UK recruiters cut costs as war and AI deter hiring

By Prerna Bedi

July 14 (Reuters) - British recruiters are cutting costs to bolster profits as global geopolitical tensions and AI-driven efficiencies weigh on hiring, while firms are also shifting to shorter-term contracts as they navigate the impact of tariffs and the Iran war.

In results released on Tuesday and last week, major recruiters Hays, PageGroup and Robert Walters reported improving temporary hiring in the Americas and some Asian markets, while demand in Europe remained weak.

Quarterly net fees fell across the sector, even as recruiters signalled confidence in their annual forecasts, betting on growth in key markets and cost cuts that have helped support shares, despite declines of as much as 35% this year.

"Hiring markets across the globe continue to move at different speeds," Robert Walters CEO Toby Fowlston said on Tuesday, adding that trading was in line with expectations and the firm was accelerating moves to tackle costs.

"(It was) an encouraging performance against the backdrop of heightened geopolitical uncertainty."

The company reported a 4% fall in second-quarter net fees, sending its shares lower after a sharp rally on Monday.

The sector is grappling with a hiring slowdown, particularly in Europe, as economic uncertainty, compounded by the Iran war, delays recruitment decisions and investment, leaving candidates in limbo and forcing recruiters to cut costs to protect profits.

HIRING SHIFTS

A growing focus on AI-driven efficiencies has also weighed on hiring, as companies reassess jobs and favour temporary positions over more costly permanent roles, recruiters said.

"Given heightened levels of global macro-economic uncertainty, we continue to expect near-term market conditions to remain challenging, with greater resilience in temporary & contracting than in permanent," Hays CEO Mark Dearnley told analysts on Friday.

Robert Walters' shares fell as much as 10.5% to 94 pence on Tuesday, before recovering some ground. PageGroup shares fell more than 2%, while Hays was little changed. All three stocks had gained between 25% and 36% since Friday after Hays raised its outlook.

PageGroup maintained its forecasts on Monday as it beat analysts' second-quarter expectations, although it remained cautious about the rest of the year.

To offset the downturn, Hays has narrowed its geographic focus, while PageGroup and Robert Walters have reined in costs and expanded in specialist areas.

France, Germany and Britain have remained weak for all three. In France, net fees fell between 12% and 17% in the quarter ended June 30. Japan and the Americas were more solid, while China also performed well for PageGroup and Hays.

SThree flagged similar regional hiring trends in June and will report interim results on July 21.

($1 = £0.7482)

(Reporting by Prerna Bedi in Bengaluru. Additional reporting by Nithyashree R B. Writing by Pushkala Aripaka. Editing by Thomas Derpinghaus, Adam Jourdan and Mark Potter)