary
often far less economic activity from staffing services tends to be highest in
companies during periods of high the immediate years following a
unemployment. Employers will reduce recession, whereas demand for
salary costs by instituting hiring freezes permanent placement services tends to
or even laying off employees amid rise in the two to three years following
economic downturns, which greatly a recession.
reduces the economy’s overall demand A growing number of industry
for employment and recruiting agencies operators are expanding their portfolio
among job creators. to include value-added services such as
Demand for senior and executive outplacement services, training and
recruitment is particularly sensitive to human resources consultancy services.
business sentiment and overall Outplacement services are intended to
economic conditions. Since the help both employers and terminated
industry’s executive recruitment employees transition to new
services are typically charged as a employment through structuring
percentage of the position’s salary, severance pay, offering job-search
companies are quick to hire for major advice and even providing counseling
roles using in-house recruitment services. These services are typically
systems during recessionary periods. countercyclical, with demand for new
Additionally, there is far less staff employment increasing as economic
turnover when economic conditions are activity and unemployment increase.
uncertain because employed workers During the recession, many agencies
will be less inclined to pursue a new experienced an increase in demand for
position if the labor market has few outplacement services; however, the
suitable openings. Many industry gains associated with providing these
players also operate in the Office services have not mitigated losses from
Staffing and Temp Agencies industry lulls in demand for permanent
(IBISWorld report 56132). Temporary placement, which has traditionally
employment agencies tend to grow and accounted for the largest share of
decline parallel to the Employment & industry revenue.
9.9%
Administrative and clerical 35.3%
Industrial
11.1%
Technical
34.3%
Executive and managerial
Total $25.0bn SOURCE: WWW.IBISWORLD.COM
Major Markets nurses and physicians in search of passing of the Private Patient Affordable
continued permanent and temporary job placement. Care Act (PPACA). However, if the PPACA is
This segment has grown over the five years repealed, demand from this segment is
to 2019 as a result of increased healthcare likely to decrease over the five years to 2024
expenditure, which stemmed from the as a result of lower healthcare expenditures.
International Trade Due to the service-based nature of the to capitalize on America’s dynamic
Employment and Recruiting Agencies labor force. For example, major player
industry, employment and recruiting Adecco SA is a Swiss human resources
agencies do not participate in any consulting company with a dominant
international trade. However, domestic presence in Western Europe; revenue
players have increasingly focused on from North American clients generated
entering emerging markets, where only 18.0% of the company’s net sales
rapidly developing labor markets in 2018. Like other international
create lucrative opportunities for employment agencies, Adecco has
recruiting companies. Likewise, specifically targeted North America as
several foreign-owned recruiting a key resource for job growth following
companies have entered the US market the recession.
West
AK
0.1 New
England
ME
Great Mid- 0.3
Lakes Atlantic 1 2
NY 3
WA MT ND 10.2
5 4
1.8 0.1 MN
Rocky
0.2 1.9
WI
OR Mountains SD
0.2
Plains 1.5 MI
2.1
PA
3.8
6
7
1.0 ID IA OH 9 8
0.2 WY 3.7
0.1
NE
0.6
IL IN WV VA
6.0 1.3 1.9
West NV
0.4 0.2
KY
UT MO
0.6 NC
0.7
0.7 CO KS 1.6 2.8
2.6 0.8 TN
SC
Southeast
1.2
CA 1.3
13.9
OK AR GA
0.7 0.5 AL 4.2
AZ MS 0.6
1.8 NM
0.2 Southwest 0.2
TX LA
0.7 FL
8.8 7.1
HI Less than 3%
0.1 Additional States (as marked on map) 3% to less than 10%
1 VT 2 NH 3 MA 4 RI 10% to less than 20%
0.2 0.4 3.1 0.3 20% or more
5 CT 6 NJ 7 DE 8 MD 9 DC
1.7 3.5 0.2 1.7 0.5
SOURCE: WWW.IBISWORLD.COM
%
and Mid-Atlantic regions, which 10
primarily offer executive search services,
generate slightly more revenue per
establishment than the national average. 0
This is due to the high-value positions
West
Great Lakes
Mid-Atlantic
New England
Plains
Rocky Mountains
Southeast
Southwest
that are located within these regions,
which typically garner higher fees.
