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IR35, Brexit and Digital Transformation: 3 Major Recruitment Industry Considerations in 2020


IR35, Brexit and Digital Transformation: 3 Major Recruitment Industry Considerations in 2020

Standing at the start of a brand new decade, what do recruitment industry leaders see? What does 2020 look like for the sector? 

On one hand, there are immense opportunities of using technology to transform the way recruitment works; on the other hand, there is a lot of uncertainty resulting from the confusion around IR35 and Brexit. And there’s tremendous pressure from shrinking margins, plus it’s getting more and more difficult to find the right talent. 

The new decade belongs to agencies that are able to prepare for widespread socio-economic-political change and the resulting impact on the industry. The ability to leverage digital and automation technologies will also play a major role in determining the future of major recruitment businesses. Let’s take a close look at top three considerations for the industry in 2020.  

1) IR35 reforms in the private sector
IR35 reforms in the public sector led to blanket inside IR35 decisions, made it tougher to find contractors for the positions, raised the cost of hiring contractors for the sector and eroded recruiter margins. While the IR35 reforms for the private sector were postponed in 2019, they are expected to be implemented in 2020.

Industry leaders have been vociferous in their demand to roll back the reforms, but no announcement on postponing the legislation to 2021 has been made yet. If IR35 reforms are extended to the private sector in 2020, agencies that have already made the preparations to deal with the fallout will have an advantage over businesses that are praying for a postponement.  

2) Brexit and its impact on the recruitment sector 
Brexit will impact the UK job market in two crucial ways – one study estimates that Brexit will lead to a job loss between 100,000 to 500,000. There is a fear that many businesses will shift their headquarters to a major EU city after Brexit. There is also another factor that may contribute to job loss – while the employment numbers are at a record high in the UK, it is feared that employers may stop hiring post Brexit, leading to lesser vacancies. 

Another key impact of Brexit will be on the number of overseas workers from EU working in Britain. While it is not possible to truly estimate how many contractors hailing from the EU will leave the labour pool post-Brexit, the chances of an exodus cannot be discounted. So the available pool of candidates may shrink. 

At this stage, there is no way to predict the true impact that Brexit will have on the UK jobs market as a whole or on the recruitment industry in specific. 

3) Digital transformation – leveraging technology for a competitive advantage 

Candidates are at the centre of the recruitment industry. The problem of skills shortage has exacerbated over the last few years. As more and more millennials enter the workforce, candidate expectations have also evolved. In this scenario, delivering a stellar candidate experience to keep them engaged and boost acquisition is at the top of the list for any agency. 

In order to achieve this, while reducing the overall cost of operations at the same time, agencies need to successfully implement digital and automation solutions. Typically, recruitment agencies in the UK have relied on tried and tested method and tools and have not been known for embracing innovation. 

In 2020 and further, agencies will need to learn how to successfully integrate innovative technologies to transform their day to day processes. Companies that are able to do this will have a greater chance success compared to players that lag behind. The biggest differentiator will be an agency’s ability to rapidly and successfully adopt new technologies – a challenging task for most as it may require disruption in the form of major process and platform changes.

Wrap up 

There is no doubt that these factors will have a major impact on how recruitment agencies function, how contractors approach opportunities, how much margin agencies have, how much money candidates can take home, and more. Agencies that are able to prepare for the highly dynamic market and adapt to the changes will thrive. 

Apart from the above points, some of the top challenges that agencies face perennially include skills shortage, increasing cost of candidates and higher churn rates. To stay on the top of these issues, it is essential to keep the candidates engaged. A pay & bill function that runs like a well-oiled machine is one of the foundations for keeping candidates happy. Happy candidates are a must for the success and growth of any recruitment company.

At QX, we process over 1.5 million timesheets every year, with over 99.8% of accuracy. If you are looking for a professional and reliable partner for recruitment pay & bill services, please get in touch with us. 

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