Great. Well, let's make a start. Hello, everyone. I'm Dami Tanimowo. I'm Head of Investor Relations here at Robert Walters. Just some quick housekeeping notices before I hand over to Toby. Firstly, we're not expecting a fire drill this afternoon, so if the fire alarm does sound, please stay calm, follow the instructions of the marshal. Secondly, we don't particularly intend to discuss current trading in today's presentations. I'd note that we'll be releasing our Q3 trading update in just a short time, less than three weeks, in fact, on the fifteenth of October. So, would ask that you maybe perhaps save any burning questions that you've got on current trading for then.
And lastly, as is customary, I'll just sort of point your attention to the cautionary statement on the slide, which I trust is self-explanatory. I'll hand over to Toby.
Thanks, Dami. Afternoon, everyone. A very warm welcome to Robert Walters' 2024 Capital Markets event. Whether you're joining via the online webcast or here with us in person in our offices in London, we're very glad you could make it. It's wonderful to actually have people together. Now, they say you should only do a capital markets event when you have something new and meaningful to say. We would like to believe that we will be taking you through some new and meaningful things over the course of the next few hours. Let me just start with a couple of key messages for today. Firstly, over the last year, we have begun implementing a refreshed approach to managing the Robert Walters business, and we're gonna call that Disciplined Entrepreneurialism.
Disciplined entrepreneurialism, it's not a strategic revolution, but it is a strategic refinement, and it's aimed at unlocking more of the potential of this business. Now, I've been a part of this business for twenty-five of its nearly forty years of trading. I have a very clear view of what drives our success, but I also have a clear view of what needs to change, so that we are better set for the continued evolution of hiring markets, and so that we operate with greater efficiency and at higher rates of profitability. Secondly, this refreshed approach to managing the Robert Walters business entails a very specific program of actions that we are now pursuing across our business. In Specialist Recruitment, we will manage our geographic portfolio more robustly, using a recently introduced internal framework to drive better decisions on where and how we invest.
In Recruitment Outsourcing, we are very clear on the reasons that trading has declined in that part of the business over the last few years, and we are working to strengthen our operating platform to give us a stronger foundation from which we can then target profitable growth once again. We have identified the areas of our business that we believe will drive the most compelling returns, excuse me, over the medium term, and we've begun to invest in them. We are pursuing improved productivity, people efficiency, operating efficiency, and better procurement right the way through our business to further underpin the benefits that we want to attain. Thirdly, the actions we are pursuing under disciplined entrepreneurialism will, we believe, drive more attractive financial returns for investors. We see a clear path to a Robert Walters business delivering a 16%-19% conversion rate through the cycle.
In excess, therefore, of our previous peak margins since the global financial crisis, and that in turn, of course, will mean a stronger profile on cash flow per share. Now, in terms of our agenda for today, I will start by reviewing our progress over the last twelve months, what we refer to as Horizon One, before taking you through our medium-term plan, Horizon Two, in greater detail. I'm sure you'll be delighted to hear it won't just be me speaking today, and I'm really glad to have a number of our executive team here and business unit leaders, so you can hear directly from them on some of their areas of responsibility. Gerrit Bouckaert, our CEO of our specialist recruitment offering, will present on the opportunities we see ahead in the really exciting interim management space.
Jess Holt will tell you about the opportunities that we see in workforce consultancy, which we've talked about with many of you already. Following that, Sinead Hourigan, who leads the most recent addition to our lineup, Talent Advisory, will introduce you to that exciting part of our business. Andrew Powell, CEO of our recruitment outsourcing business, will then do a deeper dive on that area of our organization to give some detail on how we plan to improve our performance there. Then we'll have a break, and once we return, we'll have some focused teach-in style sessions. In the first, you're going to hear from Kev Bulmer and Faye Walsh, sat there, about how we're developing and deploying technology to drive our business forward. And then Jeremy Sampson will talk to you about our Japan business.
And finally, Gerrit and Kim Lu will talk about what it takes to develop and scale a specialist recruitment business. After that, David Bower, Group CFO, will talk in more detail about the financial implications of disciplined entrepreneurialism, which, as I mentioned ago, we believe are compelling. Now, just quickly, also in the room is Chris Eldridge, somewhere, sat at the back there. He's CEO of our UK and Ireland, North American business. Shay Peters, also sat at the back, CEO of our ANZ business. Jose Bockhorst, also at the back, CEO of our Northern European business and David Barr, who's also at the back, just there, sorry, who is COO of our Robert Walters outsourcing business.
We were keen to really build in a good amount of time in our agenda to interact with your questions, and there will be a Q&A segment at the end. And then once we're finished, if you are free, it'd be great if you could join us for a drink, and we can continue the conversations more informally. So let me first take you through what I would term Horizon One, and what has been achieved already. We have, over the course of the last 12 months, started implementing actions entailed by our drive for disciplined entrepreneurialism, and I particularly want to talk about the senior team, our brand unification, and technology. Firstly, our senior leadership. In a nutshell, disciplined entrepreneurialism is about taking the essence of what has established Robert Walters as a trusted global leader in talent solutions over the last decades.
We're combining this far more with rigor and focus, and that blend is now absolutely reflected in the composition of the executive team. You can see the photos of the members of that team that will actually be presenting today, but optically, you can see some fairly long-standing Robert Walters experience, but also blended in with some more recent key hires. As an organization, a real strength of ours is promoting from within, but I'm very happy we've been able to bring some selected external hires in with significant experience and, more importantly, different perspectives. I've just had two days with the leadership team. It's very clear that we each share the same impulse for disciplined entrepreneurialism.
This senior team's tenure and experience enables them to have a real appreciation of all that is great about this business, as well as a clear view of how we do need to change for the better for the future. The second element where I believe we've seen significant progress over the last year is how we go to market. Now, in many hiring markets, our industry is moving away from the traditional analog world of just perm and temp recruitment. We are at a point where client and candidate expectations are converging on a much wider range of solutions, such as interim roles, workforce consultancy, or market intelligence, to just cite a few.
Our unified brand, which saw us combine our historical three brands under the Robert Walters brand. It makes it as easy as possible for our clients and for ourselves to see how we can best serve them. A couple of months ago, we externally launched our new brand identity, and we now go to market as one Robert Walters, able to support our clients with the full suite of talent issues that they face, operating through our three service lines, which are set out here on the left-hand side of the slide. Specialist recruitment is the service line that we've obviously operated since inception, supporting clients with permanent, temporary recruitment, executive search and interim management. Recruitment outsourcing, which we previously delivered under the Resource Solutions brand, offers two core services.
It enables organizations to transfer all or part of their permanent recruitment needs to us through recruitment process outsourcing, otherwise known as RPO. Secondly, it provides contingent or temporary workforce solutions. Talent Advisory, which as I earlier said, is the newest addition to our lineup, that supports the growth of organizations through market intelligence and data, future of work consultancy, and more recently, talent development. Now, this brand refresh was a sizable project, over the course of several months. It required the conversion of over 50 of our client and candidate-facing websites, more than 1,000 pieces of marketing collateral, and converting the employee profiles of more than a third of our people. Now, we didn't dedicate such resource to the project lightly, clearly.
Rather, it was born of my belief that we needed to tell a better story to our clients and to our candidates about how we can support them in today's increasingly complex and changing world of work. Our previous three brands with Resource Solutions and Walters People, alongside Robert Walters, had just become too confusing for our clients. And this was brought home to me in many of the conversations that I conducted with clients and prospective clients over a year ago when I first stepped into the Group CEO role. And when I put them on the spot, many of them really struggled to explain how we operate in the different parts of our business and what we did. Going to market as one helps eliminate that complexity. The talent challenges that our clients face are everywhere. Jeremy is gonna talk about demographics in Japan later.
We know we have eight hundred thousand less workers in the UK today, before obviously COVID came. And whatever research you choose to look at, the story is consistent. We are going to see greater stress to organizations around fulfilling their talent needs and challenges. And for us to serve our customers, we have to adapt to ensure that we can support them, especially in many cases where the clients have a problem, but they just don't know what solution they need. So going to market as one enables our clients to easily access the full suite of our talent solutions, and this reflects what they need. We gained really clear and actual insights into this client need through a wide-ranging, deep-dive piece of client survey research, which we conducted earlier this year.
