The good news for UK-headquartered recruitment firm, SThree, is that its long-held strategy to diversify its business beyond the UK and beyond IT recruitment continues to prove shrewd (see SThree H1 shows benefits and costs of diversification). Group gross profit in its most recent quarter (to 26th August) rose by 6% (at constant currency) to £51.3m, all due to non-IT recruitment and its international markets. In contrast, GP in UK&I fell by 6% to £17.7m and ICT recruitment (group-wide) fell by 8% to £26.9m. This leaves UK&I at 35% of group GP (was 38% in the year ago period) and ICT at 52% of GP (was 61%).
But the corollary of this is that SThree seems to be losing share in the UK ICT recruitment market, witness the ‘double-digit’ growth alluded to in Zurich-based staffing giant Adecco’s recent quarter (see UK IT still strong for Adecco). That said, Adecco runs wafer-thin margins in the UK as its client profile for IT recruitment is different from that of SThree, which is more oriented towards the SME ‘spot’ market rather than major ‘preferred supplier’ deals. But both companies’ shares are up ytd, albeit SThree doing better at +20% compared to +12% at Adecco.