SThree Slashes Workforce as Global Recruitment Market Remains Sluggish

London-headquartered recruitment specialist SThree has implemented significant workforce reductions amid persistent challenges in the global hiring landscape. The organisation has trimmed its workforce by 10 per cent, bringing the total headcount down to approximately 2,430 from 2,700 in November.

The company, which maintains operations across 11 countries, attributes some staffing reductions to natural attrition whilst adopting a highly selective approach to worker replacement. Additional cuts stem from operational streamlining through enhanced technological programmes, with particular emphasis on artificial intelligence implementation for candidate screening, contract interpretation, and worker extension approvals.

Chief Executive Timo Lehne explained the strategic workforce reduction, noting that without clear market improvement in the first half, headcount adjustments were inevitable. The company’s increasing reliance on AI-enabled processes has prompted a reassessment of optimal staffing levels.

SThree’s financial performance reflects the challenging market conditions, with net fee income declining 14 per cent to £159.1 million in the first half of its financial year. The company’s contract division experienced a 14 per cent year-on-year decrease, whilst permanent placement revenues fell by 13 per cent.

Despite these headwinds, the organisation maintains its projected pre-tax profit forecast of £25 million for the current year. Whilst this represents less than half of the 2024 earnings, it aligns with previous guidance, offering some reassurance to investors amidst sector-wide challenges.

The UK market, representing SThree’s third-largest operation, has proven particularly challenging, with net fees plummeting 28 per cent in the first half. Technology and life sciences sectors, previously robust during the post-lockdown recruitment surge, now demonstrate the weakest demand patterns.

Share market response saw SThree’s stock value increase by 13p, reaching 236½p, marking a 5.8 per cent rise in early Tuesday trading. However, the company’s shares have experienced a nearly 50 per cent decline over the past year as the anticipated recruitment market recovery remains elusive.