And we received responses from over three thousand clients who all engage with us across the global regions. And from this, we were able to see that areas like market intelligence, leadership development, and perm recruitment are where clients believe their needs are going to increase the most over the next three years. They also told us, as shown on the right-hand side here, that they do already have a reasonably good level of awareness of our credentials in these areas relative to others. So going to market as one brand then is about positioning ourselves to support our clients with what we believe are going to be some of the most pressing talent issues that they will face over the course of the rest of this decade. Finally, we come to technology. Here, we have consolidated the transformation that has been ongoing since two thousand and nineteen.
Overall, this means our technology function can now be much more focused on giving our people new, value-creating technology, rather than just keeping the lights on. In terms of value-creating tech, Zenith, our custom-built CRM, is really top of mind here, and you're going to be hearing from Kev Bulmer, our CTO, on this in a bit more detail later on. We have a much simpler technology estate backed by a modern workplace approach. A prime example of this is in communications, where digital devices and video conferencing technology mean we've avoided the need to renew an aging telephony estate, and it has enabled our people to operate much more efficiently. The work that we've been doing over the last few years also means our technology function now has greater capacity to do more value-adding projects, as you can see in the middle of the slide.
Furthermore, our simpler tech estate has allowed us also to look at the best operating model for our technology function. This has also meant a significant portion of the capability being moved to a global service center in the Philippines, which has driven a material cost saving, as you can see on the right. Disciplined entrepreneurialism is an approach to running Robert Walters that we've already set in train. Looking back over the last twelve months, much has been achieved, but yet we know there is still plenty ahead of us that we need to deliver. Let's turn now to Horizon Two, and let's consider the key elements of the overarching strategy as we look out over the medium term.
Now, as I said in my very opening remarks, disciplined entrepreneurialism is a strategic refinement rather than a revolution, and this is seen in how we're now thinking about what our overarching group strategy needs to be. The strong top-line growth that this business has achieved historically has overwhelmingly been delivered organically, with a previous focus on two things: namely, geographic expansion into new international markets and diversifying our disciplines and services in existing markets. We have refined our previous strategy to better enable our pursuit of the returns that we believe this business is capable of. Firstly, we will grow our business through geographical penetration rather than expansion. We offer talent solutions in thirty-one different countries, and within that, we have well-scaled businesses in some of the largest hiring markets globally.
However, we also have businesses in mid-size markets where we are not yet appropriately scaled to compete as we ought to. We will change this by managing our portfolio in a more disciplined way around a structured framework, which will drive better decision-making. Now, clearly, none of us have a crystal ball. It would be unwise of me to say never again to any new market entry. However, our key priority in this area will be scaling in our existing markets. Secondly, we remain convinced of the merits of service line diversification, particularly in the context of a rapidly changing world of work, where organizations have numerous talent challenges requiring a full suite of solutions.
We are, however, being more explicit about the services where we see the scope for most material growth, combined with attractive above group average margins, and we're beginning to invest in them accordingly. In this regard, you're going to hear about interim management, workforce consultancy, and our advisory service line, the service areas that we believe we're particularly excited about, given the opportunity. Before we get there, though, let me first describe our approach to geographic penetration in greater detail. Pursuing higher penetration in our existing markets means taking a greater share of the pie. Given that it accounts for over 80% of our group net fee income, and is the only one of our three service lines that we offer in all of our existing markets, we're going to spend our time today talking about geographic penetration with respect to specialist recruitment.
Now, I said in my opening remarks that we are seeking to drive geographic penetration in a more structured way, based around a framework to help drive better decisions on where and how to invest. And what you can see on the slide is that framework, our Four-Box Model. We look at our performance in a given specialist recruitment market as ultimately a function of two things. Firstly, the underlying structural drivers of that hiring market, and secondly, how well we're executing against our internal controllables. And by putting these two together, we can segment our portfolio into the quadrant that you can see on the slide. In terms of underlying structural drivers, we're talking about things like the availability of candidates, average salary levels, and the competitive landscape. And here we categorize simply between markets that are favorable and those that are less favorable.
These are factors that typically take quite a while to shift. With regards to our internal controllables, we're thinking about things like our leadership and the teams that we're building, strategic execution, adherence to global best practice, and of course, our culture, including how engaged our people are feeling. We categorize between whether we are maximizing our internal controllables or whether they are in need of improvement. Now, this segmentation isn't just an academic exercise, it's meant to give us focus when there are several candidates for investment, as well as clear direction on the strategic approach we need to take with different parts of our portfolio. So let's just take a brief moment to consider the approach for each of the four boxes in turn. Starting at the top right, where the structural drivers are favorable, and we are maximizing our internal controllables.
These are our clearly top candidates for investment to grow our platform. There is likely market growth in excess of GDP, and with it, the scope for higher margins, giving the operating leverage of our model, and for us, a couple of examples would be Japan, the Netherlands, Belgium. Moving down to the bottom right, where we're still maximizing our internal controllables, but the structural drivers are less favorable. Here, the imperative is being better than our competitors, so that we take market share. Going across to the top left. Here, the structural drivers are favorable, but we're not yet maximizing our internal controllables. In times past, because of the market growth on offer, we may have been tempted to try and grow our platform too soon. However, the right approach here is to fix the internal controllables first, before looking to grow the platform.
And then lastly, coming down to the bottom left, where neither the structural drivers nor our internal controllables are currently optimal. These are the parts of our portfolio where we are really challenging ourselves and asking the toughest questions to establish whether there is a path to a more competitive position. Now, it's important to say, we obviously think about the framework dynamically, and by this I mean we fully expect over the medium to long term for there to be movement between the quadrants. More likely, bottom left to bottom right, top left to top right. And to that end, we are keen to share in greater detail about what scaling a specialist recruitment business over a long period of time, where the underlying drivers go, say, from a relative infancy to greater maturity. What does that look like?
And Gerrit will, in conversation later with Kim Lu, who leads our Southeast Asia region, will give you a demonstration of that. So we have a clear sense of the composition of our portfolio, driven by the Four-Box Model, and increasingly, this will mean that our country management teams have a clear sense of where they sit, and thus what is expected of them, Disciplined Entrepreneurialism. Now, you might be thinking about what the other box is and which countries sit where. We're choosing not to disclose that externally, given obviously, the commercial sensitivity. But as you can see, we are very clear on the actions that are needed to drive improved performance.
To give you a very broad sense of the portfolio today, on the slide, we've also detailed the proportional split across the four boxes in terms of the specialist recruitment net fee income in 2023 of around GBP 320 million. So I'll just give you a moment to reflect on that. We can go back. Thank you. As I've said a couple of times already, disciplined entrepreneurialism is about strategic refinement, and the four-box model captures that well. It will give us greater consistency in driving our overall business model, which largely remains unchanged and is set out on this slide. As a reminder, the model is about ensuring we are future first choice for clients and candidates, and we depict it in a circular fashion because when we get it right, it starts to turn like a flywheel, gaining more and more momentum.
So I'll leave you to digest the detail on this slide at your own leisure, and I hope you now have a really clear sense of how we think about geographic penetration. We'll turn now to consider the second element of our organic growth strategy, which is service line diversification. The rapidly changing world of work means organizations have probably seen a greater shift in ways of working in the last four years than they did in the previous twenty years. And as a business, we believe we have the full range of talent solutions in our service line to help them. And we're focused on accelerating development in those service lines where we see the most compelling opportunity.
And so we thought the most valuable thing that we could do for you was to give you an opportunity to hear from some of the leaders directly from different parts of the business, namely interim management, workforce consultancy, talent advisory, and recruitment outsourcing. So on that note, I'm now gonna hand you over to Gerrit, who's gonna talk to you more about interim management.
Thanks, Toby, and good afternoon, everyone. If we haven't met already, my name is Gerrit, and I'm the Chief Executive of our Specialist Recruitment business globally.
... I'm originally from Belgium, and I've worked across recruitment markets in Europe and Asia, and currently in my role, I'm based in Madrid, Spain. I want to take the next few moments to talk to you about the opportunity we see in our interim management offering. In terms of origins, interim management emerged in the 1980s in some of our continental hiring markets. It was predominantly a response to stringent local labor laws that at that time, were discouraging employers from committing to perm hiring of more senior professionals. As an alternative, engaging an interim candidate who would be engaged on a self-employed basis, enabled organizations to benefit from the skills of a highly experienced professional, while avoiding some of the perceived costs of committing to a permanent hire.
