Dutch Staffing & HR market 2023: back to normal?

IN COOPERATION WITH INDUSTRY MAGAZINE FLEXMARKT

The Staffing and HR Services sector eased off in 2023, but this was almost inevitable after the catch-up growth of 2022. However, as demonstrated by the Flexmarkt Top 100 Revenue Ranking of the 100 largest Dutch Staffing and HR Services companies, there are notable differences between sectors and companies every year.

After two crazy pandemic years and the catch-up growth of 2022, the Staffing and HR Services industry paused in 2023. While the sector recorded a revenue growth of 14.4 percent in 2022, this dropped to 5.9 percent in 2023. Zooming in on the companies in the Flexmarkt Top 100, the growth is slightly lower at 5.4 percent.

Behind these figures lie significant disparities: brokers/managed service providers and SME temp agencies in the list have been showing double-digit growth percentages for years, while the large, generalist temp agencies have lagged behind for years – in 2023, they even declined by nearly 5 percent.

So, if you were to paint a picture of the Staffing and HR Services industry in 2023, it would be one of ‘back to normal’. No longer is the market paralysed by a pandemic (think of the hospitality sector or everything around Schiphol) while being simultaneously boosted (such as with the GGD -the Dutch municipal public health service- and testing locations). There’s no energy crisis causing substantial inflation, although its effects lingered in 2023. It’s essentially a return to the situation as it was at the start of 2020: a tight labour market with a cooling economy, where finding good staff is generally more difficult than finding assignments.

Enormous ecosystem

One company that has succeeded well is HR-tech service provider HeadFirst Group (ranked 2), which again showed significant revenue growth in 2023 – this time entirely autonomously. CEO Marion van Happen explains: “We have a strong presence in STEM profiles (Science, Technology, Engineering, Mathematics), finance, marketing, and HR. We mediate profiles that work with data, which is in high demand.” To find the right people, the company collaborates with thousands of suppliers. “Thanks to this enormous ecosystem, we can meet our clients’ demands.”

Unlike Randstad, for instance, HeadFirst Group doesn’t employ people but mediates and organises them. “The demand for managing all types of workers – from permanent to various forms of HR – continues to increase,” says van Happen. “We also invest heavily in further digitalisation, resulting in satisfied clients, suppliers, and independent professionals. HeadFirst Group brands have many long-term contracts with clients: averaging nine years, compared to a maximum of three years at most temp agencies.”

In early 2024, HeadFirst Group merged with Impellam Group, one of the largest MSPs in STEM profiles. Van Happen states, “This will open many doors for us, making us appealing to entirely new types of companies.”

Breaking the trend

While large, generalist temp agencies like Randstad (1), Manpower (12), Adecco (14), and RGF Staffing (7) have seen their market share shrink for years, this pattern is now emerging among the younger generation of generalist temp agencies, who seemed immune to it for a long time. PROMAN Group (5), YoungCapital (10), and Olympia (11) all had to take a hit in 2023, though PROMAN Group’s damage was limited (-1.9 percent). The other two also performed poorly in 2022, indicating a trend break. These companies seem to have lost their edge and are now struggling in a market where staff is scarce and specialised agencies outpace the generalists.

Among the large, generalist temp agencies, only OTTO Work Force (8) managed significant growth (12.9 percent), having specialised in working with labour migrants. A unique case is House of HR (3), which despite its size (over 1.3 billion euros in revenue in the Netherlands in 2023) has not lost its momentum, achieving an 11.3 percent increase. This shows that the company’s unique setup – a fleet of independently operating specialists – remains strong.

Unsurprisingly, IT and engineering contractors again outperformed the market. Hero Interim Professionals (31), which aimed for 60 percent growth in 2023, ultimately achieved a very respectable 48.7 percent. Synprofs (new at 54) also did well with a 34.1 percent growth. Among the technicians, The Specialist Group (22) and TMC NL (36) posted solid growth figures.

Hype

It’s not just IT, engineering, and MSPs that shine. Sun-Power (97), mainly active in horticulture and tree cultivation, also showed significant growth, re-entering the list after previously appearing.

The company, founded in 2000, has grown slowly, says owner and director Twan Christiaens. “We only operate within North Limburg and the easternmost part of Brabant and know the local market well.” The company’s significant growth last year, despite the agro sector not being known for high growth, is partly because some competitors moved to logistics during the pandemic, a hype that has since passed. Their agro sector customers felt abandoned, creating a niche market for Sun-Power.

Greenhouse horticulture implies labour migrants (Christiaens: “Dutch workers are almost extinct in this sector”). Sun-Power mainly employs workers from Poland and Romania, recruiting via social media. “We post our vacancies on Facebook and Instagram. People easily sign up online and are then called by us. We communicate job information through photos and videos, allowing people to decide whether to come.” The company also uses ambassadors: “If employees refer new people, they receive a nice bonus. This helps us attract many people and ensures quality.”

Warm Greenhouse

One way Sun-Power improves its services is through artificial intelligence – one of the 2023 hypes, but Christiaens has concrete applications in mind: “We now write our job descriptions using AI and soon will create AI videos depicting the work. This is much easier and faster than recording content with real people. These videos will allow interested parties to see exactly what the job entails, such as working in a warm greenhouse. If you can’t work in an environment over 30 degrees, it won’t work out.”

The search for new staff has led Sun-Power to look beyond the EU, particularly to the Philippines. “This mainly involves highly educated engineers. We’re starting with five people this year, responding to client requests. In the Netherlands, it’s futile as 35 agencies would pounce on a single candidate, making it impossible to compete.”

