The Future of the Recruitment Industry Report: 2024
2023 has proven to be another challenging year for the recruitment industry with political turmoil, international conflict, rising interest rates, increasing unemployment, and talent shortages all putting pressure on recruitment agencies. While the industry has been challenged, recruiters and recruitment agencies have proven once again that they can find opportunities from adversity.
As the leader of a recruitment agency, it can be very difficult to understand how your business is performing when the background economic situation is fluctuating so rapidly. That's why, at the end of each year, Firefish surveys recruitment leaders across the UK and Ireland to collect the views and establish the plans and forecasts of what is to come in the year ahead. Using this data, this report paints a picture of what the recruitment industry will look like in 2024 and beyond.
The results of the annual 'Firefish: 2024 Recruitment Agency Report' survey have been analysed and compiled to produce this report and we are delighted to share the results with you.
Introduction
Putting data at the heart of your
recruitment agency.
CHAPTER 1
The Future of Recruitment
What's your outlook for the recruitment industry in 2024?
What does this mean?
As the data clearly shows, the overall sentiment of the industry remains positive, however, it also clearly indicates that confidence levels have retracted for the second year running. The number of recruitment leaders who are optimistic or very optimistic has experienced a change of -26% when compared to 2021, declining for the second year running.
The number of agency leaders taking a neutral position remained steady at 31%.
The decrease in optimism in the industry can be attributed to the wide range of external factors that are impacting business and recruitment agencies alike. The increased cost of borrowing, economic uncertainty, rising unemployment, widespread industrial action, and talent shortages are all impacting the industry; which is also still recovering from the post-COVID boom. These sentiments are also shared more broadly by business leaders across almost every industry. The Office for National Statistics recently reported that nearly two-thirds (64%) of business leaders are reporting some form of concern for their business as they look ahead to January 2024 which means recruitment agency leaders are more optimistic than most industry leaders.
- 60% of recruitment leaders are either 'optimistic' or 'very optimistic' about the year ahead.
- Levels of optimism have declined for the second consecutive year.
- 9% of recruitment leaders are 'pessimistic' or 'very pessimistic' about the year ahead, an increase on 2023.
Highlights:
Putting data at the heart of your
recruitment agency.
The business landscape has been consistently changing in 2023 and this has required recruitment agency leaders to be agile as new challenges were presented. In continuance of the trend for the last few years, recruitment agencies have remained flexible to ensure they are able to respond proactively to the varying economic pressures.
When surveying the recruitment industry in 2021, 86% of respondents were 'optimistic' or 'very optimistic' about the outlook for the year ahead. In 2022 we asked the same question and found that this had dropped to just 66% of respondents. So how optimistic are leaders as we head into 2024?
Outlook by Region
*Data from respondents in Ireland and Northern Ireland has been combined.
Most Optimistic Regions Compared to 2023 & 2022
*No data was collected from respondents in Ireland and Northern Ireland in 2022. Data from respondents in Ireland and Northern Ireland has been combined.
When analysing the data - and while general confidence remains positive - it is clear that agency leaders are adopting a more cautious approach to 2024 than in previous years. When compared to UK business leaders across all industries, of whom 64% are reporting concerns for their business, 60% of recruitment leaders surveyed are looking positively into 2024. This is a strong result for the industry against a challenging economic backdrop, however, it is clear that there are increasing concerns about the future in line with UK and global sentiment.
The data makes it clear that regionality plays a big part in the confidence of recruitment agency leaders. There has been significant movement in regional confidence over the past 3 years, but while Welsh leaders have increased in confidence year on year, every other region has seen a decline in confidence.
By diving deeper into the data, we can compare the outlook by region to see which locations are most optimistic.
Which regions are most optimistic about the future?
What does this mean and how does it compare to the years before?
- Welsh leaders were the most optimistic with 75% of respondents responding 'optimistic', although no Welsh leaders were 'very optimistic'.
- Scottish leaders were the most cautious with 37% taking a neutral position.
- 37% of leaders in London also took a neutral position, but 11% were very optimistic.
Highlights:
- Welsh leaders have had improved outlook every year since 2022.
- All other regions are the least optimistic heading into 2024 since 2022.
Highlights:
CHAPTER 2
Outlook on Sales Growth
Which regions are expecting sales growth?
What does this mean?
In correlation with the general optimism of recruitment leaders across all regions, leaders are unanimously forecasting sales growth in 2024. Interestingly, however, the most optimistic region, Wales, is also the most reserved about expected rates of sales growth.
