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Most recruitment agency owners understand their clients, candidates and consultants. Fewer consider the structural characteristics of the industry itself or consider client services outside the core staffing segment.
Australia has a large and sophisticated staffing and recruitment industry which is ranked 6th globally. The largest market is the USA, followed by Japan and the UK. In APAC, Australia is the second largest market, currently larger than China and India.
Given that Australia is the 15th largest national economy (when measured by nominal GDP) with a population that ranks at about 55th in the world, that seems out of balance. But with a mature economy and robust legislation in place to protect workers, it allows a strong market for all styles of worker engagement.
The value of the Australian staffing market is AU$44.5B in 2024, forecast to grow at above GDP growth rates in 2026 and for the remainder of this decade. That market value is 18% of the APAC region market and 4.7% of the global market. The big markets are very big by comparison to Australia.
Australia’s economy has been remarkably robust from the early 1990’s through until the beginning of Covid in 2020, delivering small but consistent economic growth for 30 years. Over that period the staffing industry grew into a mature, large and sophisticated industry.
What the small downturns over that 30-year period showed, and the Covid years highlighted, is that the recruitment industry is subject to economic pressure. If economic structures are under pressure, or business confidence drops, then the staffing industry will endure tougher times. And the reverse is true.
The industry growth in Australia did not happen in isolation to the rest of the world. Trends from the US, especially, and other countries brought new business lines and new ways of working to the local market, albeit usually forced on the industry by the larger international clients.
The largest global staffing agencies also developed strong operations in Australia, and many of the largest operations in Australia are part of international businesses. Of the top 100 companies globally, only 3 are Australian headquartered businesses.
Diverse options
Despite the industry size, it remains structurally accessible to all agencies.
Staffing Industry Analysts has mapped the workforce solutions ecosystem, which incorporates what we usually think of as the staffing and recruitment industry. “We estimate the Workforce Solutions Ecosystem was a US$8.7 trillion global market in 2024. The ecosystem represents a wide range of products and services that an employer organization might wish to use to create and maintain the workforce that it needs to achieve its goals.”
This is the available market for recruitment agencies.
Many recruitment agencies in Australia extend services to clients beyond the traditional placement of individuals to permanent or temporary positions. Payroll services, HR consulting, Onboarding support are just a few examples of structured services recruitment agencies may arrange with their clients.
An interesting exercise by SIA some years ago was to map the service offerings of the largest 5 staffing companies in the world. There were overlapping services, of course, but none of the companies matched. They all chose their own way to address the market.
It is a large and diverse industry, and you get to choose your own path.
Despite the size of the market, Australia’s staffing industry is dominated by smaller organisations with the vast majority of recruitment agencies having less than 20 internal staff. There is room for everyone within the industry.
The Australian recruitment industry is large, globally connected and economically sensitive. It is also highly fragmented, with thousands of operators competing across multiple service lines.
Scale alone, however, does not explain why the industry behaves as it does. To discuss that, it is necessary to examine the structural characteristics that shape how firms enter, compete and grow.
HHMC Global operates within the staffing and recruitment industry on equity transactions, market valuations and business growth advisory. Contact us to discuss further.
