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Nearly a third (30%) of UK recruitment businesses intend to expand into Europe over the next 12 months, according to research commissioned by the Association of Professional Staffing Companies (APSCo).
20% of UK staffing companies also have plans to expand outside Europe in the next year. Surprisingly, South Africa was the joint favourite market outside Europe. 6.7% of recruiters said they were likely to expand into South Africa in the next 12 months.
Just 16% of UK recruitment businesses currently carry out 25% or more of their business overseas.
The research was carried out by Baker Tilly Revas among 75 staffing companies supplying professional candidates in areas such as finance, IT and engineering. 10 of the respondents were staffing companies with annual turnovers of more than 100 million Pounds.
According to APSCo, UK staffing companies are increasingly keen on overseas expansion as a means of diversifying income streams and reducing their exposure to the UK market. This process has been accelerated by the recession and the harmonisation of labour market laws in the EU.
Ann Swain, Chief Executive of APSCo, comments "it's encouraging that so many UK recruitment businesses have overseas expansion plans despite the uncertain economic outlook. Many overseas staffing markets are relatively immature compared to the UK and are being liberalised so that theyâ€™re more accessible to UK staffing companies."
"Many of the UK recruitment businesses which posted the strongest results during the recession were buoyed by robust performance from overseas operations. For professional recruiters who specialise in high margin skills, geographical expansion can be the best way of increasing turnover while maintaining margins."
Swain adds "It's interesting that South Africa has come out ahead of India and China as a target for overseas expansion. South Africa has a rapidly expanding middle class and well-established financial and legal markets, which makes it an increasingly attractive market for professional recruitment businesses."
The APSCo research shows that, with the exception of Italy, few UK recruiters are planning on expanding into European countries associated with the sovereign debt crisis.