HCM includes providers of recruitment and staffing solutions. The sector's index score of 98 (normalised to the base year of FY19 = 100), represents a decrease of 3 points from the previous year. This drop indicates a challenging year for HCM companies, as unfavourable market conditions resulted in declining demand for most offerings.
Sector performance
Human Capital Management sector performance, by dimension, is as follows:
- Growth: With stagnant or declining demand impacting both temporary and permanent hiring, many companies faced reduced revenues and profit challenges. However, a few outperformers thrived by diversifying into high-margin specialty services such as STEM staffing and technology solutions.
- Profitability: Increase in cost of service, resulting from rising employee and contractor expenses, led to a further decline in profitability for the sector in FY24. Additionally, unusual restructuring expenses at some firms contributed to decreased EBIT margins.
- Productivity: In response to rising costs and softer market conditions, recruitment firms have boosted productivity by streamlining their workforce and integrating AI, distinguishing themselves from staffing companies that continue to face declines.
- Cash flow: Liquidity ratios have increased year on year, returning to FY19 levels due to improved cash collection cycles. Firms are prioritising liquidity and exercising careful expense management to remain agile for restructuring initiatives.
Priorities for success
As client demand for legacy offerings declines, HCM companies are reassessing their value proposition and have begun transforming their businesses. While a few companies have found early success by venturing into specialised, tech-enabled offerings to chart their organisational path forward, most have only just begun preparing capital reserves for a shift in operating models.
How do you compare?
Use the simple interactive comparison tool below to map your company’s key metrics against sector peers. The tool offers a sliding scale to provide approximations for two of the four dimensions (i.e. growth and profitability) used in the creation of the annual GBSI.
Interested in a detailed benchmarking exercise for your company? Please complete the form below and we will contact you.
About the author
Global Business Services Index 2025
An annual outside-in view of the Business Services Industry and its performance across 8 key sectors