In 4 of 6 regions, agency leaders have predicted more sales growth heading into 2024 than in 2023. Only London, however, has predicted more growth than was predicted for 2022. London has also experienced the biggest shift in expectation; having predicted the lowest level of growth heading into 2023, agency leaders in London are now expecting to see the highest rate of growth.
- The majority of leaders in all regions of the UK are forecasting sales growth in 2024.
- 16% fewer agency leaders in Wales forecasted sales growth than in 2023.
- 20% of recruitment leaders in London are forecasting sales growth of more than 50% in 2024 and 94% are forecasting growth.
Highlights:
Agency owners expecting to grow by region in 2024
*Data from respondents in Ireland and Northern Ireland has been combined. No data from these regions was included in 2022 or 2021 due to low response rates.
Putting data at the heart of your
recruitment agency.
How do you expect your sales to change in 2024, compared with 2023?
How do you expect your sales to change in 2024, compared with 2023 & 2022?
Agency leaders are more positive about sales growth when looking into 2024 than they were at the start of 2023, although it is clear that leaders are still more cautious than at the start of 2022.
Whilst this expectation for sales growth is positive, it is important to note that almost two-thirds (63%) of the agency leaders predicting growth are forecasting that this growth will be at the lower end of the scale at 1-25% in 2024.
Based on the responses of agency leaders, 84% are expecting to achieve sales growth in 2024. This is significantly up from the 77% of leaders predicting growth heading into 2023.
How do agency leaders expect sales to change in the next 12 months?
In the following graph we explore how much growth agency leaders are predicting over the coming year when compared to 2023 sales.
What does this mean and how does it compare to 2023 & 2022?
*Data may sum to more than 100% due to rounding.
- The most common prediction was for sales growth of 1-25% in the coming year.
- 9% of agency leaders expect sales to decrease in 2024.
- 14% of agency leaders predict growth of more than 50% in 2024.
Highlights:
- The percentage of agency leaders predicting growth of more than 50% has increased from 8% to 14% YOY.
- The predicted sales growth is far stronger heading into 2024 than at the start of 2023.
- The percentage of agency leaders predicting 1-25% growth remained steady at 53%.
Highlights:
Despite predictions of increased sales by agency leaders, there has been only a small increase in the percentage of agencies that are predicting an increase in headcount for 2024. When we surveyed leaders last year, 62% were forecasting an increase in headcount and as we head into 2024, 63% are anticipating headcount growth.
Whilst a predicted increase in headcount growth is positive, the majority of agency leaders (almost three-quarters) are predicting that this growth will be at the lower end of this scale, forecasting growth of between 1-25% only.
The number of agencies predicting headcount growth of more than 50% remained flat YOY at 9%. There was, however, an increase in the number of agencies predicting a decrease in headcount, moving from 1% to 3%.
Changes to headcount
As part of the survey we also asked agency leaders how they were expecting their agency's headcount to change throughout 2024.
How do you expect headcount at your agency to change throughout 2024?
- 63% of agency leaders are expecting to grow their agency in 2024.
- 34% of agency leaders expect there to be no change in headcount in 2024.
- Only 3% of agency owners expect their agency to decrease in size in 2024.
Highlights:
Which sectors are expecting sales growth?
- 94% of recruitment leaders in the sales & digital marketing sector are forecasting sales growth.
- 89% of agency leaders in the engineering, manufacturing, logistics, and FMCG sector are forecasting sales growth.
- Over 20% of recruitment leaders in the construction, technology and sales & digital marketing sectors are forecasting sales growth of more than 50% in 2024.
Highlights:
% of agency owners expecting to grow by sector in 2024
What does this mean?
The data shows us that there is some significant variation between the expected sales growth across sectors. The general outlook across these sectors is very positive, although fewer leaders in the finance & accountancy, professional services, and technology sectors are forecasting growth.
Leaders in the construction, engineering, manufacturing, logistics & FMCG, and sales & digital marketing sectors have predicted the most significant growth with more than 20% of leaders forecasting sales growth of more than 50% in 2024. The Firefish Job Flow Index has shown that the technology and construction sectors have been achieving the most consistent growth in placements made in 2023, which aligns with this expectation.
CHAPTER 3
How Working Models Have Evolved
How does this compare to 2023 & 2022?
As we head into 2024, agency leaders are demonstrating a resurgence in the popularity of a fully remote working model. Whilst the popularity of the remote-first hybrid model has declined from 39% to 21% YOY, a fully remote working model has increased from 14% to 30%. This suggests that those using a remote-first hybrid model at the start of 2023 have now transitioned to using a fully remote model.
Additionally, the popularity of a fully office-based model has declined YOY once again; falling to less than half of the level it scored at the beginning of 2022. In general recruitment agencies are becoming more remote and less office-based as the years pass.
