Recruiters are now able to look forward and start to apply pressure on consultants to grow the revenue base, according to BDO’s review of the latest outputs from Recruitment Industry Benchmarking (RIB).

With 2009 being the worst reported trading period for UK-focused recruiters for many years, it is a welcome relief that 2010 has proved to be a significantly better year. While the heights of the 2006-08 years are still some way off, the positive growth as seen in reported revenue levels shows that the sector’s recovery is a lot firmer than the fragile hope at the start of the year.

What does this mean for recruiters now that they have more confidence that there is a growing market? After a period of heads down and focusing on cost and cashflow to ensure they survive, having a strategy to develop the business is key.

Looking at some of the more detailed data available through RIB, the figures provide an interesting insight into the operational plans being employed by its members. These plans centre on the following key strategies:

• increase the amount of business you have with current (or previous) clients
• increase the number of clients you work with
• increase the number of employees you have.

In many respects the above order would represent a conservative approach to developing the business while maintaining control of the cost base until these become self-funding propositions. There is no point increasing headcount until your current workforce is starting to become fully employed but given the lead time to become productive, when is the right time to start this recruitment process?

Looking at the number of temporary workers paid per client shows that while this was relatively strong on an average basis during 2009, this was largely as the number of clients was reducing. And 2010 shows that from a low point over the two-year analysis, this has now started to regain momentum and, as can be seen in the three-month moving average, rises from a low of 2.2 temps per client to 2.6 - an increase of over 18%. As new clients are gained, the average will no doubt be diluted when work starts to filter through, highlighting the trend towards increasing the number of clients.

One of the first costs likely to have been cut would have been marketing and advertising budgets. This usually covers entertaining, so the ability to get in front of new clients over lunch, drinks or corporate entertaining could be restricted, but compensated for with lower volumes of actual work. This means that recruiters would have had more time to devote to business development.

This is reflected in the RIB data, as in the past 12 months the average of new to total clients has only marginally increased from 27.5% to 28.4%. Additionally, the total number of clients billed has increased in comparison to last year, showing that effort has been devoted to maintaining relationships rather than gaining new ones. The first nine months of 2010 are showing that 5% more clients have been billed in comparison to last year.

Finally, the number of employees has started to grow but at this stage investment in building staff numbers has not been significant. As you would expect the growth in employee numbers has also been more recent, with the first half of 2010 being lower than their 2009 level as the effects of making headcount reductions during 2009 become apparent.

The sector therefore appears to be taking a cautious and conservative approach to growth. Given the woes some have suffered this is not surprising.

• Christopher Clark, corporate finance partner, BDO
• Crawfurd Walker, director, Recruitment Industry Benchmarking