Tuesday, 15 July 2008

Alwyn Welch, CEO Parity

I wouldn’t want to be a generalist (in anything) in a downturn: likely to be selling on wafer-thin margins and with a high exposure to low level (offshorable, automatable) skills.

Why is the whole recruitment sector getting hammered by the analysts/investor?

- the big market caps are generalists – and tar the whole sector with the risk they carry.

- it’s a sector renowned for “salesy”, over-optimistic, management – not necessarily true today but people have been badly burnt in the past

- many recruitment companies are small caps – and low liquidity is driving away investors.

- the perm recruitment business is more short term than management consulting – so forecasting even 2 months out is much more an art than science

… and finally, people in the City are nervous about their own jobs (being in a recession sector today) – and that emotion colours their views….

So the golden rules for a recruitment company today, in IT (and maybe other areas) are:

- get into higher level, more senior, skills … but you must deliver strong service to clients and candidates to succeed there

- focus on sectors where the downturn has not hit yet (Public, Energy, etc.) and be ready to get back into ones emerging from the “rolling recession” in due course (eg Banking)

- get lucky with your client base – even in hard hit sectors there are clients doing very nicely and still investing!

- create a company culture that combines a high quality service ethos and a sales obsession, with disciplined and results-oriented management.

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