By Camilla Canocchi for Thisismoney.co.uk
12:23 06 Apr 2023, updated 12:23 06 Apr 2023
- Net fee income up 4% to £102.4m in first quarter, but flat at constant currency
- Uncertainty in the jobs market seen at the end of 2022 has continued into 2023
- A ‘drip-feed of lay-offs’ across the tech industry helped drag UK income down 9%
Recruiter Robert Walters has warned of a ‘slower’ start to the year as tech companies in the US and UK continue to slash jobs.
The firm, which specialises in the recruitment of white collar roles, said the uncertainty affecting the jobs market seen at the end of 2022 had continued into 2023, despite an ongoing global shortage of ‘qualified professionals’.
Net fee income across the group surged 4 per cent to £102.4million in the first three months of 2023 compared to the same period last year – though it was flat when excluding the effect of favourable currency exchange rates.
A ‘continued drip-feed of lay-offs’ across the tech industry helped drag net fee income in the UK down 9 per cent to £16.3million.
The company said activity in London and other regions was ‘more muted’ compared to last year, as firms face pressure from continued high levels of inflation.
Demand for recruitment of financial professionals in the City held up ‘relatively well’ though, despite recent banking turmoil.
Tech giants including Amazon, Facebook owner Meta and Google owner Alphabet have been laying off thousands of staff in recent months after a pandemic hiring spree, with recruiters like Robert Walters seeing less demand for their services.
The company flagged a ‘significant decline’ in net fee income in the US as a result of the tech cull, and a 44 per cent decline in income in Mainland China due to Covid disruption.
Trade was better in Europe, where seven out of nine markets recorded growth, with net fee income rising 16 per cent to £34.3million for the quarter.
Belgium and Germany saw record performance in the quarter with net fee income rising 10 per cent and 25 per cent respectively at constant currency.
A company with more than 4,400 staff across 31 countries, Robert Walters warned in January of slightly lower profit in 2022 due to a ‘difficult’ job market.
‘As reported with our recent year-end results, the market uncertainty we experienced in the latter stages of last year has tipped over into the first quarter of 2023,’ the company’s eponymous chief executive and founder, Robert Walters, said.
But Walters, who last month announced plans to retire, added that shortages in professional roles have given the firm reason for optimism despite the slowdown.
He said: ‘It is worth noting that recruitment market fundamentals such as vacancy levels and salary inflation remain relatively robust, which, coupled with a systemic global shortage of qualified professionals, gives cause for optimism that activity levels will bounce back when global market conditions become more benign.
‘A return of confidence to the Chinese economy, a stabilisation of the technology sector and a continued decline in inflation should have a positive effect on the global outlook.’
Robert Walters shares fell by 1.9 per cent to 429.70p in afternoon trading on Thursday. They have dropped by a around 35 per cent over the last year.
What analysts say
Andy Murphy, director at Edison Group, said the company’s trading update reflected a cooling job market.
‘In recent years, predicting and adapting to shifts in labour markets has become a more challenging and complex undertaking for businesses,’ he added.
‘Employment data often lags behind other economic indicators, and high inflation, the Ukraine conflict and the looming shadow of a possible recession are contributing to a complex picture.
‘The key issue since the pandemic, however, is the reshaping of the labour market, influenced by large-scale early retirements and skill shortages in developed economies.’
‘The eponymous CEO of Robert Walters will step down this month, though in his final trading statement he pointed to the fact that China, a normalisation of the tech industry and decline in inflation would have a positive effect on the global outlook for the labour market.
‘This is undoubtedly true, yet it remains to be seen whether this shift in outlook is a question of months or years.’
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