A sector that has done well for years, even in the pandemic year 2020, is the industry focused on SMEs, such as Jansen & De Wit (60), which grew by nearly 43 percent in 2023. The company, active in both secondment and payroll as well as temping, is rapidly expanding in Northeast Netherlands (see the following paragraph).

Jansen & De Wit sees a niche in the northeast of the Netherlands

The secondment, payroll, and temp agency from Hoogeveen, active mainly in sectors such as construction, engineering, and landscaping, grew by nearly 43 percent in 2023, primarily through acquisitions. General director and co-owner José Perik saw a gap in the market.

Why the acquisition spree?

“My partner and I took over the company because we saw that there was no strong independent, regional player for the SME segment in the north and east. This was a gap in the market, as SMEs prefer dealing with another entrepreneur rather than a branch of a large company.”

How do you find acquisition candidates?

“We focus on smaller companies whose owners struggle with regulatory pressure. These small entrepreneurs enjoy relationship management but find the rest of running a business too complex. They face NEN certifications, changing legislation, etc. We’re larger and have the people to handle this. Hence, companies are often open when we call.”

What makes you more successful than traditional, generalist temp agencies?

“I think regional players like us perform much better than the ‘big boys’ because we speak the same language as our clients. We know the market, we have our network in the region. The lines are short. We can give personal attention, are enthusiastic and agile. When we hit a snag, it’s a signal for us to push harder and see where we can do more.”

Good demolition worker

Autonomous growth remains challenging, says general director and co-owner José Perik. Jansen & De Wit also faces staff shortages but sees more room in the market this year. “We easily hire people: if we see a good demolition worker and don’t have a vacancy, we still hire them and find a client later. People are key, not the vacancy.”

Jansen & De Wit also does much to enthuse people for construction and engineering, offering courses and training, and participating in various events and fairs. “If you’re looking for a paver, you won’t find one. But look a bit further and see if you can retrain someone, then you will. You have to be creative in this market.”

Oranjegroep’s general director Bas Witvoet is also satisfied with 2023. After a few tough years, with the pandemic complicating work and new software disrupting payrolls, the construction temp agency grew healthily by 7.5 percent last year (see the paragraph Oranjegroep: no Randstad flavour). “We are active in installation technology but now also handle many projects related to the energy transition: landing wind farms at sea, building transformer stations, etc. We supply the people for the energy transition and have many years ahead in this field.”

Friction

And yes, the housing construction sector is sluggish, but it only represents a small part of Oranjegroep’s portfolio. “We don’t suffer much from that because we are also heavily involved in infrastructure: think of bridges, tunnels, viaducts. We don’t do much in housing construction precisely because it’s so unpredictable.”

Oranjegroep: no Randstad flavour

Mediating in construction now means mediating labour migrants. Oranjegroep has been doing this for 25 years. Owner and general director Bas Witvoet sees the large temp agencies increasingly disappearing from view.

You often hear that finding staff from Eastern and Southern Europe, especially in engineering and construction, is becoming more difficult. Do you recognise this?

“No, you just have to look properly. We’ve been recruiting across Europe for 25 years. In the Netherlands, we pay well. Only in Norway and Sweden can you earn more, especially offshore. Hence, we can attract enough staff. Besides, if you bring someone from Asia, it’s not cheaper as you still have to pay according to the collective labour agreement. I prefer someone who’s somewhat nearby and can regularly go home. It’s more pleasant for everyone.”

Do you recognise that large, generalist temp agencies are falling behind in your field?

“The big temp agencies automate a lot. Randstad was a pioneer in this. But you lose a lot of personal touch. Specialised agencies like ours have people from the business itself in the office. Our staff who contact the workers must have worked in construction themselves. At the big agencies, you have consultants who are jack-of-all-trades. But then you can’t do anything really well.

“I don’t encounter Randstad often. Occasionally, they win large contracts but can’t deliver, so we step in. Randstad does have separate companies specialising in certain areas, but once the whole Randstad flavour is added, it becomes difficult. That’s why they often buy companies like ours but then spoil it with their Randstad flavour.”

Witvoet sees a bright 2024. “We expect at least 10 percent growth if nothing crazy happens. The only issue is inflation: there’s significant friction between people asking for more money and clients who can’t endlessly pay more. I understand it; everything has become more expensive. But clients don’t just hand us an extra 15 percent. That said, salaries in the sector are still much higher than for a light office job. And that will remain so.”

Formation of the Flexmarkt Top 100 Revenue Ranking

The editorial team of industry magazine Flexmarkt, together with Corporate Finance International, is responsible for collecting and processing the data for the Flexmarkt Top 100 Revenue Ranking.

Staffing and HR organisations were asked to submit revenue data in the Netherlands for 2022 and 2023. Based on this data, revenue developments were determined. For the traditional top 4 (Randstad, Adecco, Manpower, RGF), figures were taken from financial publications and, if necessary (due to lack of specific reporting for the Netherlands), processed and estimated. The Flexmarkt Top 100 Revenue Ranking provides a good overview of the development of Staffing and HR revenue in the Netherlands. However, it is inevitable that revenue is double-counted. For instance, if temp agency X delivers via MSP Y to client Z, the Z-related revenues of X and Y are double-counted in the market figures and the Flexmarkt Top 100. It has not been possible to determine the extent of this double-counting in the total market size for 2023.

To view the Flexmarkt Top 100 Revenue Ranking, please visit the Flexmarkt website (note: a Flexmarkt Pro account is required).