Market overview

More need for flexibility and increased just-in-time production have positively impacted the recovery of our business. Labour market deregulation, skill shortages and socio-demographic changes will contribute to the business opportunities in the global HR services market in the future.

The HR services market explained

Human resource services concentrate on two market segments: permanent and temporary placement of workers. Within those segments, HR services focus on three areas: Staffing (General Staffing, Professional Staffing and Executive search), HR process management and professional development. While HR process management has been increasingly outsourced in recent years – for temporary staff to so-called Managed Services Providers (MSP), and for permanent staff to Recruitment Process Outsourcers (RPO) – professional development services often take the form of a consultancy or outplacement business.

In countries with restrictive labour legislation, staffing has been slower to develop and remains immature as an industry. Even in countries with a longer history of staffing, only a small percentage of the workforce is composed of temporary workers.

How HR services benefit labour markets

As the penetration rate of our industry (temporary employees as a percentage of the overall workforce) increases, so does the efficiency of labour markets. Staffing companies address the need of companies for more flexible workforce solutions. The recent downturn in the economy even augmented this need. Uncertainty over the economic outlook and a lack of confidence by companies to hire on a permanent basis, helped foster demand for our services. Additionally, more just-in-time production, in order to keep inventory levels low, has resulted in an increased need for flexible labour. Besides offering flexibility, our industry is also highly effective in addressing skill shortages, increasing the diversity of the labour market, integrating disadvantaged people and consequently helping to reduce unemployment.

The HR services market in numbers

The global HR services market grew approximately 13% to EUR 220 billion [1] in 2010. This compares with an estimated decline of 21% to a global market size of EUR 195 billion [1] in 2009. Professional Staffing accounted for around 30% [1] of the market, while the share of General Staffing was 70% [1]. The increase in the Professional Staffing segment was +6% [1], compared with +16% [1] for the General Staffing segment.

In 2010, the USA represented the single largest market for HR services measured by revenues, with a share of approximately 27% [1], followed by Japan with 23% [1] and the UK with 10% [1]. Europe as a whole represented 39% [1] of the global market in 2010, whereas the Emerging Markets accounted for 11% [1]. Despite improved economic conditions, the development of the various HR services markets globally were mixed with growth rates ranging between –6% and +28% [1]. The strongest growth was seen in the Emerging Markets, increasing its share of the global staffing market by 2% compared with 2009.

Competitive landscape

The global HR services market is very fragmented, but the competitive landscape varies considerably from one country to another. According to Ciett [2], the estimated number of private employment agencies worldwide was 72,000 in 2009. The three biggest markets measured by revenues – the USA, Japan and the UK – are highly fragmented, with the Japanese market showing the largest number of staffing companies, followed by the UK, Germany and the USA.

The French market, by contrast, is much less fragmented; it is dominated by the top three listed staffing companies, with a total market share of approximately 70% [1]. Looking at the global picture, the three largest listed staffing companies represent 23% [1] of the overall market. The Adecco Group is the world leader in HR services, and on a regional basis has leading positions in Europe, North America, Asia/Pacific and Latin America.

Consolidation in the staffing industry is on-going, particularly in fragmented markets. The trend of large multinational companies to outsource part or all of their HR processes further accelerates consolidation in the industry. Partnering with a Managed Services Provider (MSP), to manage the contingent workforce spend, typically results in higher volumes for fewer suppliers. Moreover, consolidation is also driven by General Staffing companies seeking a stronger foothold in the Professional Staffing markets in order to diversify their product offerings and to enhance their position in this more profitable and faster growing segment.

Adecco’s market position in 2010

 

% of Adecco
revenues

Market
share [1]
in %

Market
position [1]

 

 

 

 

North America

19

5

2

France

30

31

1

UK & Ireland

9

8

1

Germany & Austria

7

10

2

Japan

7

3

4

Italy

4

16

1

Iberia

4

25

2

Nordics

4

15

2

Benelux

5

6

3

Switzerland

2

22

1

Australia & New Zealand

2

9

5

Emerging Markets

7

5

1

 

[1]Adecco estimate. 2009 estimates revised.

[2]Ciett = International Confederation of Private Employment Agencies.