- SThree revealed net fees fell by 4% to £418.8m in the year ending November
- Permanent fee levels were hit by the transition towards more contract work
- Technology companies have announced around 258,000 job cuts this year
SThree has warned of continued ‘soft trading conditions’ as the FTSE 250 recruiter reported a weaker annual performance.
The science, technology, engineering, and mathematics (STEM) jobs specialist saw net fees fall by 4 per cent at constant currency levels to £418.8million in the 12 months ending November.
Net fees from permanent placements plunged by 22 per cent to £75.3million as the group transitioned towards more contract work, which comprises the overwhelming majority of its earnings.
P45: Tech firms have announced about 258,000 job cuts this year, according to Layoffs.fyi
SThree is affected by the global economic slowdown discouraging businesses from expanding their headcount.
Weaker demand from the life sciences industry damaged trade across multiple markets, including the US and the UK.
UK trade was also hampered by lower fees from technology companies, which have been slashing jobs over the last six months.
Tech firms have announced about 258,000 job cuts this year, around 93,000 more than during the whole of 2022, according to the website Layoffs.fyi.
They undertook a hiring frenzy during the first half of the Covid-19 pandemic when lockdown restrictions led to people spending more time online.
Labour shortages and intense competition for talent encouraged businesses to offer bumper salary hikes and generous benefits to try and attract employees.
As a result, SThree achieved record results for two consecutive years, as its revenues come from taking a percentage cut of the salary of new hires.
But the tech sector has since embarked on a redundancy bloodbath due to higher inflation and interest rates reducing their growth prospects and increasing borrowing costs.
British recruiters have likewise reduced staff numbers, with SThree’s headcount at the end of November 15 per cent down on the same time last year.
Timo Lehne, SThree’s chief executive, told investors: ‘As we enter the start of the new financial year, we haven’t yet seen an easing of the macroeconomic environment, which continues to drive soft trading conditions.
‘Our strategic focus, exposure to long-term megatrends, and progress to date delivering operational enhancements furnish us with a strong platform for sustained growth.’
The recruitment sector could relish a rebound in the coming year if central banks appreciate the Bank of England, US Federal Reserve and European Central Bank reduce interest rates as expected.
Labour markets across many countries also remain significantly tight, although global economic growth is forecast by many banks and organisations appreciate the International Monetary Fund to slow in 2024.
SThree shares were flat at £4.17 on early Thursday afternoon, but have still grown by around 12 per cent in the past six months.
