It recruiters are stars of show

29-Oct-2008

A ‘super group’ of elite recruiters has evolved in the highly-competitive IT sector.

This year’s Recruiter Hot 100, which rates companies by gross profit per employee, includes more IT specialists than any other sector, with 20 companies making the cut (Recruiter 15 October).

So why have the IT specialists outperformed their peers? What makes them so special?

The answer is that people working in the IT sector tend to be highly individualistic and are not easily targetable by employers, allowing specialist agencies to use their skills to carve out a niche for themselves.

Marilyn Davidson, director of the Association of Technology Staffing Companies (ATSCO), told Recruiter that employers’ reliance on agencies to fill these positions is mirrored by candidates’ reliance on agencies to find them work.

“Unless people are very high-level consultants with a good network of contacts, it’s not realistic for them to be able to find their own contract work — they haven’t got the time to market themselves,” she says.

Sector specialisms in the IT industry lend themselves to the abilities of agencies to add value.

Rory Ferguson, director and head of search and selection at JM Group, told Recruiter the company specifically targets areas where direct recruitment is difficult.

“We have added a very proactive new business function, targeting organisations who may already have a preferred supplier type situation but with a niche focus.”

Ferguson has identified a number of jobs that do not have strong networking communities and require highly-skilled candidates who are often already in employment — areas in which employers are entirely dependent on agencies.

“The key areas we look at are around information security, business continuity and anything associated with risk, like corporate risk or market risk.

“They could target them directly, but they don’t have the reach and the kinds of professionals we look for are typically not active.”

Ferguson says the methods used to do this include building communities and working with passive candidates.

In contrast, niches in many other highly-skilled sectors, such as investment banking, have evolved strong networks that allow candidates to be easily targeted directly by employers.

IT recruiters have also had to become lean and efficient. In recent years, clients have shifted towards preferred supplier lists and put pressure on agencies to drop fees. IT recruiters have had to adapt to remain competitive, changing the type of business they target.

The IT sector is quite mature and has been through several stages of development which brutally enforced best practice.

Davidson says: “We went through a period a few years ago where contract margins were squeezed to such an extent it put some companies out of business and others under significant strain.

“Recruiters learnt business lessons from that — it sharpened up their business process so they became much stronger as organisations.”

The pressure on margins experienced over the past few years has compounded the lessons learnt when the sector grew through several earlier downturns, including the dotcom bust of 2001.

“The IT recruitment industry is quite mature now. It’s been through a number of recessions and most of the serious players are properly run, efficient and effective businesses,” says Davidson.

Employing the right consultants has been crucial to competing in this environment. “IT agencies have to pay attention to the quality of their staff. They need to hire the right staff, develop them and make sure they have good career paths,” says Davidson.

IT recruiters have also taken pains to improve consultants’ specialist knowledge.

Sean Zimdahl, chief executive of Aston Carter Group, which grew its gross profit per employee by 23% to £122,221 over a year, told Recruiter: “From an employee perspective I think we train and performance-manage our people very well — 95% of our employees were hired without experience. They are very well trained and are given the opportunity to become a successful billing consultant or account manager when they are able to hit our minimum expectations.”

Competition in the IT sector has forced the leading recruitment agencies in the sector to evolve to ensure their consultants can still generate high fees. The concentration of IT recruiters in the Hot 100 demonstrates how effective recruiters have been in adapting to these pressures.

“The competition is pretty intense and in the current market that has intensified, but that’s the beauty of recruitment — it all comes down to the individual that is representing the firm,” says Ferguson.