The latest recruitment market data gives business owners some cause for optimism, but it also raises a more important question.
Is your business still designed around the market you used to have, rather than the market your clients now want?
The June 2026 KPMG and REC UK Report on Jobs showed temporary billings rising at their fastest rate for more than three years, while the decline in permanent placements eased considerably. That suggests employers are becoming more confident, but they are still cautious about adding permanent headcount.
The latest results from some of the major listed recruiters tell a similar story. Hays, PageGroup and Robert Walters have all reported continuing pressure on fees in parts of the UK and Europe, alongside further action to reduce costs.
For recruitment business owners, the obvious temptation is to conclude that they should diversify into contracting, interim or statement-of-work services.
That may be the right answer. But it is not as simple as changing the wording on the website, recruiting a contract consultant and producing a new sales presentation.
An interim is not simply a senior temporary worker
I started working recently with a business that had fully embraced the idea of temp and contract businesses being more valuable than permanent recruitment specialists.
They had in excess of 200 workers out already, but their average margin was low in £££s and % (10%). The owner was keen to move up the value chain to strategic interim, but was getting nowhere. So I looked at his sales pitch.
At the strategic end of the interim market, clients are not buying availability. They are buying experience, judgement and the ability to deliver change quickly.
A good interim will usually be brought in because something important needs to happen and the client either lacks the capability, the capacity or the confidence to deliver it internally.
That means the recruiter needs to understand far more than the job title and the required experience. In fact, the client may not know what they need.
What is the client trying to achieve?
Why has it not happened already?
Where are the likely barriers?
Who has the authority to make decisions?
Which stakeholders need to be brought with the change?
What would success look like after 30, 60 or 90 days?
Without that level of understanding, the recruiter is still matching a CV to a vacancy. The candidate may be more senior, and the fee may be higher, but the service is not genuinely strategic. And this business owner was still saying (I paraphrase) “Tell me what you want, and I’ll find them, fast, compliantly and at a competitive margin.
Statement-of-work solutions require even greater care
I increasingly meet recruitment businesses interested in talking about statement-of-work solutions as the next stage in their development.
There is certainly an opportunity here, but there is also significant risk.
A statement of work is not simply a group of contractors supplied under a different contract. The supplier is taking responsibility for a defined outcome or deliverable.
Before pricing the work, you need to understand how it will actually be delivered.
That means examining the process in detail.
Where does the work enter the process?
What happens at each stage?
Where are the delays, handovers, bottlenecks and duplicated effort?
Where does rework occur?
Which stages are critical to delivery?
Which assumptions are being made about the client’s data, systems, people and decision-making?
What happens when those assumptions prove to be wrong?
You also need to understand the wastage already built into the process.
If a client’s current method is inefficient, poorly documented or dependent on particular individuals, that will affect the cost of delivery. If you fail to identify and price for those weaknesses at the outset, the margin you expected to make can disappear very quickly.
A classic example is where a recruitment business owner was so keen to secure an SOW agreement that he relied on the HRD’s agreement only. No communication of the agreement, its benefits, or the changed process happened. So the client’s line managers didn’t change anything about the way they worked with this recruiter. They still treated him as a “supplier of CVs”.
The proposal must also account for project management, governance, reporting, quality control, remediation, knowledge transfer and the management time required when things do not go to plan.
Recruitment businesses that enter this market without understanding the details can find themselves responsible for outcomes they cannot fully control and costs they never included in the price.
Do not underestimate the value of what cannot easily be measured
One of the dangers in pricing a strategic interim or project solution is focusing only on the elements that can be entered into a spreadsheet.
The cost of the people is visible. The number of days is visible. The technology and project management costs may also be visible.
But some of the most valuable elements are much harder to measure.
Sector understanding is a good example.
Someone who knows the market will often understand how decisions are really made, where projects usually stall, which stakeholders need to be involved and which apparently sensible solutions are unlikely to work.
That knowledge may save the client months of wasted effort, prevent an expensive mistake or identify a risk that nobody else has recognised.
Professional judgement, credibility, experience and the ability to challenge the client constructively all have value, even when that value cannot be reduced to a simple metric.
Recruitment businesses should be careful not to price strategic work solely by calculating the cost of the people involved and adding a margin.
The real value may be in accelerating a result, reducing risk, protecting revenue or avoiding failure.
Flexibility is an opportunity, but it is not an easy one
There is a genuine opportunity for recruitment businesses to broaden their offer beyond permanent contingency recruitment.
That may include temporary and contract staffing, strategic interims, fractional leadership, project teams, managed services, talent intelligence or statement-of-work solutions.
But each step brings different requirements.
The business may need new systems, stronger contracts, more working capital, different insurance, better management information and people who understand how to scope and manage delivery.
The question for the board is therefore not:
How can we sell more contractors?
It is:
Which client problems do we understand well enough to take responsibility for solving, and can we scope, price and deliver that solution profitably?
Permanent recruitment feels like it’s recovering.
But those businesses that use this period to understand their clients more deeply and develop credible solutions around the outcomes they need may emerge with stronger relationships, better-quality revenue and a more valuable business.
Those that simply rebadge recruitment supply as consultancy may take on considerably more risk without creating any more value.
If you would like to explore how Alison can support your business in identifying and implementing the right organisational development for you, please get in touch.
