Market update from Doug Baird, Managing Director of Interim Partners
"The recruitment market has proved challenging with many in the sector reporting poor results. Indeed some of the recruitment firms that were trading at the beginning of the year are no longer with us. The search market has seen declines of 15.5% of net fee income with many predicting that this percentage would be far higher. The smaller boutiques seem to have suffered more as clients have been drawn to the larger brands. The top 30 search firms (salaries above 150k) have increased their market share from 70% to 76% - not good news for the search boutiques who believe they can offer a more unique proposition to the big brands. (Source: Executive Grapevine).
The interim market has also proved challenging for both candidates and interim providers. One of our competitors has completely disappeared and several more have entered administration. For our candidates there is greater competition for fewer assignments, which means that day rates for interims are softer. We have seen successful interim managers without assignments for a number of months; some are saying that they have never seen the market so tough.
What happened to the notion that interim management was counter cyclical to the economy and that we would see shortage of high quality interim managers - especially those with turnaround experience? It seems that the expected demand for turnaround professionals has not yet arrived.
There are some positive signs that the market for interims is recovering as some of my colleagues suggest.
Andrew McIntee who runs our Financial Services practice said: "The market for interim management within the financial services sector is recovering significantly. Our financial services practice has performed better in 2009 than in 2008. Demand exists for risk and compliance professionals as organisations seek to bolster their regulatory frameworks. Candidates who are business change specialists are continuing to experience difficult market conditions."
Duncan Hoggett, Head of our Energy and Utilities practice said: "In the early part of the year clients scaled back programmes across the board and this led to a reduction in demand for interim managers. However, the sector is about to enter a significant period of change and there is real evidence that demand is increasing significantly."
Simon Gough runs our FMCG practice. He said: "The FMCG market has seen an upturn in the number of programmes that clients are seeking to deliver, however, the likelihood is that it will be Q1 2010 before these ideas become reality and make it beyond the Finance Director's cutting table. The next two months will be used to scope the work without too much disruption to the delivery of the Christmas market. The first quarter of the new year is already looking positive, now is the time to have patience for what has been a frustrating year for so many."
While FMCG has been our best performing sector this year with revenues up by just over 18%, we have also seen good return from the health sector and retail sector. The public sector market for interims is still strong. The Interim Management Association reported that the public sector now accounts for approximately half the interim market place. Paul Fleming, Head of Health, describes the market as still having plenty of opportunities for good interim managers but noted that the lead time from assignment brief to candidate starting is getting longer. He said: "Our clients in the public sector have become far more focused on value for money. The projects are more often than not linked to gaining greater efficiency and certainly many clients are aware of the broader economic climate where a new government next year may make significant budget cuts."
We have been surprised that we have still maintained reasonable revenues from retail. At the beginning of the year Jonathan Flynn, who runs our Retail practice, joked that he should consider changing sector. He said: "Last Autumn I was reading on a daily basis that there would be blood bath in the sector. Yes, there has been many that have fallen into administration and I am not sure we will see a significant improvement until well into next year. That said, I have clients who are loyal and who are continuing to use me so this year has not been the disaster I thought it would be."
Tom Legard who is responsible for our Manufacturing practice has seen a sharp rise in his fee income in the second half of this year, which he attributes to the fact that he has only been with Interim Partners for just over a year and some of his relationships are maturing. We were pleased to announce that James Fargus joined Interim Partners in the spring to build a presence in the Pharamcetical and Life Sciences sector. He has since had a number of successes and is looking forward to further developing his relationships and expertise within the sector.
In our other sectors we have performed better than many in the market, which I suspect has been down to sheer determination rather than activity in the sector. The market for candidates with private equity experience and for those who specialise in Construction and Support services has remained tough. Although Mark Kitchen (Construction and Support Services) is looking towards an improving market in 2010.
We will close the year with a sense that the worse is behind us and that the market will be more confident next year. As a business we have grown our fee income and profitability but appreciate that we will have to continue to work very hard to provide more opportunities to our interim managers."