The UK recruitment industry is experiencing continued signs of recovery. It may not be the boom like the one we saw in the first decade of the new century, but compared to the post-crisis years, professional services firms are ramping up their plans for recruitment in consulting and deal-related services.
At the headline level it is good news for people that work in the industry but, beneath the surface, there are a number of significant changes to the market structure that will have long-term implications for everyone seeking to earn a living advising on corporate transactions.
Perhaps the most significant – and well-flagged – factor is that the age of the generalist adviser for many of the larger firms is over. Seldom are we working on mandates for general M&A professionals. Firms have managed to hold onto their teams and protect the capability, but it is just not a significant area of growth in spite of the increased activity in the M&A market.
At the same time, business recovery for many has suffered and so investments into new service areas, where the same level of fee pressures may not exist and where there is more money to be made, are constantly being explored. Many, for example are focused on the opportunities created by the recent spate of regulatory changes in the financial services sector.
These fee pressures have also created a gap in the market for smaller or more niche firms to capitalise on, as they are generally less price sensitive when they do not carry the overheads of the larger firms.
Many of these larger firms, meanwhile, are continually seeking to become part of the elite in the most lucrative areas and have, as a consequence, realigned their propositions to support their clients via improved access to deeper sector expertise.
As a consequence, the most highly sought after candidates, at least from what we’ve observed, continue to be mainly within the financial services sector, followed by energy and TMT.
But, as these markets continue to grow, many partners are concerned about their ability to retain staff at the middle management level – particularly as the banks, private equity firms and corporates are also ramping up their own hiring plans.
In conclusion, those firms just playing in the fee sensitive mid market space must adapt and, if they haven’t already, decide whether they can realistically aspire and compete as one of the few full service firms with the necessary sector depth that clients now expect. The alternative is to forgo building out niche practice areas and sectors and instead focus on better supporting client demands on the international stage, or to more simply continue to stick to what they know, but build and enhance upon a select number of existing practice areas, focusing instead on becoming an elite niche market expert.