- The split between office-first and remote-first was almost equal at 49% and 51% respectively.
- Office-first hybrid was the most popular model amongst agency leaders, with a Fully Remote model following close behind.
- A fully-office based working model was the least popular with just 17% answering this way.
Highlights:
Which working model is your agency currently using?
Working models have changed dramatically over the past few years. Agencies needed to shift to a home/hybrid working model during and in the wake of the COVID-19 pandemic, however, when we surveyed agency leaders last year, it was clear that agencies were trending towards a return to the office with a decrease in fully remote models and an increase in both office-first hybrid and fully office-based models. We asked the same question this year, to see how working models continue to change.
Putting data at the heart of your
recruitment agency.
CHAPTER 4
Recruiter Retention
What does this mean?
When we surveyed agency leaders at the start of 2023 we found that nearly half (48%) had maintained base salaries at the same level in the past 12 months. This number has now increased with 53% reporting no change in 2023. Of those agencies that did increase salaries in 2023, 75% increased them between 1-10% only.
For the first time, we also asked agency leaders about changes to commission structures. 90% of agencies reported that they had made no increases to commission structures and only 5% made increases greater than 10%.
Recruitment agency leaders have a first-hand insight into the links between the cost of living and salaries, so it is interesting to see that most agency leaders continue to hold base salaries and commission structures steady. This is indicative of the pressures that are being placed on businesses in the current economic climate, which makes it difficult for agencies to raise salaries.
- Over half of recruitment agency leaders (53%) reported no increase in salaries in the past 12 months.
- 35% of agencies have increased base salaries between 1-10% in the last 12 months.
- 11% of agencies increased base salaries between 11-20% in the past 12 months.
Highlights:
In the last 12 months, have you had to increase the base salaries of your recruiters and by what average?
In the last 12 months, have you had to increase your recruiters' commission structure and by what average?
*Bars may not sum to 100% because of rounding.
Putting data at the heart of your
recruitment agency.
Retaining top talent has always been a challenge in the recruitment industry. With ongoing economic pressures affecting businesses and employees alike, this challenge has become more and more difficult for some agencies and many have had to reduce the number of billing recruiters since the post-pandemic boom. As we head into 2024, and with 84% of agency leaders predicting sales growth, recruiter retention will be a key part of what determines agency success.
To gain an understanding of how recruitment agencies are planning to improve recruiter retention we asked agency leaders about base salary increases, commission and additional benefits over the past 12 months.
- 90% of agency leaders reported no increase in commission structures in the past 12 months.
- Only 5% of agency leaders reported having raised commission structures by more than 10%.
Highlights:
CHAPTER 5
Changes to Recruitment Structures
What does this mean?
The data shows us that there is a clear intention to increase both permanent and temp & contract activities in 2024, however, over half of agencies intend to keep their activity levels the same across both recruitment types.
When compared to last years responses, there has been an increase in the intent to expand activities in both areas. 48% of agency leaders are planning to increase permanent activity in 2024, compared to 41% at the start of 2023. 44% of agency leaders are planning to increase temporary & contract activity in 2024, compared to 37% at the start of 2023.
- 48% of agency leaders are planning to increase permanent recruitment activity, while only 2% intend to decrease perm activity.
- 44% of agency leaders are planning to increase temporary and contract recruitment activity, while only 2% report a desire to decrease in this area.
Highlights:
How will agency leaders change their focus around different types of recruitment?
Significant economic pressures have impacted recruitment agencies since 2019 and the impact of various international events are still having an impact on recruitment in the UK today. As a result, recruitment agencies have had to become more agile and quick to adapt so that they can capitalise on market trends. To understand how agencies are adapting we explored what business models and recruitment structures agency leaders intend to adopt in 2024.
% of agency leaders increasing their focus on permanent recruitment
% of agency leaders increasing their focus on temporary and contract recruitment
What does this mean?
That 64% of leaders in the construction sector intend to increase their focus on permanent placements demonstrates that this strategy has been fruitful for agencies and will be a key area for growth in 2024.
Likewise, in the technology sector, the most notable growth was in the volume of temporary and contract placements. Between April and September 2023 these placements climbed by 136% and agency leaders are again indicating that this is a clear area of focus for the coming year. Leaders in the construction sector have also indicated a clear intention to increase temporary and contract focus. Placements for this sector peaked in August 2023.
Putting data at the heart of your
recruitment agency.
How does this compare to 2023 & 2022?
Which recruitment business model will you primarily focus new business on for 2024?
What does this mean?
The leading model is a contingency model, which carries a higher risk for agencies as no upfront fee is paid to the agency. This makes it vital that agencies present excellent candidates and are in control of company and candidate compliance requirements at all times.