Southeast Establishments
The Southeast region is home to 21.3% of Population
industry establishments, making it a SOURCE: WWW.IBISWORLD.COM
Competitive Landscape
Market Share Concentration | Key Success Factors | Cost Structure Benchmarks
Basis of Competition | Barriers to Entry | Industry Globalization
Market Share The Employment and Recruiting Agencies digitization of online job listings and
Concentration industry has a low level of market share other services has enabled new players
concentration, with the three largest such as LinkedIn Corporation and
operators expected to generate only 23.9% Monster Worldwide Inc. (Monster) to
Level
of industry revenue in 2019. Due to its enter the industry and quickly capture a
Concentration in client-oriented nature, this highly large market. Traditional recruiting
this industry is L ow fragmented industry is characterized by agencies such as Randstad Holding NV
many small enterprises operating in (Randstad) have also increased their
narrow geographic markets. These share of the market over the past five
employment and recruiting agencies years, though their growth was primarily
typically focus on servicing local and driven by merger and acquisition activity.
regional customers and build relationships For example, Randstad acquired
with businesses in these areas. Larger Monster, a major operator within the
companies with a global presence, such as industry, for $429.0 million in 2016,
Adecco and Randstad, still have a which helped boost the company’s
relatively low share of the market because industry-relevant revenue. The industry
of the highly dispersed and localized is expected to continue consolidating
nature of recruiting services. Additionally, over the next five years as large,
the wide range of sectors that industry traditional recruiting companies continue
operators staff employees for keeps to acquire smaller competitors, while
concentration low, as operators typically internet-based recruiters continue to
only focus on one or two of these markets. outperform the industry as a whole
Market share concentration has risen through new product development and
over the five years to 2019. The rapid aggressive marketing.
Key Success Factors Ability to effectively on job vacancies and resume screening
communicate and negotiate by employers, is vital for success in
Employees should have the ability to this industry.
IBISWorld identifies effectively communicate with clients and
250 Key Success be able to understand a company’s Providing client confidentiality
Factors for a corporate culture and exactly what they It is important to ensure total
business. The most are looking for in a candidate. confidentiality in all areas of operation and
in all dealings with clients and potential
important for this
Must have license placements. This factor is particularly
industry are: Licenses for businesses and counselors important for executive search companies.
are required to operate in most states.
Access to highly skilled workforce
Ability to quickly adopt Companies should hire talented and
new technology amiable workers who can seek out the best
Keeping up to date with new potential candidates for a job and negotiate
technology, particularly the use of effectively between clients (employers)
the internet portals for information and job candidates.
Competitive Landscape
Average Costs of
all Industries in Industry Costs
sector (2018) (2018)
100
6.0 5.3 n Profit
n Wages
n Purchases
80 n Depreciation
n Marketing
53.4 49.0 n Rent & Utilities
n Other
Percentage of revenue
60
40 10.3
13.3 0.2 1.8 0.9
1.6 1.3
20
2.4
32.5
22.0
0
SOURCE: WWW.IBISWORLD.COM
Competitive Landscape
Competitive Landscape
Competitive Landscape
Barriers to Entry business to charge for the provision of clients, but this is only pertinent to
continued services. In addition, the industry has a entrants wishing to expand their business
very low level of capital intensity. New beyond a local or regional level.
entrants could provide services from a Entrants will need to build a
home office with little more than reputation based on providing quality
computer and telephone access. candidates. In addition, new entrants are
Furthermore, the industry has a low likely to be more successful if they are
level of market share concentration due to able to provide a full range of
the ease with which companies may enter employment services, including
and exit the industry. Consequently, the temporary placement, permanent
industry is highly fragmented and has a placement, executive search and training
large number of small operators that can services. In general, larger clients that
often carve out a space within the industry demand a variety of services prefer to use
by providing services to small, local or a single operator that provides many
niche businesses. In general, new services at an affordable price than
businesses may have difficulty establishing multiple operators that each offer a
relationships with large corporations and different service.
Industry The Employment and Recruiting Agencies Globalization has made the US labor
Globalization industry has a low level of industry market increasingly global, and many
globalization. Since the industry is prospective employees are open to the
service-based, it does not participate in possibility of working abroad as a means
Level & Trend any international trade. Nevertheless, of both growing their careers and
lobalization
G in larger industry players are increasing their experiencing business culture in other
this industry is operations overseas to provide services to parts of the world. Industry globalization
Lowand the trend global corporations, while large is therefore increasing gradually, although
international recruiting companies have the majority of industry employment and
is I ncreasing
established regional branches throughout recruiting agencies continue to operate on
major US metropolitan areas. a local or regional basis.
