FAST 50: Growth rates on the rise
In partnership with The Recruiter, Clearwater International presents this year’s FAST 50, a celebration of the 50 fastest growing, privately owned recruitment businesses in the UK, according to a revenue compound annual growth rate (CAGR) over the three most recent annual reporting periods.
As this year’s FAST 50 shows, there is cautious optimism in a challenging market for UK staffing businesses.
Following last year’s analysis, two main predictions were made:
- Increasing average growth rates in 2023; and
- Challenging macro-economic factors that were likely to adversely affect the sector
While both predictions have been proven correct, it is fair to say many of us had underestimated the extent to which the ensuing political uncertainty, rising interest rates and rocketing inflation would affect both UK and global businesses. Nevertheless, it is encouraging that the UK is expected to avoid recession this year, and while unemployment rates have crept up, they remain at a near 50-year low and vacancies remain high, reinforcing the structural skills shortage in the UK economy.
Business Services Director, Dan Shrimpton, who worked with Recruiter to compile the FAST 50 list, gives his first-hand view on this year's findings, along with trends and drivers in the market.
I am pleased to report this year’s FAST 50 achieved an impressive 31% average CAGR, the highest score since 2020 and significantly up on last year’s 26%. Buoyant market conditions in 2021/22 captured in this year’s data will be contributing to the strong performance and while we are optimistic for 2024, we expect growth rates to slow with the uncertain economic backdrop filtering through to market demand. Nevertheless, experience suggests that the best operators succeed in such markets, and we’re impressed to see many businesses focusing on the execution of key strategic initiatives, internal process optimisation and use of technology that, in many instances, had been deprioritised during the high-growth, post-COVID environment.
Understanding Recruitment and ICG Global are the two stand-out performers in this year’s list, both reporting growth in excess of 95%, representing the technology and healthcare sectors respectively. Understanding recruitment successfully put in place an Employee Ownership Trust (EOT) in January 2023, making its staff a 60% shareholder in the business.
EOTs are increasing in popularity as business owners look to empower their workforce, preserve the legacy of their business and benefit from the tax efficiencies of the schemes when extracting value. We expect the popularity of these schemes to rise as a result of M&A activity in the sector slowing, with investors becoming increasingly fastidious.
healthcare and technology sectors are the second and third most represented categories by volume
The healthcare and technology sectors are the second and third most represented categories by volume in this year’s list having experienced phenomenal growth in recent years, particularly following the pandemic.
Technology skillsets were called upon to facilitate rapid digital transformation that was required to adapt business models and react to changing consumer behaviours, which was compounded with the release of a backlog of global projects paused at the outset of the pandemic. This pent-up demand continues to unwind and will be a key driver of the increase in tech recruiters placing on this year’s list.
This year’s list comprised 14 multi-sector agencies, the only category to outperform the technology and healthcare sectors. It is the third year running that this category has topped the list, which we expect is, in part, driven by the portfolio effect of sectors serviced by these organisations.
current market conditions tend to lend themselves to niche contract staffing specialists as organisations opt for temporary over permanent resources
Focusing on services rather than sectors for a moment, current market conditions tend to lend themselves to niche contract staffing specialists as organisations opt for temporary over permanent resources, particularly in the current inflationary wage environment.
Staffing businesses reliant on permanent placements and embedded hiring solutions will have to work increasingly hard to achieve growth over the next 12 months. There are always exceptions, and Dartmouth Partners (now part of Kernel Group having acquired Pure Search), focusing on ‘future leader’ and executive placements in high demand Financial Services and Legal roles, placed fifth on this year’s list. Having received investment from Three Hills Capital Partners earlier this year, the Kernel team will be looking to continue its growth trajectory through 2023/24.
It is entirely feasible that the contract staffing market continues unabated and a contraction in the inflationary environment sees business confidence in making permanent hires return. We are confident that growth rates will be robust in 2024 and hope next year’s FAST 50 will prove this year’s predictions wrong.
A version of this article was recently featured in The Recruiter.
If you’d like to discuss anything mentioned above, please contact Director Dan Shrimpton.
