According to market research organisation, The Insight Partners, the market as a whole was worth $757.56 billion in 2023. Now, this figure is expected to soar to $2.03 trillion by 2031, reflecting the overwhelming demand for talent by companies of all shapes and sizes.
While the forecast appears to be an overwhelmingly positive one for the sector, the fact of the matter, however, is that this growth is by no means guaranteed. After all, recruitment’s continued prosperity will be determined by a number of key trends and factors, likely to shape the industry throughout 2025 and beyond:
AI continues to define the industry’s future
There’s no question that Artificial Intelligence [AI] is reshaping the global recruitment industry. In fact, the technology has already had a transformative impact on the speed with which recruiters and hiring managers can fill vacancies with highly skilled candidates. From automatically writing role descriptions to answering jobseekers’ questions via chatbots, AI is greatly reducing the day-to-day administrative burden that many recruitment teams once had to bear. Not only does this free up recruiters to focus their efforts on other areas where their input can have greater value, but it is also revolutionising the candidate experience through the delivery of a more streamlined and simplified hiring process.
Given the benefits that using AI tools can provide to recruiters, it’s no surprise that so many are implementing the technology into their processes. Research conducted by data reporting firm DemandSage shows that roughly 87% of companies have now embraced AI for recruitment purposes, with over 65% of recruiters having used AI tools to hire people. Those recruitment businesses that are yet to implement the technology will increasingly find themselves at a significant disadvantage as a result, so it’s likely that many more firms will integrate AI tools into their hiring practices throughout 2025 and beyond.
The race for top talent is heating up
While AI and other innovations are undoubtedly enhancing the recruitment process, there still remains a global shortage of talent which is likely to continue throughout 2025.
As the 2023 ManpowerGroup Talent Shortage Study reveals, 75% of employers worldwide are struggling to source the talent that they need for tackling emerging challenges, and achieving key objectives. One of the main reasons for this is the rapid advancements made to business technologies in recent years, and the lack of relevant education and training for upskilling people, so that they may work most effectively alongside them. This scarcity of digital skills is holding many businesses back from gaining a much-needed competitive edge, and will continue to do so in the years ahead, as technological advancements accelerate further, and the skills gap consequently grows ever wider.
Due to these factors, those individuals possessing the skills and knowledge needed to work effectively alongside emerging technologies will become increasingly like gold dust to employers. As such, the competition for this talent will become ever fiercer, and firms will therefore need to work hard to set themselves apart from their rivals. After all, if another company is willing to offer a more appealing package to talented candidates, business leaders can hardly be surprised when their inferior offer gets rejected. Those firms that go the extra mile to secure candidates will be able to win the very best candidates that the market has to offer, and thereby solidify their position as a leading, digitally driven organisation.
The shift from contingency to retained recruitment is gathering pace
With companies rightly focused on accomplishing their strategic objectives, the need to have a skilled recruiter on their side who can consistently secure quality placements on their behalf, will become more vital than ever before.
The problem here is that far too many recruitment agencies continue to follow a ‘spray and pray’ contingency model, whereby they fill positions on a no-win, no-fee basis. Because this means income from placements isn’t guaranteed, firms are at a greater risk of receiving inferior candidates from their recruiters, who may choose to prioritise speed over thoroughness.
To deliver positive outcomes for their clients and secure the very best talent on offer, more and more recruitment firms are moving away from this low-value, high-volume contingency model, and towards a more rigorous, headhunting-based, retained model, requiring financial commitment from clients on commencement of projects. This not only helps businesses to ensure that they get the people who they actually need on board, but it also helps agencies to futureproof themselves against the rapidly shifting recruitment landscape.
For recruiters moving to this ‘retained’ model in 2025, convincing clients who may be reticent to pay upfront will continue to be a challenge, and agency owners, leaders, and independent operators will therefore need external support to achieve this goal. Only by gaining access to the relevant skills, knowledge, and tools will they be able to make the mindset, process, and collateral changes necessary for revolutionising their sales and delivery practices.
A pragmatic approach is needed
As significant changes abound for the recruitment industry – driven by technology, both for the better and the worse – only those businesses and recruiters capable of attracting high-quality candidates will find themselves ahead of the curve.
While recruitment absolutely has the potential to become a multi-trillion-dollar business over the next five years, this growth is contingent on adopting a pragmatic and viable approach to sourcing talent. Retained recruitment represents such an approach, and will be key to the industry’s success – and that of its clients – throughout 2025 and for decades to come.
Louise Archer is the Founder of forward-thinking recruitment business, Retrained Search