Major Companies
LinkedIn Corp. | Randstad Holding NV | Other Companies
Major Players
(Market Share) Randstad Holding NV 8.4%
78.7%
Other
Player Performance Founded in 2002, LinkedIn Corp. members in the United States. Recently,
(LinkedIn) has grown from a small, the company has focused on expanding
Silicon Valley start-up to one of the into foreign markets; in 2015, more than
LinkedIn Corp. largest professional networking websites three-fourths of new members were from
Market Share: 12.9% in the world. The company’s platform outside of the United States.
enables members to pursue success in LinkedIn operates through three
their careers by managing contacts and segments: talent solutions, marketing
sharing qualifications and personal solutions and premium subscriptions.
information digitally. Furthermore, the Industry-specific operations are
website permits members to seek jobs conducted through the company’s talent
through online listings and recruiter solutions segment, which seeks to match
programs. LinkedIn had over 10,000 talent with opportunity through
full-time workers worldwide as of leveraging data from employer and
September 2016 (latest available data). employee profiles. The segment generates
Across all business segments and revenue by selling space where
geographic regions, LinkedIn generated companies can post available positions,
$6.9 billion in net sales in 2018. As of its while candidates can upgrade to
final quarterly financial disclosure in premium subscriptions to access
September 2016, LinkedIn’s online enhanced search results and
network included over 467.0 million communication capabilities. The
members from more than 200 countries, company generates a significant portion
including an estimated 133.0 million of industry-relevant revenue from field
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
Major Companies
Player Performance sale operations, which had a client base of growing online recruiting companies over
continued about 43,000 medium- to large-size the past five years. The company’s US
businesses in 2015 (latest available data). industry-specific revenue is forecast to
Over the five years to 2019, the company grow at an annualized rate of 32.3% to
has pursued several expansion $3.2 billion over the five years to 2019.
opportunities, including opening European LinkedIn has focused on new product
headquarters in Dublin and acquiring development during this period,
Pittsburgh-based mSpoke, a software including the complete overhaul of its
developer. In 2014, the company acquired recruiter platform in 2013. Additionally,
online job listing start-up Bright for $120.0 the company has unveiled several new
million and Lynda, an online education and services that are designed to help users
professional training website, for $1.5 keep track of networking events, job
billion. These acquisitions have helped postings and applications on mobile
boost the company’s share of the online devices rather than on desktop
recruiting industry. computers. The company’s mobile app
In June 2016, Microsoft Corporation subscriber base has grown tremendously
(Microsoft) announced its plan to during the latter half of the five-year
purchase LinkedIn for $26.2 billion. The period and now constitutes almost
deal was officially completed in two-thirds of all site traffic. In 2015, the
December 2016 after being cleared by company also launched its Job Search
regulatory bodies in the United States app for smartphones, which has further
and Europe. LinkedIn will remain its own expanded its reach into the online job
standalone operation under Microsoft boards segment. Lastly, the company’s
moving forward. recent acquisition of Bright has
significantly boosted its database of open
Financial performance job listings. In January 2016 (latest
LinkedIn’s streamlined interface and available data), LinkedIn’s database had
focus on rapidly expanding its user base more than 3.5 million active job listings
has helped it become one of the fastest- within the United States.
Major Companies
Player Performance industry. Therefore, the professional company acquired SFN Group, another
continued services segment, which is mostly major staffing company, for $771.0
involved in the permanent placement of million. Although the deal was completed
professionals in the banking and finance just prior to the current period, it
sectors, is the company’s only industry- effectively doubled the company’s market
relevant business unit. share within the United States and
In August 2016, Randstad reached an boosted industry-relevant revenue by
agreement to purchase Monster over 30.0%. While Randstad’s net sales
Worldwide Inc. (Monster), the leading have increased at a healthy rate over the
HR services provider that owns Monster. five years to 2019, industry-specific
com, for $429.0 million. The acquisition revenue has slightly lagged total revenue
will help Randstad further expand its growth. Throughout the period,
global HR strategy by bridging two professional staffing services have
complementary sides of the larger accounted for about the same portion of
recruiting industry. In the future, industry revenue as they did at the
Monster will continue to operate as a beginning of the period, while the
separate and independent entity under percentage of revenue attributed to
its own name. professional staffing services in the
United States has slightly decreased.