The percentage of agencies who are using a retained model has recovered and increased by 3%. The percentage for 2024 remains 5% lower than in 2022.
- Almost half of agency owners plan to use contingency as their primary recruitment model in 2024. This percentage is up from 44% in 2023 to 47%.
- 32% of agencies intend to use an even mix of two or more models.
Highlights:
How are different sectors shifting focus?
To dig deeper into these trends, we explored how different sectors are intending to shift their focus in 2024.
- Recruitment agency leaders in the construction sector showed that increasing permanent recruitment is a key focus for 2024.
- Only 28% of agency leaders in the sales & digital marketing sector plan to increase their permanent focus.
Highlights:
- Over 55% of leaders in the construction and technology sectors plan to increase their temporary and contract focus in 2024.
Highlights:
Want to learn more about placement trends?
Download the Firefish Job Flow Index: Annual Summary 2023
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CHAPTER 6
Candidate Attraction & Preferences
What does this mean?
The data clearly shows that agencies intend to rely on a strong brand and excellent quality data in 2024. With 70% of agencies planning to use social sourcing to attract new candidates, they are relying on engaging new candidates with their brand to build organic trust with them.
With 67% of agencies looking to their recruitment CRM first and 40% of agencies seeking to leverage email marketing, it is clear that candidate engagement will be a key focus for agencies in 2024.
By sourcing organically through social channels like LinkedIn and Facebook, and then nurturing candidates once they are in their CRM, agencies can significantly reduce the cost to fill a role by eliminating external marketing costs. From the data, it is clear that this is the favoured approach as we head into 2024.
What will be your main candidate attraction strategies for 2024?
- 70% of agencies plan to utilise a social sourcing strategy for candidate attraction.
- 67% of agencies intend to re-engage their existing database to find candidates.
- 40% of agencies will use email marketing as one of their main tools for candidate attraction.
Highlights:
How do the years compare?
*No data was collected for In-person Events in 2023 or 2022.
In 2023 we noted that agency leaders were reacting to increasing candidate acquisition costs and opting for cost-effective strategies. In 2024 the data demonstrates that this trend is continuing with an increase in focus on content, email and the engagement of candidates who are already in the database. While 20% intend to increase the use of job boards, this represents a 2% decrease on 2023.
Putting data at the heart of your
recruitment agency.
20.7% of businesses reported having difficulty recruiting candidates at the end of 2023 according to Office for National Statistics data. With worker shortages representing a persistent challenge throughout 2023 and with tightening regulations around migration and broad economic pressures, talent shortages are showing no immediate signs of reversal.
In order to understand how recruitment agencies are planning to drive growth and remain competitive we asked about the recruitment strategies they will be adopting in 2024.
- Social sourcing remains the most popular strategy for attracting candidates but has dropped from 79% in 2023 to 70% in 2024.
- Email marketing saw the most growth YOY and has now increased for two years in a row.
Highlights:
Candidate Preferences
In a candidate short market it pays to understand what candidates care about when looking for a new role. With a clear understanding of key candidate requirements, you can ensure your agency's acquisition strategy and communications align.
We asked agency leaders for an insight into what matters to candidates today; here's what we found.
What do you expect the 3 most important factors will be for candidates when considering roles in 2024?
- 84% of agency leaders believe that the base salary is the most important factor for candidate attraction.
- 67% of respondents believe a hybrid working model is most important with a further 24% choosing fully remote roles.
- Progression and career development was the second highest result at 71%.
Highlights:
What does this mean?
The data demonstrates that the base salary, career progression and a hybrid working model are the top factors for candidates looking for a role in 2024.
When comparing these areas YOY: the base salary increased from 74% to 84%, career progression and development increased from 66% to 71%, and while hybrid working remained flat at 67%, remote working dropped from 42% to 24%. This suggests that the base salary and career development are climbing in importance while working in an office occasionally is no longer as much of a barrier. This is likely a result of the cost of living pressures candidates are facing, which are making them more willing to be flexible around broader working conditions as long as the base salary and future prospects are right.
CHAPTER 7
Survey Information
Demographics
What is your agency's main industry focus?
Where are your agency headquarters?
When was your agency founded?
The 'Firefish: 2024 Recruitment Agency Report' survey was sent out to recruitment agency owners and directors based in the UK and Ireland during the month of December 2023. 45% of respondents were recruitment agency leaders from agencies founded before 2014.
A total of 195 agency owners and directors completed the survey, representing a broad cross-section of agencies across a range of specialisms and sectors. Additional data has been drawn from the Office for National Statistics and from the Firefish Job Flow Index: Annual Report.
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