The fourth annual UK Recruitment Index from Deloitte and the Association of Professional Staffing Companies (APSCo) found that 79% of recruiters saw net fee income (NFI) increase over the last 12 months despite widespread staffing challenges.

The study of 117 companies also indicates that churn among recruiters has impacted productivity with 24% of respondents having reported that staff have left within 12 months of joining, compared to 18% in 2015.

“With the recruitment sector considered as one of the barometers for the wider economy, our survey paints an interesting picture of the current talent market,” Katie Folwell-Davies, financial advisory partner and lead partner for human capital services at Deloitte said. “However, the buoyant job market is creating internal challenges to recruitment companies as churn among recruiters has increased. This is taking its toll on the sector, with average fee-earner payment as a percentage of NFI indicating that productivity has been impacted by higher staff turnover.”

Moreover, 61% of respondents cited increasing headcount as their main challenge for the year ahead and 42% were concerned about the retention of existing talent. When asked about factors important to growth, nearly all respondents outlined staff training and access to new recruiters (95% and 94% respectively). This comes at a time when the number of businesses within the recruitment sector has increased by 14% year-on-year, according to figures from the ONS.

While the survey closed before the EU referendum had taken place, the data indicates that recruitment companies are focused on how uncertain economic conditions could affect growth plans. Many respondents cited the ‘business environment’ and the ‘UK economy’ as important factors influencing growth.

“Greater uncertainty is likely to translate into an increased need for recruitment support, particularly around flexible staffing strategies and contract and interim appointments. Recruitment companies that innovate and convert these changing conditions into business successes are the ones that will ‘ride the waves’ and continue to grow in the long term,” Fowell-Davies said.

There has also been a decrease in respondents planning to open new offices within the next 12 months, down to 24% compared with 32% in 2015, 35% in 2014 and 61% in 2013.

The study states that fewer openings in 2016 could be explained by the volume of consultancies increasing their global footprint in recent years. This dip may also, in part, be attributed to macroeconomic uncertainty and the fact that recruitment businesses continue to become more reliant on information and communication technologies and, consequently, office space is becoming less important.

Moving forwards, external factors such as Brexit, technological innovation, and broader talent trends are likely to create opportunities for the professional recruitment sector.

“The recruitment sector is not alone in finding access to talent a barrier to growth,” Ann Swain, Chief Executive of APSCo, said. “A recent report from the CIPD also found that hiring has become a major challenge over the past two years, with employers instead upskilling existing employees to fill skills gaps.”