This would also give flexibility to organizations to pursue the interim route when perm hires were discouraged or they were faced with a hiring freeze. And you might ask, what's now the difference between an interim candidate and a candidate as a temp or contractor? As detailed on the middle of the slide, there are really two big distinctions. It is the level of seniority and the business impact. In terms of seniority, an interim candidate is typically a highly experienced senior executive, whereas a contractor, particularly a temp, are operating more at a less senior level decision-making. Then with regards to business impact and given their level of experience, the interim candidate will likely be expected to make fairly immediate and tangible contributions.
As such, you will often find interim candidates employed where the hiring organization faces a more discrete and potentially transformational corporate event, such as a merger and acquisition, a divestment, a fundraiser, or a transformation in technology. And by vertical, we see most of our demands coming from HR, operations, finance, and transformation. And organizations use it to fulfill the need of the skills right up to the senior level, all the way to, say, for example, a CFO. In terms of the attraction to candidates, as well as a greater variety experience they're able to gain, and potentially leveraging this experience to gain a substantial earning per hour, perhaps the key benefit of taking a role as an interim manager is around flexibility, and it gives them to plan around their lives rather than vice versa.
And that helps to explain the historical trend whereby the traditional candidate, who was an individual in the latter part of their career, to slowly start transitioning this to candidates that are mid-career candidates, increasingly with an interest of seeing interim management as an alternative to a permanent career. And we have done a survey in 2020 that outlines that one-third of the candidates in interim management are currently under the age of fifty. So now we're all on the same page of what it means to be an interim manager. Let's now have a look at why we like it and the ambitions we have for this part of the business. As you can see from the slide, the conversion rate profile of interim compared to very favorably with the group average, underpinned by a higher daily average rate and higher fee rates.
Giving clients typically very specialist recruitment skills at the senior level is, of course, a scarce in supply. In addition, there's lower risk exposure to us because we are not the end employer. Across the four continental European markets in which we offer interim management today, this is a business bringing in over GBP 35 million on an annual basis, so it's already at a decent scale. However, our competitors tend to talk in terms of their market share in revenue terms, so on that basis, we generate GBP 120 million annually. Our estimates are that this market is sized in the single-digit billions GBP in revenue terms across those markets. So we see scope for growth for our share to grow, given our differentiated position as a relation-based recruiter.
In order to grow, we're focused on further developing and deepening our specialization in markets where we already are offering interim management. A good example of that is France. In that market, we have now targeted certain verticals in which to specialize, and this has strengthened our credentials in front of clients, increased our knowledge of the candidate market, as well as helping our own internal succession planning with more career paths open for our own people. Additionally, we also see an opportunity to go to markets where we are present, but not currently are offering the interim service, such as Switzerland. As Toby said yesterday, earlier, not yesterday, we are allocating resources to the higher margins of our business, and growth in interim will be a contributor to the structurally higher margin we seek to achieve in the medium term.
So thank you for listening, and with that, I'll hand over to Jess.
Thanks, Gerrit, and good afternoon, everyone. I'm Jess Holt, the Managing Director for our Workforce Consultancy division, and I've had a career of 25 years in recruitment, predominantly in the U.K. market, but also in Australia, and that covers both temp, contract, perm, and outsourcing. My passion over the last 15 years has been about developing consultancy-based solutions within global staffing firms. I joined Robert Walters in 2022 to do exactly that, to launch these services here on a real strong brand heritage and client portfolio. Over the next few minutes, I'll provide a clearer sense of what that is, what the consultancy offering is, and how it will be relevant in the market, and also our ambitions for the future. In essence, Workforce Consultancy offers an alternative route for clients to access non-permanent labor. Traditionally, these are provided through contractors or consultancies.
Our Workforce Consultancy business retains a network of highly experienced consultants and teams, and we then deploy them into mid to long-term projects. In addition, we operate an academy which builds the skills required by organizations, and our specialism is in both generalist technology roles, such as business analysts and program managers, and more specialist roles, such as software engineers, and we deploy them across a range of verticals. And to give some context here in relation to the market, business leaders are currently facing a number of resourcing challenges, driven not only by the changing landscape of the world of work, but also to the pace of digital transformation and technology advancements and increasing legislation and cost challenges.
As you can see on the middle of this slide, three-quarters of organizations recognize that they will need to upskill or reskill their workforce, but approaching a third of those faced cuts in their training budgets. With permanent hiring also being restricted, organizations then have to turn to getting these skills through using contractors or consultancies. However, this demand can then drive rising costs, and with more than half of contractors having a tenure of over two years, this not only presents a longer-term cost impact, but also creates a risk of long-term retention of skills as these contractors could exit at short notice. What Robert Walters can provide through Workforce Consultancy is a resolution to these challenges, enabling a single, joined-up total talent solution from one provider. In terms of the mechanics of this solution, they're set out on the right-hand side of the slide.
Firstly, we leverage our group capability to attract, assess, and acquire highly skilled consultants. We offer them a permanent contract of employment and then deploy them individually as part of something called a managed service program or as part of a team on a statement of work project. We also partner with our clients to build the talent through our Recruit, Train, Deploy Academy, and here we focus on either graduates or school leavers and train these individuals for 4-12 weeks before deploying them into our clients' early in career programs. So what's the pull for both clients and candidates to use this solution rather than more traditional alternatives? Well, the main benefit from a client's perspective is that we deliver, on average, 25% savings versus contractor rates, and this increases to 40% when you compare this to consultancies.
We've achieved nearly GBP 7 million of annualized savings this year for our clients. Let me explain how we achieve this. Traditionally, contractors have to cover in their day rate the cost to run their personal service company, including insurance, accountancy fees, as well as building in cover and any loss of earnings that it may take if they have an absence or they take a break in between their contracts. By contrast, we can secure workforce consultants with a competitive base salary, which, when rolled up into a daily charge, is more cost-effective for the client. In addition, the scale of our operations enables us to leverage a cheaper cost to source, screen, and manage the consultants, again, which we pass on to our clients.
The second key benefit we offer our clients is relieving them of all the regulatory burden and potential employment risk of hiring non-permanent workers. Most notably here are the revised off-payroll worker regulations, known as IR35. This regulatory change pushed all the liability to the end client for any back taxes which may arise through contractors retrospectively being reclassified as inside IR35. Because all our workforce consultants are permanently employed by Robert Walters and are on our payroll, we remove the need to assess the worker status and eliminate any risk of any back taxes. Furthermore, with employment rights increasing after two years, long-tenure contractors can re-represent an increased risk of liability to clients, for example, unfair dismissal claims, should they wish to terminate.
Workforce Consultancy takes on all the employment responsibility, irrespective of the duration of the assignment, and allows clients to return them to our bench with ease for us then to redeploy to a new client, and for candidates, the benefits of being employed by Robert Walters as a workforce consultant are also very significant in comparison to contracting. Firstly, they have no loss of earnings between assignments or if they want sick, holiday, or otherwise on leave, and also, they have access to fully funded benefits such as healthcare and investment into their learning and development through accredited courses, all of which can cost a contractor thousands of pounds, and through our huge volume of roles received globally within the group, we can also deploy our consultants across a broad range of clients, industries, and locations, all through one employer....
Hopefully you can see why Workforce Consultancy appeals to clients and candidates. Why to us? Firstly, it's driving attractive margins for us. Compared to traditional managed service provider margins, typically in the single mid-digit number, we're delivering a product conversion ratio of over 30%, and this reflects our current operating model, where we're able to leverage the group infrastructure of the recruitment outsourcing business. We seek to protect our margins by carefully managing the risks associated with bench time, which is the period when a consultant is in between assignments, and we build an allowance into our charge rate to the client. As well as this, the skills our consultants have, some of which I mentioned earlier, are in high demand across a wide portfolio of our clients, and this enables us to redeploy quickly.
Typically, just 1% of our consultants are on the bench at any given time. Secondly, through partnering with our clients to understand their workforce demands, we get greater forward visibility, and with our average consultant deployment tracking at 18 months. And thirdly, we like Workforce Consultancy because of the attractive markets to which it gives us exposure. We can deliver our consultants into technology contractor roles, of which are estimated to be around 150,000 in the U.K. We can deliver our early in career consultants into Recruit, Train, Deploy programs, of which the U.K. market is estimated at GBP 300 million. And we also deliver our consultants into statement of work programs, and the value of spend here is estimated at GBP 10 billion in the U.K. There is plenty to pursue.