Financial performance While this trend has led industry-relevant
The company’s performance during the revenue to underperform total sales,
five-year period has been driven by industry-specific revenue has still
several major acquisitions as well as increased an annualized 3.1% to $2.1
organic growth. Prior to the period, the billion over the five years to 2019.
*Estimates
SOURCE: ANNUAL REPORT AND IBISWORLD
Other Company Adecco SA (Adecco) is one of the world’s employed over 34,000 full-time
Performance largest temporary staffing agencies. The equivalent employees and had more than
Switzerland-based company places about 700,000 associates on assignment daily.
3.0 million people in employment each The company currently has about 5,000
Adecco SA year and is among the largest players in branches in more than 60 countries
Market Share: 2.5% North America. In 2017, Adecco across the globe and generated $28.2
Major Companies
Other Company billion in global revenue in 2018. Adecco The company’s North American
Performance operates through four main business lines: segment performed well in 2014, when
temporary and permanent career revenue from permanent placement
continued
transition, outsourcing, talent development services rose significantly. Demand for
and other services. Temporary staffing permanent placement services has
represents the majority of company since spiked as rising corporate profit
revenue; however, it is not included in the and higher business sentiment have
Employment and Recruiting Agencies encouraged employers to seek more
industry, which comprises permanent, full-time hires. In contrast, the
career transition and outsourcing company’s temporary staffing unit has
revenue. Adecco contributes to industry slowed down during the period.
services by accessing a range of Overall, Adecco is expected to generate
candidates, screening resumes and $635.2 million in US industry-specific
conducting interviews and assessments. revenue in 2019.
Operating Conditions
Capital Intensity | Technology & Systems | Revenue Volatility
Regulation & Policy | Industry Assistance
Operating Conditions
Capital Intensity automatically screens resumes and rise slightly over the next five years as
continued candidate profiles have helped reduce the online recruitment sites continue to invest
level of labor required by industry in product development and outperform
participants. Capital intensity is expected to the industry as a whole.
Technology and The Employment and Recruiting red flags such as typographical errors.
Systems Agencies industry has experienced a Similarly, operators are developing new
moderate level of technological change in methods for reference checks,
Level recent years. Online job listings have qualifications checks and interview
become essential employment-seeking procedures. Computer software has made
The level
of tools for clients and companies in this these processes faster, enabling
technology change industry. The ability for applicants to appropriate candidates to be found and
is M
edium view vacancies and to submit their screened with better accuracy. Agencies
resume over the Internet is critical, keep track of candidates and their
particularly for applicants hoping to resumes on a computerized database;
relocate across the country for when a client provides a particular list of
employment. Job seekers can also specify demands in a candidate, agencies can
which potential employers can view their quickly search the database to find an
resume online. Many websites now offer applicant whose background best
advice on resume format and content and matches the job posting.
career planning. They can also Some companies now use personality
recommend suitable job openings based testing to assist in the selection of senior
on users’ specific job preferences. staff. The tests probe candidates’ work
style, motivations, interpersonal skills
Screening and testing and ability to work in a group setting.
Applicant resume screening is now being Some tests can be as simple as client
streamlined with the help of computer meet-and-greets or as thorough as
programs. Employment recruiters can issuing group case studies at employment
filter high volumes of resumes for selection centers to test the aptitude of
keywords, experience requirements and several applicants at once.
Revenue Volatility The Employment and Recruiting Agencies increased during the period leading to
industry has a low level of volatility. Over reduce revenue volatility.
the five years to 2019, industry revenue Although demand for industry
Level
grew by as much as 6.4% in 2014 and as services may rise in times of economic
The level of little as 2.6% in 2019. Demand for industry duress and low employment, industry
volatility is L ow services depends heavily on the overall performance typically suffers when the
state of the US labor market and changes in industry is unable to place individuals
the national unemployment rate. Over the successfully into new jobs. As a result,
five years to 2019, the unemployment rate many companies have expanded their
has dropped significantly, as the domestic global reach over the past five years to
labor market improved in line with overall increase job listings and placement
economic recovery. As new hiring services in emerging markets that have
increased, demand for permanent more fluid labor markets than those in
placement and executive search services the United States.
