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The Death of Recruitment Agencies – It is here!

The Death of Recruitment Agencies – It is here! 

One of the recruitment agency boss proudly told me that he had more than 10 telemarketer to do business development and generate new clients and seek my professional advice on how to make it better.
The only sentence I gave– 

Close the department, you are wasting your money and your table space in your office.

He argued, many agencies are doing the same thing and my ex-boss were doing that and it seems to be doing well….

My explanation to him:

1)      You paid over $1500-$2000 to the Tele-marketers per month and the business they generated is fine but it is not good enough. The numbers that generated from Telemarketing compared to the ROI is very low. You may able to generate 3-5 new business per day per tele-marketers….but still not good enough, here’s why..

2)      With the Market Tumors in the recruitment industry, 90% of the business the telemarketer generated will not be fruitful. Less than 2% will generate good income.

3)      With the 2nd Market Tumors and the 3rd Tumors, your ratio of closing overall is 1/1000, which is to say that you will need to have 1000 job assignment to close 1 case!

4)      With the problem in point 1,2 and 3, your total sales compared to your expenses will not be profitable.

I asked him a question:

Whatever other people are doing NOW, it does not mean it is workable, if ALL the recruitment agencies are doing the same thing and the number of clients are “constant” so who will be the ultimate winner? Or loser?

I further explained to him that with a change in tactic show in my book, Financial Success in Recruitment Industry, he is able to eliminate the First Tumor and reduce the 2nd Tumor to a ratio of 1:3, hence overall closing ratio is still 1:3, therefore compared to 1/1000 to 1/3, he is a much happier person because the consultants need not have to work long hours and the agency is able to close more cases compared to last time. Of course, taking away the whole department of telemarketing department cut his expenses by over $20,000 per month, meaning that he is earning extra $20,000 per month!!!

I do hope that many recruitment agency will realized that whatever they are doing now is NOT WORKING and it will continue to be that way for many years. Until one day the sales are lesser than the operating cost, it will be too late….mark my words…when the time when you remember this article and come back to read this, most likely it will be too late….

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Dougles Chan

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