In terms of the financials, reflecting the fact that we launched Workforce Consultancy just in 2022, from a standing start, we've delivered around GBP 4 million of Net Fee Income in 2023. As we flagged in the half year results, we grew fee income by 40% in the first half of 2024. This has predominantly been delivered through our existing outsource clients and just in the UK. With the significant investment we've had in our Recruit, Train, Deploy Academy and the Statement of Work programs this year, plus the drive from our UK clients for us to deliver into new regions for them, such as North America and Ireland, we're really excited about the huge opportunity we have in front of us. I'll now hand over to Sinead. Thank you for listening.
Thanks, Jess, and good afternoon, everyone. I'm Sinead Hourigan, and I'm the Global Head of our Talent Advisory service line. I'm based in Brisbane and have recently celebrated my twenty-first year with the business. Prior to being asked to lead the advisory offering, I gained many years of experience in our specialist recruitment business in the Australian market. Before entering the recruitment sector, I worked in professional services. This shift across to Talent Advisory is like a full circle moment in my career. As Toby mentioned, the Talent Advisory service line is the most recent addition to our lineup, and over the next few moments, I'm gonna be taking some time to bring you up to speed on what that Talent Advisory service offering is and our immediate ambitions for this exciting area.
Our talent advisory function is, we believe, serving a clear demand in hiring markets today. We have listed on the slide some of the key drivers we see as reshaping hiring markets in the market, such as acute skills shortages, rapid technological changes, and changing work practices. The pace of change means securing and retaining the best talent continues to grow in complexity. Our clients are asking questions like: What composition of skills do we need three to five years out from now? How do we build that into our existing workforce? Where should we augment that workforce by bringing talent into the organization? How do we do that in the most cost-effective way? And how does our approach to people leadership need to change in light of more geographically distributed teams across multiple time zones? In short, there is more to consider for hiring organizations than ever before.
That is where Talent Advisory steps in. We partner with organizations to help them solve their strategic talent challenges. What solutions have we got to help our clients with these talent challenges that they face? As you can see on the slide here, we have three key services: market intelligence, future of work advisory, and talent development. Now let's take a moment to run you through those in a little bit more detail. In market intelligence, we use the data we have built up in our business over years, enriched with some third-party data, to help our clients make insight-led, effective decisions on how to attract top talent in the most cost-effective way. As an example, we recently assisted a client that had created 15 new roles in their technology division.
The client needed insights into appropriate remuneration benchmarks for these roles, taking into account some local market rates, as well as competitor insights to ensure an effective talent attraction strategy. As an advisory function, we conducted a salary benchmarking and competitor insights analysis for the client and this cohort of 15 roles, with the opportunity then on-referred to our specialist recruitment service line, as it became clear the client also needed assistance in resourcing for those roles. In Future of Work Advisory, we help clients assess their performance in critical areas which are increasingly driving talent attraction and retention, and then we advise them on how to align with global and industry best practice. We do this using robust evidence-based diagnostics, offering recommendations for any changes they should consider, and then assisting them with any training and support that they may need.
For example, we recently engaged to complete both a diverse hiring and a candidate experience diagnostic on behalf of an NHS trust. This resulted in the re-engineering of their entire recruitment approach to minimize bias and to future-proof their recruitment strategies. An extremely positive endorsement from the client has now positioned us to be able to do a similar service for a number of other NHS trusts. In talent development, we partner with clients to ensure they attract, retrain, and develop the leaders of the future. We can support clients with the assessment of talent in advance of selection, and with our transition coaching, we assist in onboarding the selected candidate and setting them up for success. We recently undertook a transition coaching assignment with a CFO who we placed in a major banking institution in Asia.
The CEO wanted to ensure that the newly appointed candidate felt supported throughout the entire engagement, and the feedback from both the placed candidate and the CEO was exceptional. We can then continue that relationship through our leadership development offering. This could be developing strategies to effectively manage hybrid working practices or supporting an organization in managing their talent through mergers and acquisitions. So that gives you a flavor of what our Talent Advisory service line is. Now, let's take a look at the wider market and how Robert Walters is well-placed to go after that market. We launched Talent Advisory in 2023 and generated around GBP 1 million of fee income last year from that standing start, with growth tracking very strongly this year.
Our Talent Advisory service line plays within the wider HR advisory market, which, as you can see from the slide, is vast and is forecast to grow broadly in line with projected global GDP out of the latter part of this decade. In terms of our go-to-market strategy, our distribution model is twofold. Firstly, since launch, we've been focusing on building client awareness and reach. To do this, we are leveraging our two more established service lines. Our colleagues in specialist recruitment and outsourcing have been educated regarding our capabilities. This enables them to spot the buying signals from their clients, usually when they raise some of the questions I listed earlier, enabling them to make their clients aware of the relevant services we offer within Talent Advisory and then make an introduction.
Importantly, our colleagues in specialist recruitment and outsourcing are incentivized through a fee-sharing arrangement to refer opportunities, which we believe will set us up for success. It is also important to state that this is actually happening in our business right now. A great example of this is within our Irish business, where referrals from the recruitment business have resulted in three deals being closed for Talent Advisory since July. And secondly, having further built out the function over the near term, we will go direct to market with our own advisory engagement leads in every region, who will be responsible for generating direct fee income. With this dual go-to-market model, we're building on strong foundations, which we believe will give us a clear right to win in the market, and there are also some other powerful enablers which will help us drive the business.
Zenith, which Toby referred to earlier, our bespoke CRM, will be a key enabler for us, giving visibility of and access to a pool of prospect clients with whom we already have an existing relationship. In addition, our near forty-year legacy in the talent market and the brand position and entrenched client relationships that has provided us will continue to open doors. And finally, we have a differentiated position as a thought leader and fast mover in Talent Advisory. A great example of this is our status as the first talent solutions business to build an ESG for HR practice, and some of our other more recent credentials are highlighted on the slide. So putting it all together, we believe that the Talent Advisory service line is really well-positioned to address a clear client need, particularly in the ever more complex world of talent attraction and retention.
We have existing relationships to leverage from across both the recruitment and outsourcing service lines and a product offering that speaks to the challenges that our clients are facing, and more importantly, our clients are telling us that this is what they want. They want the data we can offer, the insights we can provide, and the expertise that we can bring, so thank you very much for listening, and with that said, I'll hand you over to Andrew.
Well, thank you, Sinead. Good afternoon, everyone. So by way of quick introduction, my name is Andrew Powell, and I'm fortunate enough to be the Chief Executive Officer of our Outsourcing service line, which, as Toby shared earlier, you might have previously known as Resource Solutions. So I've been leading Robert Walters Outsourcing now for about 10 months. However, I have actually been a customer of the business prior to this in my capacity as Global Chief Operating Officer of City of London Telecom, or Colt Technology Services, when it was a FTSE 250 business. So what are we gonna cover today? So my intent today is to ensure that you leave with a clear understanding of the following. Firstly, our business and the market across which it operates, particularly with regard to the competitive landscape, our customers, and the typical deal life cycle.
Secondly, the reasons for the challenge in trading the business has seen over the last few years, and then lastly, I will walk you through what we've already done to address that and further, what we still have ahead of us. With that said, let's get into it. Let's go back to first principles. Recruitment outsourcing serves the needs of businesses, often very large, multinational enterprises, who, year in, year out, hire large volumes of people, perhaps in the sum of hundreds or even thousands. Agency recruitment, such that of our specialist recruitment offering, which Gerrit leads, is not set up or resourced to hire in the large volumes required here. So the two service lines are very different, driven by distinct customer requirements.
This distinction is perhaps best brought out when you consider that the recruitment outsourcing partner, in many ways, needs to function absolutely seamlessly, like an extension of the client's organization, and in most instances, the outsourcing teams are co-located on the client sites. Thinking about our Robert Walters outsourcing business then, and in a bid to demystify it a bit, we really do two things. Firstly, we do volume-based global permanent resourcing, and secondly, we do volume-based global non-permanent or contingent resourcing. Now, I simplify our business to make a key point. There are, of course, different types of customer-centric propositions that we provide under each of the above-noted solutions. Sometimes our industry tends to overcomplicate things a little for our customers.
