In a company statement issued this week [12 October 2023], Hays said the drop reflected employers’ increased time to hire in permanent recruitment and went on to say: “On an actual basis, net fees decreased by 9%, with a weakening of the Australian dollar versus sterling in particular decreasing group fees. The group’s year-on-year fee decline was consistent through the quarter, and our fee decline exit rate was 7%.”

The Q1 report also revealed that temp and contracting, which together represent 58% of group fees, was flat year-on-year. The company attributed this to its “actions to increase fee margins and our focus on higher value markets, together with the positive effects of wage inflation”.

“Our long-term strategy is to position our businesses in the most attractive structural growth sectors,” the company said. Fees in Hays’ largest global specialism of technology, representing 25% of the group business, dropped by 7%, compared to a record prior year performance. In that sector, technology temp “significantly” out-performed perm, Hays said. In the company’s second largest specialism, accountancy and finance, Hays saw its fees decrease by 4%, while engineering, its third largest specialism, grew by 10%. However, the construction and property element decreased by 14%. Direct outsourcing fees in enterprise clients fell by 6%, “although we continue to have a good pipeline of opportunities”, Hays said.

Group consultant headcount decreased by 2% in the quarter and by 9% year-on-year “as we managed our overall capacity in line with market conditions”, the company explained. “We remain firmly focused on driving consultant productivity, which is at good overall levels, despite more difficult markets, particularly in perm.”

In terms of its operating profit in FY24, Hays said the strengthening of the pound compared to the main trading currents of the euro and Australian dollar “remains a headwind”. Also, Germany has two fewer working days in the first half of FY24, “which will negatively impact fees and profit” in the temp and contracting businesses by about £3.5m in the first half of the financial year.

The company said the new financial year had begun “in line with our expectation”. Hays went on to say, “we continue to expect conversion rate and operating profit will also decline, as we protect key strategic investments to benefit from future recovery and structural growth opportunities”.

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