The influx of recruiters into the public sector as a ‘safe haven’ from the hard hit private sector is affecting margins, but the impact of these new entrants will be short-lived.

That is the view of David Morgan and Simon Law, founders of public sector recruiter Morgan Law, which has just come out top in this year’s Recruiter Hot 100 recruitment companies. Each of its 35 staff (it now employs 45 staff) contributed more than £196,000 in gross profit. In the year ended 30 September 2009, the company, which was founded in 2000, achieved record turnover of £37m, up from £24m in 2008.

Morgan told Recruiter: “The influx of competitors into the public sector in the past 12 months who rely only on their price to sell has pushed down margins.”

However, co-founder Law predicted that many of these new entrants would disappear from the sector within the next year. “We will be there to pick up the vacancies they leave behind,” he said.

While acknowledging that public sector recruiters faced “challenging times” as government spending came under pressure over the next few years, Law said he was “excited” about managing the company through the “worst recession in living memory”. “Good businessmen get through bad times,” he added.