The complexity of propositions that sit under these two key banners, and you've already heard a little bit of detail about them from Jess, that's our job to manage, and we need to ensure that we design the right solution to meet our customer need. So it's really important when we're engaging our customers, that we support and advise them to see the beauty in the simplicity of what we can do with them and for them. So let's now look a bit at the market in which our business operates. So from a competitive point of view, perhaps one of the key dynamics to understand here is regarding geographic reach.
Some players are able, either directly themselves or more likely using network partners, to service volume hiring in markets around the globe, while other smaller players are focused on certain geographies and wouldn't really be able to service hiring outside of that specific geography. We see this as a significant comparative strength for us, as we truly do have a global platform, and so, for instance, in 2024, we've conducted hires thus far for our clients across 27 different countries globally. In terms of the number of participants and the competitive landscape, it's been broadly stable across the last several years. The importance of reputation, the levels of regulation, for example, in areas such as data handling and protection, as well as licensing required to be able to deliver this service, in particular jurisdictions, all do act as barriers to entry.
So therefore, new entrants have been largely limited to agency recruitment firms seeking to launch outsourcing offerings, usually at the smaller end of the market, with volume hiring requirements, say, below 100 hires per year. So customers, they're quite a passion of mine, and if anybody wants to explore that further outside, please come and talk to me. I actually love our customers, and I've had over 100 customer meetings across four different continents in my short 10 months here already. As I've said, customers can be very large multinational businesses needing to make thousands of hires a year, and so client purchasing power can be quite material, and the biggest deal sizes would deliver a significant NFI contribution for pretty much any of the players whose logo you see on the slide, which are also those we typically come up against in bids, by the way.
So clients are aware of this materiality, and so as you can expect, that has a very disciplining effect when it comes to pricing models and bidding for deals. This is balanced, though, by the fact that deals are typically multi-year, with average initial contract engagements ranging from a base of three years and more. But this provides a really good level of visibility on repeat income in times when end hiring markets are stable and are growing. So I just want to pause for a second on that deal life cycle and tenure. So in effect, what is the industry standard business model? It is worth being aware of the shape of the commercials on an outsourcing deal. In its simplest form, and we like simplicity, there are three phases.
Firstly, we have to win the deal, then we invest in the deal, and then we build the capability to execute on the deal. Secondly, we go into a manage and operate phase, and then thirdly, we go into a renewal phase or we exit, so why do I share this with you? I think it's really key that you appreciate that when we win a deal, which is good news, by the way, but it usually does demand investment from our PNL in the first year. Year one is all about investment in people, infrastructure, systems, and tools, which all, of course, have a cost, but after that, and as we deliver on the contracted hiring volumes, we see the returns as we get into the second and third stages of the deal life cycle.
Now, due to the global nature of our client base, there is also real opportunity during the deal life cycle to organically grow and scale. This can be either through geographic expansion or through the cross-selling of other services, such as workforce consultancy, statement of works, or advisory. So I'll draw all that together for you then. Outsourcing market players seek to differentiate, among other things, by the level of geographic coverage they can offer our customers. High barriers to entry have meant a reasonably stable landscape, with the highest competitive pressure exerted by customers. The increasing complexity of the world of work makes it a much tougher task for a potential customer to replicate an outsourcing solution by taking that service in-house. In short, the market characteristics for us are very, very favorable.
Now, that is evidenced by the recent market growth, which you can see on the slide. In terms of Robert Walters Outsourcing, our customer centricity, our scale, our agility, and our geographic coverage means that we have a great foundation to compete really well in this market. Now, having shared all of the above, you are probably aware that our business has seen challenging trading over the last few years. So now I want to turn to that in more detail so you understand the drivers. As you can see from the chart, you are probably aware that our business has seen challenging trading over the last few years. In 2018, we delivered GBP 110 million in net fee income. That accounted for 28% of group fee income at that time and came following a very strong growth in the preceding years.
However, our fee income was highly concentrated, with our top three customers accounting for three-fifths of that 2018 figure. We subsequently lost two of those key customers during the decline, driving the decline in fee income to GBP 67 million in 2023, which is around a sixth of group fee income last year. So that concentration was in the context of a business that had a very banking, financial services, and insurance-centric client base. The fundamental reason for the two large client losses was when that they come up for renewal, our operating model hadn't kept pace with the sectoral changes being exerted on the industry from a cost to serve perspective, which meant our bidding price was too high and as a result of our cost base being far too heavy.
And so for me, the key near-term focus since I've joined has been ensuring that we rightsize our business and optimize our end-to-end operations, such that we have a platform that enables us to drive sustainable and profitable growth. So now let's have a look at what we've been up to. So since arriving, my team and I have been working really hard to ensure that we take the business back to being a customer-centric, operationally excellent, and agile service provider. So you've been here ten months, Andrew, what you've actually done? So in terms of what we've delivered already, we have reshaped our global leadership team significantly, including the recent appointment of a new Chief Operating Officer, David Barr, who has huge and deep experience in the recruitment outsourcing sector. Dave is here today, so do take an opportunity later to chat with him over drinks.
Dave, if you could just stick your hand up. There's Dave. We've also taken really smart, non-customer impacting, but absolutely necessary measures to remove cost out of our global operating model. But also in parallel, we have reinvested wisely into continuing to build our market-leading technology solutions, dynamic reporting suites, and strategic partnerships, as we need to ensure that we continue to be viewed as, and are trusted to be, a best-in-class service provider. So looking ahead, we have a real clear plan in place, which we are executing against, to further optimize all facets of our business and in service of our customers. So I'll now share just four key things that we are tackling. Sourcing. So sourcing is all about how we attract talent for our customers.
Here, we are targeting placing more of the roles that we are contracted to fill directly and minimize the number of roles going to external agencies, which of course would dilute our fee income. We are focused on using technology, automation, and AI to enhance the quality of hires and improve our speed to market to attract the best talent. Continuing to build on our global consistent sourcing strategy, with a high percentage of direct hire fill rates, underpinned by multiple and diverse routes to market, will make a huge difference for our customers. Supply chain. So this is all about maximizing our fee income by more robustly managing a balanced recruitment agency supply chain.
This, of course, includes having our own specialist recruitment offering from Robert Walters Recruitment as a key partner in our talent supply chain, as well as improving visibility of supplier performance to increase operating efficiency and to reduce risk. Just as an example, our new operating model does lend itself to working far more closely with our Robert Walters Recruitment colleagues. So if ever roles do need to go to agency, we have a key partner to pull upon. Data. So in terms of data, we have built and we continue to develop a secure, globalized technology platform to run our operations across all of our client accounts, improving our customer experience, again, driving operating efficiencies and providing us added insights into potential and further cost-saving opportunities. Data in our industry is the new gold.
Enabling our customers to see through a windshield on predictive hiring trends, skills needed, and volumes required will actually be a game changer for our industry and a USP for us as a business. And then systems. So we have built a market-leading customer and candidate automated talent acquisition and onboarding platform. This is significantly enhancing our already competitive MSP offering. This new platform, coupled with our reduced cost to serve and optimized operating model, will enable us to be even more competitive and compelling in the MSP tender process and provide a user, both customer and candidate, experience that is as yet not seen in our segment of the market.
So while these four things are not exhaustive, and these are the areas we've addressed and what we are changing to ensure that we put the customer back at the heart of everything that we do and to accelerate our business back to a sustained growth trajectory. Now, it's been ten months. This is not an overnight job, but be assured, my team and I have a very clear plan, and we have great people right the way through our business who are determined to deliver on it. We are really very well-placed with our geographic footprint, serving more than fifty existing enterprise clients that are all scalable, with significant white space to sell into. We are renewing existing customer contracts across our whole footprint, and we are actually winning new logos.
Now, when you couple this with the changes that we have made and are continuing to make to our outsourcing business, to expand into what remains a global market opportunity, this business has a very, very bright future. So I just wanted to thank you for your time today. I do hope that whilst historically you may have felt a little uninformed about our outsourcing business and its potential, I do hope that you leave today knowing that this is a real opportunity for us. I'll now hand back to Toby. Thank you very much for your time.
Thanks, Andrew. So we're just gonna take a quick comfort break. Drinks are out there, probably ten or so minutes, and then we'll all reconvene, and then Kevin's gonna get stuck into technology. So about ten or fifteen minutes. Thank you.
