Diversifying into new markets not only boosts growth potential but also minimises the impact of a potential market downturn.
As a flexible and low-cost industry, recruitment provides ample opportunities for new market entry, but also heightened competition, and quick market saturation makes prompt action a crucial advantage.
Although core recruitment skills remain the same regardless of the market, knowledge of the market and its unique demands is essential.
With over 45,000 registered recruitment agencies in the UK, competition is fierce. To stand out, consider these five key areas when venturing into a new market:
Candidate Volumes vs. Jobs
As you dive into exploring a new market, it’s important to consider the candidate landscape. Think about what competitive advantage you can bring to a particular market. Why will you succeed ahead of existing suppliers?
Typically, the most profitable markets to enter and win big are niche markets with a shortage of quality candidates. Recent big success stories such as the Frank Recruitment Group have achieved rapid growth by focusing on candidate short markets where their ability to identify hard-to-find talent has seen them win significant market share.
A market with a shortage of quality candidates presents an opportunity for a specialist recruitment agency to thrive and differentiate itself by being able to identify hard-to-find talent that competitors cannot. In such markets, it’s crucial to have confidence in your ability to source and attract top talent, and to have a strategy in place to stand out from other recruiters.
On the other hand, in markets with an abundant supply of candidates, you’ll need to focus on speed to market and delivering results faster than your competition. While cutting fees to win business may seem like an option, this strategy is difficult to scale and leaves little room for error in an economic downturn.
Instead, consider offering value-added services that set you apart, such as video interviewing or advanced automation tools to streamline your recruitment process.
By offering a complete and innovative solution, you’ll be better positioned to compete and win business in a highly competitive market.
Average Fees in the New Market
Before entering a new market, it’s important to understand the fee levels. What are the fee levels in the market you are looking to enter? Are high fees the norm among niche agencies or are lower fees the standard set by large players?
Both models can work, as long as you know the fee levels and how to differentiate yourself with a unique value proposition.
Setting the wrong fees can lead to loss of potential customers so to succeed and scale, avoid pricing lower than the competition just to win business. Instead, aim for high margins like successful companies in the industry that offer better products and justify their prices with added value.
For example, when transitioning from high volume recruitment to niche, average fees will likely be higher so don’t leave money on the table by pricing too low.
Conversely, attempting to charge high fees in a market with a high supply without offering a distinct advantage may result in difficulty winning business.
The Best Companies to Partner With
When entering a new market, it’s important to identify the companies that have a high demand for talent and can pay a premium price. Seek out companies that are hiring not only for current needs, but also to fulfil a long-term strategy that requires multiple hires in the coming years.
Focus on the emerging companies, especially those that have private equity or venture funding, as they offer a wide pool of clients with money and the need for talent without high barriers to entry in established markets.
Look for large enterprises that don’t have strict recruitment processes and internal talent teams. FTSE 100 FMCG companies, for example, may not have the stringent processes as perceived, and they can offer a good opportunity to win exclusive contracts.
While it’s crucial to establish a healthy client relationship from the start, you must also value your time and avoid working with companies that don’t prioritise hiring and have a poor brand, as they may end up wasting your time and resources.
As tempting as it is to work every job in a new market, you can end up being sucked into wasting a huge amount of time on clients where you will either never fill their roles, or you spend so much time getting them filled that you’d have been better off spending your time finding better opportunities.
Before accepting a job offer, assess the client’s hiring process, communication, and commitment to filling the role. Also, make sure that the role and company culture align with your values and goals as a recruiter.
Having a clear understanding of the client’s expectations and requirements can help you save time and avoid frustration in the long run.
Permanent vs. Contract
When entering a new market, it’s important to assess the demand for both permanent and contract roles, and align your focus and resources accordingly.
Consider the market trends, clients’ preferences and the competition, and weigh the benefits and drawbacks of each approach. For example, permanent recruitment offers stability and steady income compared to contractor placements which can be volatile.
In permanent recruitment, the focus is on building relationships with both clients and candidates and providing a high level of service to both.
Contract roles, on the other hand, require a deep understanding of the market, the current demand for specific skills and the ability to market and sell those skills to clients effectively.
With that in mind, it’s essential to be flexible and adaptable as the market evolves, and be able to switch gears when necessary — as the market shifts, so will its needs.
Start diversifying into new markets today!
The advice above should hopefully give you a comprehensive understanding of how to choose your new market and set yourself up for success.
Here are a few additional tips to help you turn your knowledge into results:
By following these tips, you can increase your chances of success in any new market and make a lasting impact in the recruitment industry.
TL;DR Key Takeaways
- Recruitment is a low-cost, flexible industry that offers ample opportunities for new market entry, but prompt action is a crucial advantage due to heightened competition and quick market saturation.
- Knowledge of the market and its unique demands is essential, although core recruitment skills remain the same regardless of the market.
- The five key areas to consider when venturing into a new market are: Candidate Volumes vs. Job Openings, Average Fees, Ideal Partner Companies, In-Demand Skill Sets, and Contract Vs. Permanent Placements.
- To succeed in a market with a shortage of quality candidates, it is crucial to have confidence in your ability to source and attract top talent and to have a strategy in place to stand out from other recruiters.
- Offering value-added services that set you apart, such as video interviewing or advanced automation tools to streamline your recruitment process, can help you compete in markets with an abundant supply of candidates.
- Understanding the fee levels in the new market and setting the right fees can help avoid loss of potential customers and help succeed and scale.
- Identifying the companies with high demand for talent and can pay a premium price is important when entering a new market. Look for emerging companies, large enterprises that do not have strict recruitment processes and internal talent teams, and establish a healthy client relationship from the start.
- Assess the demand for both permanent and contract roles, and align your focus and resources accordingly when entering a new market. Be flexible and adaptable as the market evolves.
