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Headhunters are waiting for changes

 The world's sector of executive search is going through hard times and Russia is no exception.

 In the 3rd quarter of 2012, the number of new orders received by companies, which are members of the Association of Executive Search Consultants (AESC), had decreased by 7.6% in comparison to the 3rd quarter of 2011 and by 6.8% in comparison to the 2nd quarter of 2012.

 “The results are disappointing, but it is hard to call them unexpected”, says the president of AESC Peter Felix. According to his words, “the 3rd quarter is always one of the slowest in the whole industry,” and August and September this was confirmed when many AESC members reported the slowdown of their businesses.

 Of all the regions in the world, regions with the most noticeable decrease were Europe, the Middle East, and Asia (EMEA); the number of new orders during the year decreased by 12.2%. The situation is better in the Asia-Pacific region (-9.6%), North America (-4.3%), Central America, and South America (-2.3%).

 “Good, dynamic quarter”, says Artem Avdeev, the Managing Partner of the Russian office of Egon Zehnder. In Russian practice of the company the main areas of growth, according to Artem Avdeev, consist of “pharmaceutics, industrial companies, and consumer markets.” There are many new requests and confirmed orders from these sectors, but in Eastern Europe there is an economic decrease, and in crisis times international companies can decrease their budgets.

 In the Russian office of the Amrop Company, “the 3rd quarter of 2012 was worse than the first two ones, but better than the third quarter of 2011”, said the Partner of the Russian office Ekatherina Kashubskaya-Kimpelainen. She assumes, the reason being that the first two quarters were very busy and successful, but isn’t ignoring the significant structure changes in the Executive Search market in Russia. The majority of region offices had ambitious plans of growth for this year, but only Spain and Turkey meet these expectations.

 In the Ward Howell Company, “the 3rd quarter was moderately successful, although not brilliant”, concluded by CEO Evgeniy Boyakin. The 3rd quarter was not worse than the first two quarters and even a little better than the 3rd quarter of 2011. However, “the main business of the company, Executive Search, is growing very slowly”, stated Boyakin, while the other sectors of the business, connected with consulting services, such as talent management, are growing much faster. In a long-term outlook, according to his words, “Executive Search sector will continue growing, despite the development of professional networks and other ways for employee recruiting.”

 Between all the services of the Moscow office of Odgers Berndston, the most rapid pace of growth is found not in the service of Executive Search, but in Leadership Development practices. By the end of 2012, according to the Odgers Berndston Partner Daniil Rybak, these practices will make more than 20% of the annual office turnover.

 “The situation of Executive Search markets can be a good illustration to Michael Porter's works”, says Vaagn Manukian, the Managing Partner of Heidrick & Struggles in Russia. The clients of the consultants are consolidating faster, he assumes so they can dictate their own conditions. The majority of headhunters don't have enough weight on the market, and even worse now have to compete with small boutique companies. He explains that Consultants, even those who have very poor experience, tend to open their own boutiques and offer services to the same clients with whom they were working in big structures.

 The gain of Heidrick & Struggles in the 3rd quarter of 2012 has decreased by 17.5% in comparison with the same period in the last year. The most serious hit was taken by the European subdivision of the company, where the decrease is 43%. The number of consultants working in the company all over the world has decreased from 386 in 2011 to 332 in 2012. However, the average revenue for a consultant has increased up to 1.4 million dollars a year.

 According to Manukians opinion, the global as well as Russian market of executive search needs consolidation. If consolidation occurred then the work conditions of headhunters would become easier, and the rules of the game would be clear. He would not be surprised, if such consolidation occurs in the future. 


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