... Right, I think we're good. Hi, everyone, and welcome back. Hope you're all duly refreshed after that break. I'm Kev Bulmer, and I'm the Chief Technology and Transformation Officer here at Robert Walters. As Toby said earlier on, our technology transformation commenced in twenty nineteen, and I joined the business slightly before that to lead this really exciting program. My background before Robert Walters was predominantly in technology consulting. I spent a large part of my career at companies such as Accenture and Infosys, where I led the digital transformation practice. So today I wanted to spend the time I have giving you a primer on Zenith, our custom-built CRM. If you joined the last capital markets event back in twenty twenty-one, you might recall we'd just gone live with our first Zenith deployment into the UAE.
Shown on the slide is a timeline of the other geographies we've gone since, too, and as of today, Zenith is being used by our consultants in twenty of the thirty-one countries where we have a presence. Our development of Zenith has used an agile methodology, by which I mean that in contrast to doing something big bang and turning all the functionality on at once, we started with simpler functionality and have developed that over time and released new features gradually. This approach has been core to building the consultants' competence on and confidence in Zenith. On the slide, we've also set out some of the functionality we've rolled out in each subsequent deployment. But let me address a fairly obvious question that you might have in mind up front.
Why would a talent solutions business, which says it thrives on relationships to drive its business model, choose to develop its own CRM? Well, for me, there are both philosophical but also more practical reasons to that. In terms of philosophy, investing resource and time in developing a CRM is not as counterintuitive a move for a talent solutions business as it might first seem. As you've already heard today, we thrive on our people providing fantastic service and being great partners for their clients and candidates. Our ability to truly understand clients and candidates and create and share their compelling stories is, we believe, what sets us apart. So a CRM system is the very lifeblood of how we formally capture and internally share those stories. So a system that enables us to differentiate from our peers is, we think, really, really important.
So we have our philosophy, which is that a CRM is a core competitive differentiator for a business like ours, but we also had clear practical reasons to build our own, and these are set out on the right-hand side of the slide. Firstly, building a CRM ourselves has meant Zenith is customized to align to our unique business processes. A great example of this is our candidate review process. Our most successful markets have regular team meetings, and they talk through the candidates we've met, just to ensure that we're looking as widely as possible to find the right roles for the right candidates. We've, in Zenith, created the prompts and process to ensure that this key activity is happening globally to drive best practice across the global business. Secondly, building ourselves has meant we haven't been reliant on a vendor for updates or changes.
have full control over the system's features and are able to iterate those to suit the needs of our business without having to compromise to suit the preferences of a software provider, and thirdly, building Zenith ourselves has given us more flexibility for the future to adapt it as demanded by the business need, and on the slide, you can get a great sense of where we've set out some of the other third-party apps and functionality that are now fully integrated into Zenith. In this sense, we don't look at Zenith as just a CRM. We look at it as being right at the core of our plans to continue digitalizing this business in a way that continues to allow us to share our clients' and candidates' unique stories better than anyone else.
So we've been operational for three years, we're deployed in 70% of our markets, and we'll be development complete in quarter four this year, and all our business will be on Zenith by the end of quarter two next year. So let me now tell you about some of the benefits we've seen to date. Relative to the legacy system which preceded it, Zenith has put our business absolutely where it should be in twenty twenty-four. In a moment, I'll pull out some of the improvements that Zenith has already delivered for our business, but we've also prepared a short video now to give you an overview.
All right. Welcome, guys. We are very excited to go live with Zenith today, not just in London, of course, also in the other offices in Ireland and in South Africa.
Based on my first impression, I think using Zenith has been pretty easy. It's very intuitive. All the interface is really easy and makes sense how you're using it. Any issue that I've had has been really quickly addressed, and they seem very responsive to improvements and feedback.
What I've been really impressed about is the ability to use this with clients on my mobile, on the go. That is a really exciting prospect, sitting down, showing them information, data, candidates, et cetera.
The first thing you'll notice about Zenith is that due to its browser-based nature, it is incredibly quick to log in and get started. You land on the Recent Candidates page, where by default you are presented with the candidates you have been in touch with for the past one week. Open a candidate record, and you can see the upcoming events and scroll down for all the recent activity associated with the record. You can scan through and check everyone you've been in touch with, including your placements and any other people you might have in your current processes. Zenith has powerful advanced search capabilities. Click the link to open your Search tab, and you'll be presented with a list of all candidates, currently unfiltered. You can use the facets on the left to narrow down your search to whatever type of candidate best suits your role.
Zenith also utilizes AI. If you have a candidate that you know is quite good for your position, you can press Similar Candidates, and Advanced Search will automatically parse and scan all of the data in the CV and on the candidate profile in Zenith to present you with a shortlist of similar candidates. Every candidate has buttons at the top of the profile to quickly launch a phone call, arrange a meeting, et cetera. If a record has an associated client contact profile, you may click through and instantly check the activity that has taken place on the client side. In this example, a BD call has yielded a new role, so we will arrange a meeting with the client. Click the button and begin to enter all of the details for the meeting.
This information will be sent to both you and the client contact and automatically synced with both of your calendars for convenience and ease of access. You may select the meeting type, set the date and time, any information that will be valuable to the recipients.
First impressions of the launch has been a really positive one. I was really impressed coming into the office today and seeing everyone just cracking on. It was almost like there hadn't been a new system put in place, which was lovely to see. Aside from the user-friendliness and the simplicity of it, I think people are really excited to use this as a bit of a fresh start, getting good quality data on the system to really drive those good behaviors from a business development point of view.
Great. Now, I said before that Zenith has put our business where it should be in twenty twenty-four, and by this I mean we have a future-proof CRM that gives the capabilities and user experience assumed by an increasingly digital native consultant population who've grown up in the smartphone era. You see this really clearly when you consider one of the improvements we've seen, which is the length of time to onboard new users into Zenith. With our legacy system, that process took two days. With Zenith, it's being done in as little as four hours. On the day actually we went live in the UK, we had a kickoff scheduled for 10:00 A.M., and we got to that kickoff, and consultants had already been booking fees in the system before we got there.
So it kind of backs up with the video that the efficiency and ability to use is there. Once up and running with Zenith, our consultants have been seeing good efficiency benefits as well. The more intuitive user interface gets our consultants to the information they need or the task they need to complete much, much faster, with clicks required down by a quarter against Profile, the legacy system. Indeed, we've itemized a list of all the core recruitment activities a consultant in our business needs to complete on a CRM, and 96% of them are quicker in Zenith. Furthermore, previously manual activities, such as keying in a candidate's details, have been eliminated by directly taking them from a CV. This is everyday marginal gain stuff, but it's more time our consultants have to invest in client and candidate relationships.
As you'll hear from David later on, it's these sort of gains that gives us the confidence on the capacity we can absorb in the business as end markets recover to drive higher productivity. So hopefully, you've got the sense that we're absolutely seeing benefits from Zenith right now, and really in terms of the greater efficiency it's delivering for our consultants. The time it frees up enables them to get on to more productive activities, and that's gonna be a great tailwind in an environment where job flow begins to pick up materially. Looking to the future, it's really clear that the added visibility Zenith is giving fee earners across our business has value as well. You heard from Sinead earlier as to the strong platform we anticipate Zenith will be, as we seek to boost client awareness of our talent advisory offering.
As you might be able to appreciate, these top-line benefits can often be difficult to attribute with surgical precision, but we feel there's a great opportunity here across our business, and we'll be sure to report back periodically as we prove that out. So thanks so much for listening, and I'm now gonna hand over to Faye.
Thanks. Thank you, Kev. Hi, everyone. Yeah, I'm Faye. I'm the Director of Innovation and AI, and I'll leave that up on the screen so you can see how well I've aged in the last eight years since I've been leading the innovation team here. I just want to tell you a little bit about the innovation team and how we work. In the team and the rest of the business, we're really focused on harnessing the latest technologies so that we can actually increase productivity in the business, free up our consultants' time, and look to speed them towards those human relationships that actually power our business forward, which really matters.