Operating Conditions
Revenue Volatility
continued
Regulation and Policy A license is required to operate as an Federal and state laws surrounding
employment agency in most states. the use of personal information also
Licenses are usually issued by the regulate the online industry operators.
Level & Trend State Department of Labor and may be The federal CAN-SPAM Act, which was
he level of
T renewable on an annual basis. In some signed into law in 2003, regulates the
Regulation is states, a counselor’s license is also use of e-mail as a form of
Mediumand the required for any person who communication and sets standards for
interviews, counsels or advises the sending of mass e-mail messages.
trend is S
teady
employers or employees on any matter The law limits the type of
related to employment and contracts. communication that online recruitment
Having a license permits agencies to sites can have with clients and users.
charge for the provision of services. In Additionally, each industry operator
addition to the necessary licenses, must clearly state and display its
however, the Employment and privacy policies and practices. Private
Recruiting Agencies industry is largely data and information is constantly
self-regulating. The American Staffing collected and stored on these recruiting
Association has a general Code of websites. Accordingly, laws that pertain
Ethics and Good Practices as well as a to the protection of this data are
code developed specifically for essential for client and user security
construction companies and day and for the websites’ credibility.
laborers. The code sets standards for Furthermore, because of the internet’s
member organizations, such as globalized nature, industry operators
treating applicants with respect, must be willing to comply with the rules
maintaining integrity, complying with and regulations of foreign governments,
laws and determining the which may differ widely from those in
qualifications of employees. the United States.
Operating Conditions
Industry Assistance The Employment and Recruiting industry. The ASA provides its affiliates
Agencies industry does not receive any with legal advice, public relations
direct form of government assistance. materials, educational materials for new
Level & Trend However, many employment and and established players and provides
he level of
T recruiting agencies in the United States public advocacy campaigns to benefit the
Industry Assistance benefit from various trade associations. interests of the industry. The ASA also
is L owand the The American Staffing Association (ASA) provides support for member companies
is one of the most prominent industry across other industries that provide
trend is S teady
associations that works for the benefit of temporary and contract staffing,
member companies that work within the outplacement services, HR consulting
Employment and Recruiting Agencies and company streamlining activities.
Key Statistics
Industry Data Industry
Revenue Value Added Establish- Wages Domestic Unemployment rate
($m) ($m) ments Enterprises Employment Exports Imports ($m) Demand (%)
2010 16,843.7 10,679.5 12,520 11,383 242,382 -- -- 9,909.2 N/A 9.6
2011 18,667.4 12,032.4 12,546 11,428 267,454 -- -- 11,074.7 N/A 9.0
2012 18,329.7 11,722.6 12,333 11,300 276,733 -- -- 10,621.5 N/A 8.1
2013 18,671.6 11,298.8 12,242 11,155 287,890 -- -- 10,259.0 N/A 7.4
2014 19,861.7 11,710.0 12,357 11,114 296,026 -- -- 10,647.4 N/A 6.2
2015 20,675.3 12,363.0 12,672 11,268 293,526 -- -- 11,200.1 N/A 5.3
