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 telemarketers 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 Tumor 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 are you going to get the job assignments? Even if you did get all the job assignments, have you consider the market tumour in place?

I further explained to him that with a change in tactic, 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….

[Update 1]

Big Staffing & Recruitment Agencies Laughed When I Wrote About The Death of Recruitment Agencies.

Many years ago [Article above], I wrote an article about The Death of Recruitment Agencies, which took the recruitment market by surprise because my statement was so harsh, and it did not make sense. Many of the big recruitment agencies were laughing and said that they were not affected by what I claimed, and they were doing very well.

Many months back, I was informed by my sources that the BIG boys had claimed that they were doing very well, expanding and making profits. Well, I do not need to argue who is right or who is wrong because there is no reason to prove who the “winner” is. All I care about is how to transfer my skills and knowledge to people who are open enough to become the elite, and help them to not fall into the trap of the Market Tumour.

From that period until now, many people have been open enough purchase the manual Financial Success in Recruitment Industry, and those people do not just come from Singapore. They come from as far away as the Middle East and the USA. Although most of the visitors to the website www.dougleschan.com come from North America, I was very surprised that many of them actually bought the manuscript. [You can now download all the manuscript for free over here!]

Many of the people who bought the manuscript actually talked to me and emailed me or even met me in person to tell me that they found what I have written in the manuscript to be very accurate and somewhat disturbing.

They also mentioned how C-Marketing had transformed their marketing strategy so that they were able to double or triple their closing ratio within 2-3 weeks of implementation.

My sincere thanks goes to those who have used C-Marketing. It is not for everyone because only people who think out of the box will be willing to have the ultimate faith to use the C-Marketing strategy, let alone fully understand what the Market Tumor is all about!

As for the others who were still laughing, many of them are no longer laughing now, as some of them have had to close down their companies. There are MNCs who are closing their branches in Singapore and other countries, and those surviving BIG players are bleeding so badly that they have had to cut their costs, close their other branches, and let go of many recruitment consultants just to stay afloat.

These are the groups who do not believe what I have written last time, and will eventually suffer because they are still using traditional methods of operating their business.

I would like to shout out to all those who are still living in their own DREAMS:

Do wake up now! When the bleeding comes in, which it will, it might be too late to react because you might not have the ammo and resources to fight anymore. The business environment is changing so fast that within days or weeks, new things will overtake and replace what is in the present.

Wishing all good luck and cheers to the elites!

[Update 2]

If you are involved in Recruitment Agencies for the last 10-20 years, you will notice that the number of cases and billing value a recruitment consultant can close compared to many years ago is declining every year averagely.

10-20 years ago, a normal recruitment consultant in any recruitment agencies in Singapore will be able to close an average sales value of S$20,000 – S$30,000 per month but in the year of 2012, a normal recruitment consultant that is able to close a value of S$5,000 – $10,000 per month is consider to be quite good.

If this trend continuous to decline, I can foresee that the whole industry can dis-integrated and falls apart. Many will failed, including the bigger players. There are many valid reasons why I have the guts to make this projection:

The Diminishing Factor 

Most of the newer recruitment agencies bosses comes from the background of being a recruitment consultant before in one or more of the recruitment agencies, the knowledge and skills they have learned from their “boss” are always limited because the Boss never wants to teach them too much things, don’t even talk about skill sets.

Hence when the knowledge of the new recruitment agencies bosses are so limited, the new recruitment consultants under their wings of this new bosses will be even lesser because they are not able to learn much from their current bosses.

To make matter worst, these new recruitment consultants will think they are so great that they gather together and form another recruitment agencies and hope to make huge income from becoming their own bosses. This cycle goes on and on and eventually the skill set of the recruitment consultants gets lesser and lesser.

At the end of the cycle, the BOSS of the recruitment agency basically do not really know what they are doing, seriously.

The Secret Trap

Many recruitment agencies bosses never share their clients and database with their consultants because they are afraid that the consultants will steal their clients and database to use it when the consultants forms a new company.

Assuming that the boss has 50 job orders and he is not open enough to share the jobs to their recruitment consultants, they will not be able to fulfilled these 50 job orders entirely because of lack of time and resources.

They are very happy they are able to close 5 case and lose the other 45, that means the other job orders will be lost to other agencies…

How’s that for been “Smart”?

Get the picture?

If he is open enough to delegate the other 45 orders to the rest of the recruitment consultants, the company will be able to close more cases many time compared to just 5 job orders. (Assuming that the job orders are real and valid and had negate the market tumour.)

The Competitions Factors

10-15 years ago, there were about 500 recruitment agencies in Singapore but in the year 2012 there are coming to over 3,000 recruitment agencies in Singapore, in the year 2020, there are 3,700 recruitment agencies.

Hence the clients have more choices and better pricing, the smaller agencies will have problem even to break even at all, if times are bad, then the agencies will make a loss and eventually have to close shop.

Inadequacy of Skills

A recruitment consultant has to be a great sales person, a great presenter, a great interviewer, a great searcher, a great advertiser and a great negotiator, do you really believe a 2-3 days crash course can make a consultant to be able to become the superman?

The hard fact is that it is almost impossible to find someone of such skills because most of them are not trained to be at that level! The entire industry is filled with people that DO NOT have the right skills, no adequate training, no investment done on training and no coaching and mentoring….

Could this really be the doom of recruitment industry?

I would like to be a Boss of a Recruitment Agency

Talk to any recruitment consultant out there and ask them the question: Would you want to have your own agency when you have the opportunity and the financial resource? I bet 8 out of 10 of them will say YES!

Why is that so?

Simply because they want to make more money and want to be their own boss, many of them will go for the opportunity even if they were to partner with a few others, simply because they LOVE to be their own boss and apparently they will believe that they are going to be a better boss compared to the current one! (Oops did i rang any bell?)

With this mindset, recruitment agencies are usually not able to retain good staff simply because the good ones decided to have their own firm.

When there are no good staff, there will be lesser sales and eventually you will know what happen…

The time will come where the entire recruitment agencies system will face a crisis and there will be a total revamp and market will change and the first one to set the trend will be able to dominate the industry entirely.

The time will come and when it happens, many players regardless of whether small or big, will face total elimination! Mark my words…it is already happening.

[Updated 3: The year of 2020 is the total revamp of the recruitment industry due to covid19]

The Death of Recruitment Agencies continues…