Why Are UK Recruiters Seeking Opportunities in the US?

What Has Led to the Rise in Expansion to the US?

The rise of UK recruitment agencies expanding to the US job market is being driven by a myriad of factors. The UK economy is struggling, recruiters are seeing a rise in competition linked to a dwindling talent pool and agencies are struggling to ride out the storm. The US offers refuge with fresh opportunities, a booming economic landscape and high margins. This makes the US an attractive destination for UK recruiters looking to expand their operations.

Economic Projections

With the UK economy struggling to achieve and sustain any meaningful growth, recruitment agencies have fallen victim to significant challenges. A slow recovery from Covid-19 and sluggish economic performance has led to a tightening of budgets across multiple industries. In response, many businesses have adopted measures to scale back on any hiring plans. Instead, many are implementing more conservative workforce strategies. With caution at the forefront of most businesses, hiring freezes have been steadily increasing, directly impacting recruitment agencies. This has created a domino effect which has reverberated throughout the industry. The diminished economic activity and its consequent reduction in the number of job opportunities available has subsequently led to a decrease in recruitment activity across the UK.

An Overview of the US Economy

The appeal of the American landscape could not be more contrasting for the UK recruitment sector. Recruitment businesses have the opportunity to increase their revenue in the largest recruitment market on the planet.

According to the Bureau of Economic Analysis, real Gross Domestic Product (‘GDP’) was at 2.3 percent (%) in the fourth quarter of 2024 alone. This is primarily reflected across increased consumer spending, business investment and federal government spending.

Revenue generated from the global recruitment industry (or staffing industry for my US peers) equated to nearly $645 billion USD in 2023 according to estimates from Staffing Industry Analysts. Of this, a whopping 33% market share was accounted form the US alone.

Revenue is only on an upward trajectory with current economic growth forecasted in the years to come. Factor in current market projections and US dominance, the US currently sits at nearly five times (5x) the market share of the entire UK recruitment sector. This statistical data is a key factor to consider in relation to the enormous profit-making opportunity the US can offer.

Profitable Revenue Margins

The economic challenges faced by UK recruiters come hand in hand with a decline in revenue. The decrease in job placements seen throughout the UK in recent years has significantly impacted the revenue streams. As businesses scale back on hiring due to economic uncertainties and market constraints, recruiters are finding fewer opportunities to match candidates with roles. This drop in placements has directly translated into reduced income.

For smaller recruitment firms and independent recruiters, the decline in revenue has been particularly hard hitting. Moreover, this has forced many to reassess their business models. Some recruiters have seen no other option but to consolidate operations, downsize, or shut up shop.

The end of 2023 saw the number UK recruitment agency filing for insolvency increase to 14%. This number does not appear to be slowing down. Again, countering the rather grim and challenging UK landscape with declining revenue pots for almost all recruiters, the US offers considerably higher salaries. In turn, this directly translates into higher mark-ups from a fiscal perspective. Having had many discussions over the years with various recruitment agencies, it is safe to say that the majority are conducting business between 25-40% mark-up on any given successful placement.

Diversification of revenue streams is essential in a competitive business world. Therefore, the US seems a very lucrative and appealing opportunity for UK recruiters seeking to seize higher mark-ups to bolster their overall revenue and business appeal.

Extraordinary Talent Pool

The UK job market is currently grappling with a significant shortage of highly skilled workers. The repercussions of which adds further strain for both business and the economy alike. Recent estimates reveal a shortfall of approximately 2.5 million highly skilled workers across various industries. This gap highlights the growing disconnect between the skills demanded by employers and workforce availability. Furthermore, the ripple effect of this skill deficit has displayed huge economic consequences. It is estimated that the current shortage of skilled workers is costing UK businesses around £6.6 billion annually.

Whereas, in the US the workforce is hired ‘at will’. At-will employment means that either the employer or employee can terminate their employment relationship at any time, for any reason without having to serve a legally binding notice period.

This differentiator contributes towards a talent pool in the US overflowing with leading candidates becoming available almost immediately. Naturally, this transcends into a super prosperous probability for recruiters to extract. Ever heard of the expression cherry-picking? Well, this allows recruiters the prospect of ascertaining the best accessible resources for their clients. Again, this essentially provides the perfect foil for recruiters to lure top talent and place them exclusively with clients due to their almost instant availability.