2016 22,324.5 12,744.1 12,475 11,074 296,404 -- -- 11,410.2 N/A 4.9
2017 23,428.2 12,815.5 12,661 11,210 297,903 -- -- 11,532.8 N/A 4.4
2018 24,403.2 13,299.5 12,885 11,386 291,273 -- -- 11,957.3 N/A 3.9
2019 25,037.2 13,622.3 13,050 11,516 298,062 -- -- 12,242.3 N/A 3.7
2020 25,045.6 13,676.7 13,116 11,572 299,864 -- -- 12,302.3 N/A 3.6
2021 25,032.0 13,715.1 13,191 11,638 301,267 -- -- 12,347.0 N/A 4.0
2022 25,124.3 13,793.3 13,285 11,721 303,323 -- -- 12,423.5 N/A 4.2
2023 25,342.3 13,927.8 13,386 11,807 306,459 -- -- 12,547.8 N/A 4.3
2024 25,790.2 14,166.7 13,562 11,958 311,627 -- -- 12,761.5 N/A 4.3
Sector Rank 11/26 10/26 13/26 12/26 8/26 N/A N/A 10/26 N/A N/A
Economy Rank 339/694 199/694 276/694 265/694 119/694 N/A N/A 146/694 N/A N/A
Figures are in inflation-adjusted 2019 dollars. Rank refers to 2019 data. SOURCE: WWW.IBISWORLD.COM
Liquidity Ratios
Current Ratio 1.5 1.5 1.5 1.6 1.6 1.6 1.7
Quick Ratio 1.4 1.4 1.4 1.5 1.5 1.5 1.5
Sales / Receivables (Trade Receivables
Turnover) 8.4 8.4 8.2 8.1 9.4 8.2 7.6
Days’ Receivables 43.5 43.5 44.5 45.1 38.8 44.5 48.0
Cost of Sales / Inventory (Inventory Turnover) n/c n/c n/c n/c n/c n/c n/c
Days’ Inventory n/a n/a 0.4 0.4 0.4 0.4 0.4
Cost of Sales / Payables (Payables Turnover) 155.3 144.7 137.5 132.0 n/c 127.0 91.3
Days’ Payables 2.4 2.5 2.7 2.8 0.4 2.9 4.0
Sales / Working Capital 19.5 19.0 18.7 18.1 31.5 17.8 16.1
Coverage Ratios
Earnings Before Interest & Taxes (EBIT) /
Interest 9.3 7.7 7.0 6.6 2.7 8.6 7.1
Net Profit + Dep., Depletion, Amort. / Current
Maturities LT Debt 5.5 7.4 6.6 9.0 n/a n/a n/a
Leverage Ratios
Fixed Assets / Net Worth 0.1 0.1 0.1 0.1 0.1 0.1 0.1
Debt / Net Worth 2.2 2.1 2.2 2.1 2.2 1.8 2.2
Tangible Net Worth 23.3 25.4 20.1 26.0 15.1 32.4 27.0
Operating Ratios
Profit before Taxes / Net Worth, % 44.0 40.0 34.4 40.5 44.2 42.0 31.5
Profit before Taxes / Total Assets, % 12.6 11.7 10.1 10.3 10.6 12.4 8.2
Sales / Net Fixed Assets 217.8 228.2 190.9 212.8 460.8 199.7 144.8
Sales / Total Assets (Asset Turnover) 5.4 5.2 4.9 5.2 5.2 5.3 4.8
Assets, %
Cash & Equivalents 15.0 13.6 12.4 13.7 19.6 12.3 10.3
Trade Receivables (net) 59.7 59.6 58.3 58.5 47.1 65.2 59.2
Inventory 0.1 0.3 0.2 0.2 0.3 0.3 0.1
All Other Current Assets 6.7 5.5 4.6 5.0 6.4 4.8 4.0
Total Current Assets 81.5 79.0 75.5 77.4 73.3 82.6 73.5
Fixed Assets (net) 5.2 5.9 5.7 4.9 5.9 4.3 4.7
Intangibles (net) 5.2 7.5 11.0 9.1 6.2 6.9 14.9
All Other Non-Current Assets 8.2 7.6 7.8 8.7 14.5 6.3 6.9
Total Assets 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Total Assets ($m) 4,432.9 5,183.5 5,351.2 5,438.4 102.2 868.1 4,468.0
Liabilities, %
Notes Payable-Short Term 25.3 23.5 22.9 23.1 24.1 25.9 18.2
Current Maturities L/T/D 1.5 2.4 1.7 1.1 0.5 1.3 1.4
Trade Payables 8.5 8.6 7.2 7.0 5.5 8.1 6.7
Income Taxes Payable 0.3 0.4 0.2 0.2 0.2 0.3 0.3
All Other Current Liabilities 19.9 19.0 19.3 18.5 22.7 16.8 17.3
Total Current Liabilities 55.5 53.9 51.3 50.0 52.9 52.3 43.7
Long Term Debt 8.9 7.6 9.3 7.2 8.3 4.6 10.0
Deferred Taxes 0.1 0.1 0.2 0.1 n/a n/a 0.4
All Other Non-Current Liabilities 7.0 5.4 8.0 7.6 17.5 3.7 4.0
Net Worth 28.5 32.9 31.1 35.1 21.3 39.3 41.9
Total Liabilities & Net Worth ($m) 4,432.9 5,183.5 5,351.2 5,438.4 102.2 868.1 4,468.0
Maximum Number of Statements Used 423 377 354 339 93 146 100
Source: RMA Annual Statement Studies, rmahq.org. RMA data for all industries is derived directly from more
than 260,000 statements of member financial institutions’ borrowers and prospects.
