Recessionary times have dramatically impacted the volume and level of resourcing opportunities available in Southern Africa. Anecdotal evidence from resourcing companies we engage with or have trained over the last 6 months, suggest that in the first half of this year we have seen vacancy levels oscillate between 30 – 60% less vacancies.
The impact in Southern Africa has been uneven, with the obvious exceptions being Angola and Mozambique, where local environments and skills shortages continue to fuel resourcing opportunities. The relatively small markets of Namibia, Zambia and Botswana have slowed, with a number of companies placing moratoriums on new or replacement hires. These markets are highly susceptible to any slowdown in the worldwide demand for commodities, even impacting governments, who tend to be the largest employers.
South Africa is by far the largest resourcing market in the region and has been similarly impacted. The knock on of the slowdown in the region has led to increased Southern African applicants applying for South African jobs. In turn South African companies increasingly look to apply job moratoriums in the work place, with an overt South African first policy. When speaking to companies, many are literally ‘holding on’, using natural attrition to right size their businesses. Our sense is that this can only go so far, and that we will see a range of corporate restructuring in the South African market in the last of half of this year, despite the perceived upside of hosting the World Cup next year. Such a dramatic market change has impacted applicants and recruitment companies alike.
Firstly this has slowed down the use of non-South Africans in the South African market, which is a big blow to encouraging Southern Africa as a region, to utilise skills co-operatively. Our view is that companies and recruitment agencies continue to miss significant upside opportunities in the hiring of African talent, both in terms of pricing and value add.
Secondly, the South African recruitment market will go through a significant restructuring of the players offering recruitment services. The larger companies will consolidate during this period, with some of the more adventurous ones looking to expand in the region. Small to medium companies are under pressure, with some already closing. In order to survive, these entities will increasingly need to come up with different customer propositions or products.
We see the market differentiating between low cost producers and the higher end players, who increasingly operate in a more consulting role, with a wider range of products or services. This period will be very difficult for ‘traditional’ players, who want to simply ride out the storm, as margins will reduce in tandem with the recession. This will be exacerbated by the trend of companies accessing candidate databases directly and using social networks in lieu of recruitment agencies.
The third impact will be an escalation of tension between stakeholders around what it means to employ people. Governments will look to protect full time employment, whilst the market will intensify their search for labour flexibility. This tension has already erupted in Namibia, with the recent banning of labour broking and the South African government is also looking to do the same.
This brings us back to the question of where next for commercial recruitment. We have a two scenario view. The first or low road suggests that recruitment becomes unattractive as a commercial venture with the banning of labour broking and the commoditisation of recruitment.
The second scenario is hardly a high road, but one that will benefit those recruitment companies that look to diversity their services and become low cost producers when mining their candidate IP. This implies a significant change in current recruitment approaches, pricing and funding models.
In the short term, our sense is that a complex combination of the two is occurring currently. None of the above in our mind necessarily benefits applicants and we think that recruitment professionalism will be increasingly under pressure.
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