What Does the Future Look Like for the Australian Recruitment Industry?

Australia is a booming market within the global recruitment industry. According to a report from Australia’s Department of Employment, the market is currently generating more than $11 billion in revenue each year, employs over 93,000 people, and is supported by more than 6,900 recruitment agencies.

It’s a large country, but the population density is low, and labour is concentrated in a handful of major urban areas like Melbourne and Sydney. That said, it stands out in the Asia-Pacific (APAC) region as a very mature and competitive market.

The rise of the gig economy

Australia is fully embracing the gig economy, perhaps more so than some of its fellow countries within APAC. Many of the country’s employers see temporary staff as a viable alternative to permanent staff and hire employees on a contract,‘needs-only’ basis. Over the past year, The Australian Bureau of Statistics has consistently reported a monthly increase in the number of part-time roles available, while the number of permanent roles has been slowly falling.

Employees are in favour it, too. Australian workers are increasingly choosing to operate as independent consultants and specialists in their chosen fields. They work project-by-project or on short-term assignments that enable them to work remotely and enjoy flexible hours. There is a trade-off made here: higher pay and flexibility in exchange for paid leave entitlements and the security of a permanent role.

This shift to contract work is possibly due to how the Australian jobs market is structured. There aren’t many small employers by comparison to some countries — a handful of big companies dominate the jobs market. Rather than work for one of these big companies for their entire careers, Australians view contract work as a more varied, and perhaps more interesting, alternative.

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However, it’s not all positive news. The country is suffering from major skills shortages and it is struggling to recruit talent from overseas, partly due to the government’s tough stance on immigration. The pressure on the labour market is serious, but it does afford recruitment companies the opportunity to step up to the plate and revolutionise how they find talent.

The role of recruitment agencies

The large employers in Australia tend to have strong in-house recruitment functions. Agency recruiters are typically only called in when the in-house teams can’t find the talent they’re looking for. As the world of work continues to change — especially in relation to how people look for jobs and respond to prospective employers — agency recruiters are increasingly turned to for help.

Nonetheless, employers are still very much in control of their recruitment functions, leaving agencies in a vulnerable position. As a result, many Australian recruitment companies are looking for ways to maintain profitability and drive down operational costs at the same time. Instead of feeling unprepared when a big company comes knocking, these agencies are increasingly investing — very wisely — in important technology to improve efficiency. Thanks to advances in automation, social media and cloud computing, recruiters are improving their abilities to source and interact with candidates, and respond to opportunities proactively. This is crucial as Australia navigates a severe skills shortage and talent becomes harder to find.

Mind the skills gap

Australia’s ever-tightening immigration laws and heavily regulated business environment pose difficult challenges. The country now faces a chronic skills shortage,which is felt hardest in the IT and engineering sectors. While many international students come to Australia to study for degrees in STEM subjects, most return home after graduation as they are unable to stay in the country.

When it comes to the implications of the talent shortage, employers and agencies share the same pain. In fact, the extreme difficulty in sourcing skilled labour is one of the primary reasons corporates turn to recruitment agencies in the first place — and they are responding with enthusiasm. In fact, according to Bullhorn’s Australian Recruitment Trends 2017 report, 85% of recruitment companies expect their revenue for 2017 to top last year’s.

To fulfil these revenue projections, recruitment companies are actively focusing on improving their operational efficiency — nearly half (43%) anticipate an overall increase in their technology investment this year. The adoption and usage of ATS and CRM systems is already stronger than ever: 78% of agencies use a CRM system to track candidates and 47% rely on an ATS.

What the future holds

Despite uncertainty, over half of Australia’s recruitment agencies. 63%, expect recruitment needs to increase. Contributing factors are the country’s steady unemployment rate and the increasing number of workers opting for contract roles. As it stands, 47% of agencies expect more demand for contract workers — without doubt, this will prove an increasingly lucrative area in the coming months.

Striking the right balance between new and existing business will also be key: 70% of firms say that more than half their revenue will come from current accounts this year. About half of Australian recruitment agencies, 49%, anticipate that business from new clients will only account for less than a quarter of their total revenues. Agencies need to strike a fine balance: improving revenue from existing clients while simultaneously building a healthy pipeline of new business.

There are three primary recruitment metrics that Australian agencies need to drive: customer satisfaction, fill rate, and candidate satisfaction — the problem is knowing how to measure success. Too many agencies only use informal feedback to gather information. Again, the right technologies can help agencies track how well their recruitment processes are really working.

Agencies need to remember that they serve two main audiences: clients and candidates. The latter are often side-lined in favour of the former. As the Australian recruitment sector faces the growing challenge of a nationwide skills shortage, the companies that communicate and respond to both clients and candidates quickly and efficiently will stand out in the years to come.

MORE: Gig: The New World of Work

Simon Greening

Simon Greening
Simon Greening is APAC regional director at Bullhorn.

Simon Greening

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