8,456 recruitment businesses were registered in 2019, according to data from Companies House.

2019’s new entrants to the UK recruitment industry push the total number of agencies registered since 1990 to nearly 80,000, with 60% still ‘active’ on Companies House.

Despite the ongoing uncertainty around Brexit, new business registrations per month remained largely consistent throughout 2019, with March seeing the highest number (999).

Outside Greater London, Birmingham is the number one destination for new recruitment business registrations. Leicester and Manchester the next highest. 

Regionally, Greater London and the South East account for more than half of the new recruitment business registrations. The West Midlands and North West being the next most popular regions.

New market data from Sonovate revealed the top sectors for new startups with healthcare, IT and education being the most in demand sectors for new recruitment startups. 

In this article, we look at some of the key factors contributing to the recruitment industry’s continued growth and some of the reasons why healthcare, IT and education are so in demand.

Recruitment industries continued growth

At the turn of the new decade, the internet was full of ‘ten year challenges’. Mainly embarrassing photos of yourself with a questionable hairstyle and dodgy attire. 

In terms of a UK recruitment ‘challenge’, ten years ago the industry was starting to show signs of real growth, with the number of businesses registered in 2010 totalling 2,556, a 280% increase on the numbers registered a decade earlier.

By the end of the decade, this number had risen to 8,456 in 2019 – the growth phase had taken full effect!

Source: Companies House

So, what are the key reasons for this growth?

  • The UK is full of entrepreneurs (there has been a 69% increase in the number of businesses in the UK since 2000)
  • Small, nimble specialists dominate the market (there were 5.6 million micro businesses in the UK (between 0-9 employees) in 2019, accounting for 96% of all businesses) 
  • Lower startup costs (our article reveals why startup costs aren’t as much as you might think)
  • Better access to finance (with more finance products available, the balance of power has shifted to the agency. Between 2008 and 2018, the time it took for a business to take out its first finance product dropped by 84%! On average a business took a little under five months to partner with an invoice finance specialist.)
  • More connected world (LinkedIn, Facebook and Twitter (to name a few) have made it easier to build your own personal brand. In turn, it’s made it easier for recruiters to connect with you and help you find your next role.)

Employment trending upwards

Estimated employment rates for men and women aged between 16 and 64 years have generally been increasing since early 2012.

Source: ONS

In 2019, employment continued to grow with
309,000 more people in employment than a year earlier. This was driven by a quarterly increase for full-time employees (up 50,000 to a record high of 20 million).

However, as employment levels climb steadily, a growing skills shortage is placing pressure on businesses. According to a new report commissioned by The Open University, 91% of organisations in the UK are struggling to find workers with the right skills.

With the recruitment process taking longer, 64% of businesses reported that they were spending more on recruitment, with costs increasing £1.2 billion.

Recruitment agencies are perfectly positioned to help businesses overcome hiring challenges.

UK recruitment startup market in 2019

8,456 new business owners are entering the industry at a time when both job and earnings are set to grow. 

  • PwC expect the G7 to continue to create jobs, to the tune of around 2 million in 2020. Four out of the five new jobs in the G7 will be created in the US, UK and Japan.
  • Reuters reported that British real wages are expected to climb early in 2020 to levels not seen since before the financial crisis.

UK business registrations by region

Greater London and the South East account for over half of all business registrations, however, according to ONS data, between March 2019 and June 2019, the largest estimated increase in workforce jobs in the UK was in the North East at 43,000, while the largest decrease was in London at 35,000.

Despite the drop in jobs, London remains the go-to place for service sector jobs with an estimated proportion of 91.4%, while the East Midlands had the highest proportion of jobs in the production sector at 14.4%.

Top five cities for new business registrations

  1. London
  2. Birmingham
  3. Leicester
  4. Manchester
  5. Sheffield

Source: Companies House


Top 10 sectors for new startups

Our research from over 500 respondents reveals the top sectors that new startups indicated as their primary sector to recruit in.

The findings taken in Q4 2019, bear similarities to ONS data which revealed that the sector showing the largest estimated quarterly increase in jobs in 2019 was health and social work activities (up 42,000 on the quarter).

From an annual increase perspective, scientific and technical activities (up 183,000 on the year), had the largest estimated annual increase in jobs.

The top ten…

1. Healthcare

The global healthcare sector is witnessing a lot of change. A growing and aging population is increasing demand for care, intensifying skill shortages. Technological advancements and evolving care models are changing the future of work and highlighting the importance of sourcing, hiring, training, and retaining skilled workers.

Key challenges and opportunities:

  • Care model innovation
  • Digital transformation and the future of work
  • Performance improvement

2. IT

In 2019, UK tech companies attracted $13.2bn in venture capital, compared to $9.1bn in 2018. At a staggering 44%, year-on-year investment in the UK grew at a faster rate than in Germany, France, Israel, the US or China.

Growth areas:

  • Hybrid-cloud: Gartner predicts that by 2020, 90% of organisations will adopt hybrid infrastructure management.
  • AI: Businesses are expected to spend as much as $97.9 billion annually on AI projects by 2023, up from just $37.5 billion this year, IDC forecasts.
  • IT security: According to Gartner, overall spending on security increased 10.5% in 2019, with cloud security projected to grow 41.2% over the next five years.

3. Education

An ongoing skills shortage is making the sector increasingly attractive for recruitment professionals to find the talent schools desperately need. 

Key challenges & opportunities:

  • Schools in England face shortages in key subjects such as maths, physics and foreign languages.
  • In 2019, the government failed to reach its recruitment targets for secondary school teacher trainees for a seventh year in a row.
  • Government figures predict 654,000 (8.7%) more pupils by 2026, with an additional 534,000 pupils in secondary schools and an increase of approximately 100,000 in primary education.

4. Construction

5. Hospitality

6. Engineering

7. Transport & Logistics

8. Human Resources

9. Banking & Finance

10. Executive Search

Source: Sonovate