We all hear Toby talking a lot about how relationships are the currency of the future, so we're obsessed with thinking how we in the technology team, as you already heard from Kev, are actually thinking about what we can do to speed towards those key moments that matter. So what we do in the team is we actually work really closely with the business to identify the challenges and where there are time sinks for them, and we look to solve those challenges with technology, design thinking, and we spin up proof of concepts to see if we can prove whether they work or not. When we prove they work, we hand them back over to our lovely tech teams, and they integrate them into the core tech stack, leaving us to move on and focus on really what's next in the future for the business.
So we have been focusing on quite a lot of automation and data projects, but in the last year, we've been lasering in on AI, and I wanted to bring you some of that for today. So since let's say July last year, we've been spinning up new environments that our people can work on that are powered by AI. So I'm really proud to say that we moved faster than quite a few of our peers in the industry, and that's given us a real competitive advantage in terms of the training time that it takes to get you ready and running in AI for our people. Firstly, these are the three new environments that we started using AI in, and you can see we started with something that we call our OpenAI playground.
That's our own private version of ChatGPT, in which we can incubate all of the new ideas and use cases that we wanna try out in our business. On top of that private technology, we've actually built our very own AI Ad Writer, which I'll tell you about in a minute. And we also use Microsoft Copilot, and we use that as our private way of interacting in natural language with the web as well. Now, all three of these provide a really cutting-edge environment for our people to work in, and actually, we've just got to finalist stage of the APSCo Innovation Awards for these as well, so it's a really exciting time for us. As you can see, the green protected icon at the top there, these are all secure environments.
They are private versions of GPT, supplied by Microsoft within our Azure enterprise-grade environment, which means we can actually play and try these new ways of working in total security that we're not sharing our data, our clients' data, our candidates' data, with any of the providers. So it gives us a really nice environment to work in. So let's dive into some of these and give you a bit of a closer look. The first I'm just gonna show here is the OpenAI playground. As I mentioned, this was the first thing we went live with all the way back in July last year. We were already upgrading it to ChatGPT Four in November. We're just about to upgrade again to Omni, and we've already got One O in trial as well.
So we're really keeping pace with the change, which is something I'm very proud to be able to say. We built communities in our social intranet, our AI trailblazers, and that's how we actually moved quickly with it. So globally, within the first couple of months of rolling out the AI playground, we already had a quarter of our people in there trying out these new business cases, and everything we're trying out in there is geared towards productivity. So we're thinking about whether we can write and target better, BD emails, all the way through to transcribing and summarizing hour-long interviews with candidates, so we can use AI to summarize them and put them in our CRM and share better data.
I wanted to actually show you what it looks like in our playground with what we do with just a simple thing, like creating a CV summary. Imagine for a moment, if you will, that you are recruiting members of your team, and you might be being forwarded five or 10 CVs for the role by your recruiter. It's actually really lovely if you can get a summary of those candidates to talk you through the kind of people that, you know, you're being offered for your role. It takes our recruiters a lot of time and effort to build those from scratch, so we can now use AI to almost give them a new blank sheet of paper by getting them 80% of the way there with AI, and then they can spend their time actually focusing on the human.
I'm gonna show you a little video of someone doing this in the playground. All you have to do is jump in, and you drop in a prompt that the innovation team has honed for them, that it tells the model what to do. Then, you choose the best model of GPT, and all you have to do here is copy and paste in a CV and press go. And you can see in real time here, because it's been instructed properly with a really detailed prompt, our AI is now summarizing the CV in real time there, and the recruiter can start to work with that. There's obviously, with AI, nothing's perfect. You have to look at how you're working with that, that data, but you can also communicate with the AI as well and say: "Can you keep going with this? Make it shorter.
Maybe anonymize it," and you can start to tailor. Then, when you're ready with the output, the recruiter can simply move over into our CRM or into their email. They can share that summary with their other recruiters and with the hiring manager as well. So it really is saving time and moving towards that sort of productivity angle. Mostly, though, it's actually allowing us to move towards those human relationships that really are powering us forward. The second area that we've built is our AI ad writer. So with our AI ad writer, we did something that is quite unique. We took the power of generative AI to write creatively, but we paired it with everything that we know as a group about how to write the best and most productive and most appealing ads and social media posts and outreach emails to our candidates.
And so we were able to also work in quite close connection with Microsoft there. So we actually were delivering this at very low cost to us in a very speedy fashion. The timescales we developed in, by November 2023, we had our first proof of concept live. In February 2024, we pushed this out to all the English-speaking areas of our business, which meant I beat LinkedIn to develop the same thing, so I was quite pleased with that. And then, by this summer, we'd also gone live in 13 different languages with AI translation, the full suite of functionality that we were aiming at. So I'm gonna give you a quick tour of that as well.... So if you see, you can dive into our AI ad writer here, and all the recruiter has to do is pop in a few details.
Normally, we anonymize the job, but if you show the client name, we get more applications, so you can tick that. Then you just copy and paste in the job spec or start it off with a few notes and click Write My Ad. And then what we've done there is built into the prompting and the coding in the background, and within an average of 46 seconds, the AI parses all the information the recruiter gives it, optimizes the language used for SEO, formats the structure into the best readability and appeal, and writes inclusively for inclusion, diversity, and appeal. And so the recruiter can actually play with that ad as well, draft it again with a different tone, and translate it into any of the languages that we use in our business.
They can either start working with that directly, or they can move on to the next tab, which is creating a social media post. It's like an ad for an ad, so we often post those on LinkedIn to draw even more people to our roles. And you can see within a few seconds, a really short, emoji-filled, punchy ad is created that our recruiters can share on LinkedIn or Instagram to encourage more people to apply. That, again, can be translated, and we then can move on to the next piece of the puzzle, which is creating outreach emails to the candidates that we already know. So we could just click here and write an email which talks about the role, but importantly, we can actually hyper-personalize these emails now by dropping in the candidate's CV.
What the AI is being programmed to do in the background is actually pull out all the key skills that the candidate has on their CV that are actually required for the job, and it writes us a lovely approach email, the kind of email that gets 40% more responses back, encouraging them to apply and reconnecting us. Again, the final piece is translation. You're just gonna see, click the button, and it translates into French in moments. So again, nothing's perfect with AI, and because we're all on this journey together in Robert Walters, we're all making sure that we look at the copy before we post it over to be used in our posting tools or in our CRM environment. That's really how we're looking at the productivity there.
If I just compare this to pre-AI, our recruiters, in time and motion studies, once they get a job live and have to do all that admin, previously, it was taking them four days, up to four days, to complete that kind of life cycle of administration to get those roles out. Now, they've got first drafts in seconds for them to work on, and they've completed all their admin in ninety minutes, which I'm particularly pleased with. But we can talk about those sort of success stories, but we're actually rigorously measuring them and counting what we're doing here as well, because the whole point is that we can do something with those saved hours and minutes, right? Just for the AI ad writer alone, we had a really clear set of objectives that we wanted to meet.
Yes, we wanted to save time, but we also wanted to increase the number of live jobs on robertwalters.com. We've got a beautiful new brand. We wanna make sure all that lovely content's up on our website, encouraging our people to communicate with us. We also really wanted to increase the quality of the job ads, 'cause the better quality of ad, the more excited you are to apply for it, and hopefully, we hoped we would increase the number of applications, and we sure did.
So in the first three months of going live, our wonderful, creative, innovative consultants were already managing to increase the number of live roles they were posting on our website by 17% in the first three months, and we've seen a very encouraging increase in registrations and placements coming from those AI-written job ads as well, which is giving us great pleasure for the future. And just to give you another idea in numbers, since we went live in February all the way to yesterday, in fact, we're coming up on 15,000 job ads that our guys have put through the tool now. By the end of the month, we will be at 15,000. But importantly, we're counting from our time and motion studies, all of the hours that we're saving. So we're not too far off 7,000 hours now.
And what the teams are doing on the ground is focusing on where those hours go, and they will be towards those human relationships, because every time we speed them towards those key moments that matter, we can be sure that they're spending more time with our clients and candidates and actually learning how to tell their story better. So with all of the tools that we've implemented so far, we've got more than 2,000 people regularly dipping into AI to speed their processes. And of that number, I was really happy to find that it's actually 70% of our recruiters that are doing that. They really want to power themselves into those human spaces, because for a recruiter, that's the really exciting part of the job.
So we're gonna continue to measure this very closely, and hopefully by the next time you come and see us, we'll have a tranche of new results to show you, because we've got a lot of programs coming up behind this one. So that's it from me for now. I'm going to hand over to our Sampson of our Japan business, who's gonna give you a lovely story from Japan.