Recruiters that build strong rapport with their candidates can always fulfil leading roles with highly sought after individuals. Due to the at will employment status of the American workforce, recruiters operate off a much shorter turn-around time. This means that top candidates are placed within days after becoming available leading to fees earned almost instantaneously. Such rapid turnarounds are beneficial for monthly commissions and frequent paycheques.

Less Competition

Together with the diminishing talent pool, UK recruiters are faced with a steep rise in competition and saturation. The rise in competition is being driven by a multitude of factors. These include current economic pressures, talent shortages, and the growing presence of international and digital competitors.

The influx of international recruitment agencies has raised the stakes for UK-based recruiters. These global players often bring extensive resources, advanced technology, and established networks. The effect of this makes it harder for local agencies to secure contracts, particularly for specialised roles. As businesses look for cost-effective and efficient hiring solutions, they are increasingly turning to international firms that can offer comprehensive global talent access.

Have you ever shifted the paradigm and thought about the US from a strategic perception of unique individual states to choose from? Essentially, America offers 50 ‘independent countries’ for recruiters with all different GDP’s, sector demands, and available talent. A strong economy generally leads to more job opportunities. In turn, this leads to a greater demand for staffing or recruitment agencies to locate and supply top talent. A growing economy equates to both temporary and permanent supply of resources as companies are more likely to invest in hiring additional personnel.

Food for thought; the Californian nominal GDP (2023) amounted to $3.8 trillion dollars, comparable to that of the entire Indian GDP. Furthermore, Texas equated to $2.5 trillion, comparable with Italy. These numbers are nothing short of gigantic and unparalleled. Statistics have been utilised from the Bureau of Economic Analysis.

Appealing Overseas Markets

With the UK economy in its current climate and the job market under tremendous strain, the appeal of opportunities awaiting overseas, becomes ever more attractive. Many international markets offer greater economic stability, a steady demand for skilled workers, and expanding job opportunities. These factors make them a viable alternative for UK recruitment agencies aiming to sustain growth and profitability.

Other markets such as the US, Canada and parts of Europe, are seeing continuously strong economic performances. These bolstering markets offer untapped opportunities for UK recruiters to tap into. A sharp contrast to the slower growth and skill shortages currently affecting the UK job market.

The strong and diversified US economy signifies major leaders in almost all industries across the globe. The opportunity to amplify your revenue and reputation has never made the US a more appealing prospect than today. Additionally, added to that equation is the attraction of both weather and lifestyle and suddenly, it makes the vision a required reality. The sheer size of the industries and the vast number of independent states decreases the reliance on one area for economic demand.

Recruiting in the US adds stability pertaining to revenue streams for UK based agencies which is beneficial from an outsider investor perspective. This mitigates against hiring cuts or redundancies due to a stifled economic downturn or a dependency on a one market approach.

A Spectrum of 50 Independent States

The US allows recruiters to operate across the spectrum of all 50 independent states. The positive spin-off through diversification?

1) it is evidentiary that generating revenue in multiple markets with larger client portfolios decreases the reliance solely on revenue derived exclusively through one source only i.e., UK clients.

2) agency valuation in the sense the business has more liquidity relating to cash-flow. Payment terms are far more advantageous (usually between seven (7) – fourteen (14) days) in the US compared to the UK relating to a steady and high cashflow injection.

Based on this alone, America becomes a viable and enticing opportunity for the next agency seeking to expand their horizons.

How We Can Help

UK Recruiters Seeking Opportunities in the US

As highlighted above, the US offers an exciting opportunity, but seeking the right advice is essential. Here at WTT Legal we provide expertise and assistance in helping UK agencies cross the North Atlantic with confidence – both from a legal and risk evaluation assessment prospect.

Our team along with our Dual US-UK qualified Director of Legal Services, Carla Roberts, hold extensive experience in both the UK and US recruitment market, making us strategically placed to cater for your business’ needs.

For more information, contact our specialised legal advisors today. Book a consultation below to commence your navigation on US expansion confidently.