Are City recruitment firms thinking about redundancies?
It is, perhaps, early days to be suggesting this, but with most investment banks making redundancies, are recruitment firms servicing the City also likely to reduce headcount?
Certainly, the precedent is there. During the height of the financial crisis, large financial services contingency recruiters were quick to make redundancies and in some instances staff numbers only recovered towards the middle of this year.
Banking cuts were, of course, deeper in 2008 and (despite comparisons) sentiment decidedly more downbeat than now. However, some financial services recruiters - notably Michael Page, Robert Walters and Hays - were increasing headcount relatively aggressively late last year.
Concerns over banks' hiring freezes, which could be in place for the rest of the year, could prompt some recruiters to take pre-emptive action and trim headcount.
So far, though, there's little evidence of this happening. Gabby Gerra, director of recruitment to recruitment firm Orint, says redundancies haven't been mentioned at large City-focused contingency recruiters, but any new hiring is now very selective.
"The fact is, nine months ago recruitment firms were struggling to find sufficient supplies of talent and, having let people go during the financial crisis, are conscious of how difficult it is to replenish numbers when they need to," she says. "Any new hires now are only for people who can bring in a new revenue stream. Firms have no appetite to recruit people just to manage accounts."
By their nature, contingency recruitment firms chase volume hiring areas. While the lack of investment banking hiring will, of course, hit hard there are still growth areas - notably support functions, back office areas, compliance, change management and, to some extent, IT.
"It's been a bad couple of months, but we could continue to operate at the current levels and still look to expand our business," claims one director of a financial services recruitment firm. "It's generally a transient industry anyway - most people stay here a couple of years, then get a better offer, don't make the grade or decide recruitment isn't for them. We could reduce headcount just by not replacing people, without the need for redundancies."
Perhaps boutique headhunters focused on niche areas of investment banking are in more danger of losing people, or just shutting entirely. Last year, for instance, there were a number of start-ups focusing on the then-buoyant FICC space, which has subsequently taken a beating.
In the current climate, clients look for "trust and longevity of relationships", says Jonathan Evans, chairman at headhunters Sammons Associates.
"The second half of the year will be a litmus test for any firms established on weak foundations. Headhunters recently set up to pursue short-term demand will struggle," he says.
