2 Key Observations on the HK Recruitment Industry for 2020 – The Employment Agency Perspective

January 27, 2023

The Agency Licence Perspective

All recruitment agencies in Hong Kong must register with the Labour Department to obtain an Employment Agency (EA) licence before they’re permitted to practice recruitment. With all the data openly provided by the Labour Department, we observed 2 encouraging trends that surprised us in a very positive way (especially from 2019 to 2020). Overall, it shows a lot of vitality and strength in the recruitment industry. It’s encouraging at times like now as 2020 has been a chaotic start for many.

IN 2019/2020, WE WAVE GOODBYE TO 100+ AGENCIES AND SAY HELLO TO NEARLY 400 NEW AGENCIES.

From 2019 to 2020, we saw 100+ licences disappear. Some agencies were consolidated by bigger agencies, some international agencies exited the Hong Kong market and some unfortunately closed down. Just to highlight a few:

In 2019/2020, we also witnessed nearly 400 new entrants into the recruitment market and we are only halfway in 2020. To name a few noteworthies:

  • New Traditional Recruitment agencies like More Associates, iTalent, and Glimmer
  • Clarrow entered the Hong Kong market from Australia.
  • Open HR – A new Social Job Referral service, competing directly with early entrants such as Wanted and Weesper
  • Casual DB – A new Job Board service focusing on temp jobs.

First Trend to Watch: An Increasingly Fragmented Recruitment Market

New EA Licence Per Year
*data for 2020 is incomplete.

RISE OF BOUTIQUE AGENCIES

Since 2012, there has been an exponential year on year growth in new licences registered. These numbers include new startups that try to compete in the HR Tech Space. We also noticed a sharp increase in the number of boutique agencies. Boutique agencies are those smaller in size (1-5 staff) but very specialised in a niche set of recruitment disciplines.

This is both GOOD & BAD news for employers.

The BAD
With an increasingly fragmented market, it’s now harder than ever for employers to choose the right recruitment agencies to hire. Traditionally, the agency’s brand wields a lot of power as most employers rely on collective branding (i.e., Michael Page, Robert Walters, etc). Now in a fragmented market, employers need to base their decision of which recruitment to hire on more concrete metrics such as Time-to-Fill, or Time to Hire and less on vanity metrics such as brand image or the size of an agency.

The GOOD
This is great news for employers who are looking for specialised recruitment agencies. As most boutique agencies are very niche in their recruitment services, employers now have access to more choices than ever. In the long run, we believe that a fragmented market allows boutique recruiters who are truly excellent to outshine the bigger recruitment brands in the market.

Second Trend to Watch: Decentralisation of Employer Agencies Geographically

POTENTIAL RISE OF REMOTE RECRUITMENT

For convenience and brand image, most agencies situate their office in prime districts like Central & Western area on the Island side, or Tsim Sha Tsui if they’re in Kowloon. While Central still hosts the most recruitment agencies in Hong Kong (a whopping 571 agencies), we are seeing a steady increase in the number of new agencies setup in non prime districts. In fact, 30% of new agencies in 2019/2020 have offices located outside prime districts like Hong Kong Science Park in Sha Tin.

We believe this trend resonates with the increasing remote nature of recruitment. Nowadays with technology, a premium recruitment service can be delivered equally well anywhere in Hong Kong. This may seem trivial to employers but it has a huge impact to the bottom line of recruitment agencies especially in Hong Kong where office rental is the biggest cost for recruitment agencies.

Final Notes

It’s difficult to overstate how excited we are about these two trends in Hong Kong’s recruitment Industry. We at Find Recruiter have always envisioned the rise of boutique agencies and remote recruiting to shape the future of recruitment.

This analysis is based on data collected directly from the Labour Department of Hong Kong. It’s worth noting that we did find discrepancies when cross-checked with other data sources. For example, we noticed several recruitment agencies with valid licences not listed on the Labour Department website. Do feel free to share with us if you notice a mistake.

At Find Recruiter, we take a data-centric approach to analyse recruiters’ best capabilities. Our success relies on how well we understand our recruiters. In addition to our direct relationships with the recruiters, we scrape the Internet to gather other aspects of a recruiters work so we get a holistic perspective. And we must get this right to deliver the Promise of Find Recruiter: “Hire in days, not weeks. First interview with high-quality candidate in 72 hours”.

If you share the same belief as us, follow us on LinkedIn, we share updates on the recruitment industry regularly.

PUBLISHED BY
Ted Kuo

The tech guy behind Find Recruiter. Let's build a thriving recruitment community together.

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