Tough times have hit profit margins, writes Sylvia Pennington.
Slow times and belt-tightening across the information and communications technology (ICT) sector have sent recruiters' profits plummeting.
ICT recruiters' profitability dropped 53 per cent in the March quarter, compared with 2012 figures, according to the IT Contract and Recruitment Association (ITCRA), which tracks the monthly performance of a sample of agencies.
ITCRA said the period was the local industry's weakest since 2009. Hours billed for contract staff were down 5 per cent on last year while permanent placements for the year to date have dropped 9 per cent.
ITCRA chief executive Julie Mills said lack of investment in major projects meant there was less work for those who found work for others.
"It is typical in uncertain times that no one hires unless they absolutely have to, and they make do, so no investment, no infrastructure ..." Ms Mills said.
Compounding the difficulties of a recessionary climate, social media and new market entrants are treading on traditional recruiters' toes, as they continue to make it cheaper and easier for companies to find their own staff.
Professional social network LinkedIn's 225 million profiles worldwide include 4 million Australian professionals, some 300,000 of whom work in the technology sector.
Of the IT professionals on the site who changed jobs in the past year, 16 per cent did so following a direct connection with their new employer, according to Steve Barham, LinkedIn's director of talent solutions for the Asia Pacific region.
A thousand local companies, recruitment agencies among them, now advertise jobs on LinkedIn.
Recruiters see the platform as a valuable tool in their arsenal, Mr Barham said, even as it appeared to be edging them towards irrelevance.
Online start-up RecruitLoop, which allows firms to hire a recruiter by the hour, is also making inroads. The firm's average placement fee of $1475 compares favourably with the percentage-of-salary commissions charged by traditional players.
Other employers say exploiting their own networks and those of their staff has reduced their reliance on external recruiters.
Software developer DiUS Computing employs 100 people in Sydney and Melbourne and opts for the DIY approach wherever possible. Human resources manager Jessica Lowe says it's easier than it was a decade ago.
"People are more receptive to networking than they used to be."
In addition to paying bonuses to employees who introduce successful candidates, the firm has snagged entry-level staff at post-graduation presentation evenings.
The operations manager at Newcastle IT services company Myrtec, Alison Hough, says keeping her ear to the ground outside the professional sphere has also paid off. One of Myrtec's early hires was plucked from a Coles check-out after Ms Hough overheard him discussing his communications and IT course graduation.
Other roles have also been filled directly, via social media, job websites and traditional networking. Ms Hough says these methods are cheaper and yield better-quality staff than those sourced by recruiters who don't bother to understand the business they're hiring for.
While adept at searching resumes for key words and certifications, "they don't take the time to evaluate the soft skills", she said.
ITCRA's Ms Mills believes internal hiring is increasing - but only marginally so. "The talent is still the challenge and when it can't be found, the recruiters are the go-to people," she said.
Connect Recruitment managing director Steve Bleakley agrees. "Definitely there is a slowdown in the market and, yes, some are going the in-house route," he said.
External recruitment fees were an easy target for cost cutters but companies frequently underestimated the time needed to build and maintain large networks of contacts, he said.
Tough times would see recruiters who lacked industry knowledge and gave poor service go under but others would continue to thrive, he said.