The Recruitment Market Has Changed
Pretty much every recruitment business leader I know has a strong feeling that the world they operate in has changed. It’s more expensive, less stable, and people are buying (and job hunting) differently.
I’m delighted to see some evidence of job flow improving in 2026. But that doesn’t mean guaranteed sales.
The contingent (payment on results) model that has dominated the market in recruitment services for so long isn’t working for recruiters anymore. Client commitment to hire is low, decisions are slow, and the odds of filling a job are lengthening.
If you run a recruitment business, this won’t be news to you.
What Smart Recruitment Leaders Are Thinking About Now
If you are leading a recruitment business today, you’re probably thinking beyond:
- Increasing BD efforts
- Cutting staff
- Improving job fill rates
And towards bigger strategic questions such as:
Faster, Less Expensive Delivery Mechanisms
How do you reduce cost-to-deliver while maintaining quality and protecting margins?
Diversification
What else can you legitimately sell to existing customers that solves a business problem?
New Markets
Should you expand geographically or sector-wise — and if so, when is the right time to do it?
These are the conversations serious leaders are having now.
The Mistake Daniel Made
I met up with Daniel this week, having not spoken for about two years.
Back when I was working with him, his business was making more sales, but was less profitable than before. His people worked about 10 jobs to fill one, they spent a fortune on candidate attraction, and the pace was relentless.
We planned to change this, but he didn’t prioritise it.
Then, his UK markets dried up.
His team, disillusioned by the leadership style and now not seeing any commission, left en masse.
“So I did what you said, Alison – I hired a guy to build out the US for me.”
This was emphatically NOT what I had advised him to do.
It failed.
Why Expanding Into the US Failed
Daniel made the decision based on anecdotal evidence of huge fees from other recruitment businesses operating in the US market.
He hired someone expensive and left him to get on with it.
No infrastructure. No client penetration strategy. No operational redesign. No differentiated offer.
And crucially, he was late to the party.
The Real Problem Was Never Geography
The issue wasn’t the US market.
The issue was that the underlying business model wasn’t healthy enough to scale into a new market in the first place.
Ansoff’s Matrix: Understanding Growth Risk
Let me introduce you to Ansoff’s Matrix. Igor Ansoff is credited as being one of the first thinkers to identify the idea of environmental turbulence — how quickly and aggressively businesses need to read evidence and act for growth.
The matrix remains one of the simplest and most useful ways to think about growth strategy and risk.
1. Market Penetration (Low Risk)
This involves getting better penetration of your services with your existing target community.
Account development, in short.
Dan had never done that in any structured way. He was focused on getting more jobs from more clients.
Meanwhile, he had royally p*ssed off some existing clients through poor service and aggressively headhunting from them.
Many recruitment businesses underestimate how much growth already exists inside their current customer base.
2. Product Development (Medium Risk)
This involves selling different services to your existing clients.
After all, one hopes that you understand something about their business priorities, decision-making process and operational challenges.
For Dan, I had designed an entire temp/contract solution, complete with documentation and supply chain support.
He ignored it because “the revenue growth was too slow.”
And here’s something many recruiters won’t like hearing:
Most recruiters are so focused on job orders that they become deaf and blind to buying signals for anything else.
3. Market Development (Medium Risk)
This is where geographical expansion sits.
Taking your services to the US can absolutely work — but not in the way Dan approached it.
Successful market development requires:
- timing
- market intelligence
- operational readiness
- financial resilience
- and usually, proof that your existing model works exceptionally well already.
4. Diversification (High Risk)
Diversification is effectively reinvention.
Nokia was once a wood pulp business before moving into telecommunications.
Hays started as a shipping and chemicals company before moving fully into recruitment.
This type of shift requires serious capital, exceptional market intelligence, and leadership alignment.
But it can absolutely be done.
What Emma Did Differently
Now let’s quickly meet Emma.
Her recruitment business, in a completely different sector, faced many of the same market pressures.
But we approached growth very differently.
Charging Beyond Recruitment
We focused first on client penetration.
We developed candidate attraction strategies, onboarding plans, and process support — and charged for them.
Once Emma understood how to package and deliver these services properly, the business became far more commercially stable.
Leveraging Referrals and Market Intelligence
We then systematically leveraged referrals, market insight, and existing relationships to expand her customer base.
Growth became more strategic and less reactive.
Expanding Into L&D
Later, the business expanded again into designing and delivering learning and development solutions.
By that point, expansion was an extension of capability — not a desperate attempt to replace lost revenue.
The Lesson for Recruitment Business Leaders
As you’d expect, I’ve worked with hundreds of recruitment businesses to identify the right strategic priorities and execute them properly.
One contingent supplier of energy staff increased account penetration and became an MSP.
Two recruitment firms recently made major gains in Middle Eastern markets within their sectors.
But in every successful example, we started with stronger market penetration first.
Not geographic expansion.
Not panic diversification.
Not chasing shiny new markets.
For one engineering recruiter, that resulted in tripling productivity per recruiter in just four months.
New markets can absolutely create growth.
But if the foundations of the business are weak, expansion tends to magnify problems — not solve them.
Alison Humphries is a highly experienced MD and NED, with 35 years at the top of the recruitment sector. She advises directors and owners of recruitment businesses on strategy, finance, sales and management to maximise performance, enter new markets, prepare for sale and work more efficiently.
Copyright 2021 © Recruitment Leadership
You may not, except with the express written permission of the author, distribute or commercially exploit the content. Nor may you transmit it or store it in any other website or other form of electronic retrieval system. Recruitment Leadership
Discover new Rec2Rec London opportunities with leading recruitment agencies across the UK.
You can also explore recruitment consultant opportunities in London with specialist employers.