Hays highlighted the strains of a slowing global recruitment market on Wednesday as the firm revealed the impact of economic uncertainty and the changing face of recruitment.
Net fees were down 10% on a like-for-like basis in the fourth quarter, with all geographies experiencing declines. Germany was particularly heavily hit.
Although a softer jobs market can be blamed for some of the slowdown, Hays faces a bigger threat from businesses that choose to seek out talent without involving professional recruiters.
Platforms such as LinkedIn and a plethora of AI tools mean in-house recruiters have never been better placed to conduct their talent searches.
This is a threat to Hays that isn’t going away and will likely lead to lower revenues in the coming years. It goes without saying that this is highly unattractive to investors, and today’s update has proved to be the final nail in the coffin for some. Shares were down 4% at the time of writing.
“Things are starting to look very serious for Hays, what began as a slowdown has turned into a rout. After a series of profit warnings and repeated downgrades, net fees and operating profit have continued to fall sharply,” said Mark Crouch, market analyst for eToro.
“Permanent recruitment, the engine room of the business, suffered a double-digit decline, ripping through earnings and leaving little room for optimism.
“Global economic uncertainty, weak business confidence and sector-specific pressure have all bitten Hays hard. The UK public sector remains subdued, while Germany, a critical market, has been dragged down by an automotive industry that last year posted its worst quarterly profits since the 2009. At the same time, companies are increasingly bypassing traditional recruiters altogether, leaning on in-house teams, AI-driven platforms and direct hiring models to cut costs and move faster.”