Note: For a full description of the ratios refer to the Key Statistics chapter online.
Industry Jargon IN-HOUSEThe opposite of outsourcing; performing a OUTSOURCINGThe use of outside service providers to
duty or task within the company itself, rather than perform various noncore activities.
through an outside source.
OUTPLACEMENT SERVICESServices provided to a
terminated employee to assist their search for a new
job.
IBISWorld Glossary BARRIERS TO ENTRYHigh barriers to entry mean that INDUSTRY REVENUEThe total sales of industry goods
new companies struggle to enter an industry, while low and services (exclusive of excise and sales tax); subsidies on
barriers mean it is easy for new companies to enter an production; all other operating income from outside the
industry. firm (such as commission income, repair and service
CAPITAL INTENSITYCompares the amount of money income, and rent, leasing and hiring income); and capital
spent on capital (plant, machinery and equipment) with work done by rental or lease. Receipts from interest
that spent on labor. IBISWorld uses the ratio of royalties, dividends and the sale of fixed tangible assets are
depreciation to wages as a proxy for capital intensity. High excluded.
capital intensity is more than $0.333 of capital to $1 of INDUSTRY VALUE ADDED (IVA)The market value of
labor; medium is $0.125 to $0.333 of capital to $1 of labor; goods and services produced by the industry minus the
low is less than $0.125 of capital for every $1 of labor. cost of goods and services used in production. IVA is also
CONSTANT PRICESThe dollar figures in the Key Statistics described as the industry’s contribution to GDP, or profit
table, including forecasts, are adjusted for inflation using plus wages and depreciation.
the current year (i.e. year published) as the base year. This INTERNATIONAL TRADEThe level of international trade
removes the impact of changes in the purchasing power of is determined by ratios of exports to revenue and imports
the dollar, leaving only the “real” growth or decline in to domestic demand. For exports/revenue: low is less than
industry metrics. The inflation adjustments in IBISWorld’s 5%, medium is 5% to 20%, and high is more than 20%.
reports are made using the US Bureau of Economic Imports/domestic demand: low is less than 5%, medium is
Analysis’ implicit GDP price deflator. 5% to 35%, and high is more than 35%.
DOMESTIC DEMANDSpending on industry goods and LIFE CYCLEAll industries go through periods of growth,
services within the United States, regardless of their maturity and decline. IBISWorld determines an industry’s
country of origin. It is derived by adding imports to industry life cycle by considering its growth rate (measured by IVA)
revenue, and then subtracting exports. compared with GDP; the growth rate of the number of
EMPLOYMENTThe number of permanent, part-time, establishments; the amount of change the industry’s
temporary and seasonal employees, working proprietors, products are undergoing; the rate of technological change;
partners, managers and executives within the industry. and the level of customer acceptance of industry products
and services.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists of NONEMPLOYING ESTABLISHMENTBusinesses with no
one or more establishments that are under common paid employment or payroll, also known as nonemployers.
ownership or control. These are mostly set up by self-employed individuals.
ESTABLISHMENTThe smallest type of accounting unit PROFITIBISWorld uses earnings before interest and tax
within an enterprise, an establishment is a single physical (EBIT) as an indicator of a company’s profitability. It is
location where business is conducted or where services or calculated as revenue minus expenses, excluding interest
industrial operations are performed. Multiple and tax.
establishments under common control make up an VOLATILITYThe level of volatility is determined by
enterprise. averaging the absolute change in revenue in each of the
EXPORTSTotal value of industry goods and services sold past five years. Volatility levels: very high is more than
by US companies to customers abroad. ±20%; high volatility is ±10% to ±20%; moderate volatility
is ±3% to ±10%; and low volatility is less than ±3%.
IMPORTSTotal value of industry goods and services
brought in from foreign countries to be sold in the United WAGESThe gross total wages and salaries of all
States. employees in the industry. The cost of benefits is also
included in this figure.
INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players account
for more than 70% of industry revenue. Medium is 40% to
70% of industry revenue. Low is less than 40%.
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