Agents eye further upheaval

For Laurel Gillan, director of recently launched recruiter ITmaniacs, the current IT downturn was inevitable.

For Laurel Gillan, director of recently launched recruiter ITmaniacs, the current IT downturn was inevitable.

“Prices for services everywhere have been inflated to a level where people are starting to question the value they are receiving, so naturally the industry has taken a financial hit,” says Gillan.

“September 11 has provided a convenient scapegoat for what was blatantly obvious to anyone who was constantly studying the market and in touch with their client needs. The market is now becoming saner in that people aren’t investing obscene amounts of money in things like online procurement and CRM without actually realistically considering the return on investment,” she says.

However, Sally Breed of IT@Work blames much of New Zealand’s IT downturn on overseas-owned firms “who make decisions from head office without necessarily looking at the performance of individual countries”.

Breed says repercussions on agencies include some of the larger players downsizing and reviewing their strategies. “I believe this will continue and some of the smaller agencies will disappear with new ones emerging with the philosophy that if they can make it through the tough times, they will excel in the better ones.”

Recruiters are all hopeful of better times in 2002, but Ross Turner of Pinnacle Recruitment says large government projects are needed for a recovery.

“There is nothing out there, even if it is election year. We need the companies to get big deals, banking infrastructure, health infrastructure, something that will require substantial commitment by the IT industry. It will be a brave and well-connected entrepreneur starting a new business in the IT environment,” Turner says.

He believes new firms like ITmaniacs may only survive by being different, while surviving agencies will have to function with fewer staff. They will also offer more HR services, like retention strategies and career counselling, already a selling point for Pinnacle.

Breed believes consultancies will also have to focus on staff retention, “probably one of the greatest challenges facing business today”. Recruiters will also use better software tools, improve their staff training and implement other unique methods, she says.

Meanwhile, firms and candidates may use more “boutique” consultancies to keep a human element if they feel recruitment is becoming too automated.

Gillan says firms are rebelling against “paying a premium for a basic body-broking service” and want consistent service, good recruitment tools and measurable performance.

“Those who don’t use agencies are happy with their web-based job markets or believe they have a reputation strong enough that they will always attract the best calibre staff anyway,” she says.

Gillan says recruitment agencies need to change. There is complacency among some, the mystique surrounding IT has disappeared, companies are realising they have been fed a lot of hype and “candidate care” is deteriorating, she says.

“The world of recruitment has evolved into one matchmaking database. While initially this was a key selling point as more and more people gain various IT industry skills, this process is beginning to fall down and the agencies are doing a disservice to the candidates,” Gillan says.

While industry trends show more outsourcing, ITmaniacs believes whether HR is outsourced will depend on a firm’s own experience.

“Some HR staff may also feel threatened about giving up what is considered to be their own core competency,” Gillan says. “However, if the agents can demonstrate that they are really capable in this areas, progressive thinking clients will use them smartly to complement their own expertise.”

However, Turner sees something more fundamental happening, though it won’t be without its problems. Like Breed, who says applying by web will be expected, Turner says web-based advertising will continue as now, with newspaper adverts declining largely to just a branded logo to maintain market visibility.

Website job boards “are probably best” for positions with identifiable skills and qualifications, such as many technical roles, says Turner. But he believes for face-to-face roles with customer contact where personality matters the consultant will still be needed to assess that personality fit.

“Large organisations will take back the recruitment function,” he says, naming IBM, Telecom, Telstra, Peace Software and Oracle, who already have or plan to move down that track. Links with recruiters will survive but will be weaker and more flexible, he says.

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