Thanks, Faye.
Pleasure.
Hi, everyone. I'm Jeremy Sampson, and I have the privilege of leading our recruitment business in Northeast Asia and Greater China regions. As you might pick up from the accent, I'm originally from Australia. However, I've spent over nineteen years in Japan, almost all of that time with Robert Walters, based in our Tokyo office. I started my career with Robert Walters in Japan as a junior consultant, where I specialized in manufacturing recruitment, later expanding into accounting and finance and supply chain recruitment. I was appointed Managing Director for Northeast Asia in 2018, then expanded my coverage to include Greater China from April this year. Over the next few minutes, I'd like to firstly share why our Japan business continues to excite us.
Here, the banner points are really that the structural market drivers are as appealing as ever, and that Robert Walters Japan has built a market-leading position, which we intend to enhance further. I'll then briefly turn to some areas of opportunity that we're focused on unlocking. So let's begin. Why are we excited then? Firstly, the Japanese hiring market continues to be characterized by extremely favorable long-term factors, notably driven by demography. As you can see from the slide, since peaking in 2010, Japan's population is now in decline. The forecast projection on this slide is on the basis of long-run average birth rates. But even assuming a higher than long-run average birth rate, the Japanese population is forecast to be in decline through the middle of this century.
This is set to make labor shortages even more acute, with Japan facing a shortage of more than 10 million workers by 2040, in the absence of any significant corrective measures. One key indicator of the skills shortage in the market is the vacancy-to-applicant ratio. In essence, the number of active job openings for each job seeker. As you can see from the slide, this has bounced back in Japan since the pandemic, and even during the height of the pandemic, still meant there was more than one job for every job seeker. Indeed, Japan remains one of the most talent-short hiring markets globally. Importantly, this will continue to support really strong fee rates for specialist perm and temp hiring. And you're probably aware that our Japan business has the highest fees in the group.
As well as the decreasing population, Japan is also seeing a growing number of retirees relative to the working-age population, and it's already a fair way ahead of other G7 nations on this measure. That point is brought out well on this slide, which compares Japan and the U.K. across a few different demographic and hiring market indicators. You can see that as of today, retirees account for a materially larger proportion of the Japanese population than is the case in the U.K. And given the lower fertility rate in Japan, this differential is only likely to grow larger. Unaddressed, these demographic factors would constrain long-run economic growth in Japan, something well understood by policymakers. As a result, it's likely there will need to be much higher levels of immigration in Japan in future than seen historically.
Importantly, this will continue to support placement volumes, a tailwind we think we are uniquely well placed to capture, given our differentiated position and historical success in placing non-native candidates, particularly into local operations of international businesses and multinational Japanese companies. Lastly, there are clear signs that churn in the hiring market is set to increase as the job-for-life mindset begins to recede. As you can see on the bottom left of the slide, the number of professionals interested in changing jobs is at record levels, at more than ten million this year. While the proportion of younger professionals who desire that job for life with the same employer has fallen quite a bit over the last decade, from thirty-five% to twenty-one%, as shown on the bottom right. All of these demographic factors strongly underpin the long-run growth characteristics of what is the second-largest recruitment market globally.
As well as the favorable structural market drivers, the second, and perhaps even more important reason we're excited, is because we have built a differentiated and leading position. In terms of international recruitment businesses serving the Japanese market, we had first-mover advantage twenty-five years ago, and we've continued to strengthen that leadership position ever since. That's nicely illustrated when you consider our brand awareness, which we know compares very favorably to other mid-level international recruitment firms operating in Japan. And on the slide, you can also see some of our recent brand marketing in situ on the concourse of Tokyo's busiest train station. That brand awareness is well supported by our candidate database of English-speaking native Japanese professionals, which, at over three hundred thousand, is the largest there is in Japan.
As a society, Japan is increasingly being prompted to internationalize itself, and Robert Walters is well set for that. We have a nice balance in terms of our people, with a broadly fifty-fifty split between native Japanese and non-Japanese, with more than 45 nationalities represented overall, allowing us to better serve clients and attract candidates from all over the world. Furthermore, the business is really well scaled. Our 270-plus fee earne rs are grouped into over 70 teams, with deep sector and sub-sector specialism having been built over the years. It's worth pausing briefly to appreciate this in a bit more detail and show just how deep our specialization can go in our Japanese business. So looking here at one of our functional verticals, hiring for sales and marketing professionals.
We have specialist teams serving, for example, the retail sector, which is clearly distinct from the needs employers in healthcare will have of their sales and business development professionals. This depth in our offer is the source of real competitive advantage, as our fee earners enhance their in-depth knowledge of the sub-sector over broad generalists at competitors, and then develop stronger relationships with their clients and candidates as a result. It also positions us for greater scale. So then, to summarize, Japan is a large hiring market underpinned by structural drivers that will fuel long-term growth for our business, and Robert Walters has built a clearly differentiated and market-leading position. Combine the two, and you'll hopefully see the reasons why the business has such a strong track record of growth, as brought out on this slide.
The business is bigger today than it was immediately before the pandemic, and we have group leading fee rates underpinning group-leading conversion rates. As I mentioned earlier, I have over eighteen years' experience of specialist recruitment in Japan with Robert Walters. It's been fantastic to be involved in the business through such a period of development and growth. The ambition we have, though, isn't just a matter of sustaining what we have at present. We, too, embrace the Japanese concept of Kaizen. That is, the quest for continuous improvement. There is more to go for, and that's why I'm as excited now about the potential of this business as at any point over the last couple of decades. In terms of what excites me and the local leadership team, let me share just two of the things we're focused on unlocking. The first is to do with productivity.
We look at perm placements per fee earner as a proxy for our volume productivity. As you can see from the chart, the recent historical trend has been one where the Japan business has lagged the wider group. Of course, this is likely to be partly a function of that job-for-life mindset, which has been prevalent among Japanese professionals for many decades, albeit that is now changing, as we've seen. However, we believe we are well placed to narrow, if not close that gap from here. Why do we have this conviction? It's really about the strength of our platform, and it's well positioned to take advantage of the changes being seen in Japanese hiring markets. Specifically, the capacity we have today in terms of our fee owners can absorb greater placement volumes, driven by the greater level of churn as today's professionals change jobs more frequently than previous generations.
This, of course, will also be aided by the technology enhancements that are being rolled out across the wider group, with the Zenith CRM due to be deployed in Japan later this year. Given what Kev shared earlier and what we've heard from our colleagues where it's already been deployed, we can't wait until our launch day. The second reason we're convinced there is plenty more to go is that we have set ourselves up, we believe, better than our peers, to harness the shifts underway in the Japanese labor market. As well as the demographic tipping point and need for greater inward migration, if Japan is to sustain economic growth, then female talent will need to participate at much higher levels in the labor force than seen historically.
While the female labor participation rate has been closing the gap with males for some time, policymakers recognize that focus now needs to turn to boosting female participation in higher skilled and leadership roles, where the gap to males remains quite marked. How we are set up as a business makes us distinct in our ability to support the placement of female Japanese talent. Our fee earner population is very balanced in gender terms, with our... over 40% of our management pool in Japan also female. So while we continue to be well-placed to support native Japanese talent, as we've done for the last quarter of a century, we're strongly resourced and have the right competencies to help harness international and female talent, which will be a strategic imperative for the Japanese labor market more widely.
So to conclude, I hope I've given you some reason to share our excitement about the future of this business, and with that said, I'll pass back over to Gerrit.
Thanks, Jeremy. Hi, everyone. So as you have already heard from Toby, the approach to running this business over the medium term will be marked by disciplined entrepreneurialism, blending the relationship-based entrepreneur, entrepreneurialism that has driven our top-line growth historically with more operational focus and rigor to drive operational conversion rates. Toby asked me to take the principles behind disciplined entrepreneurialism and really flesh out what that means for the specialist recruitment part of our business. So what we'd like to do in this session is really two things: firstly, and more briefly, I want to lay out a few specifics on how disciplined entrepreneurialism plays out for our country leads in the specialist recruitment business.... when we are entering a market, what should they be focused on? Or if their business needs a course correction, what should they be spending their time on?
The second thing that we like to do is take a real-life case study from our business, looking at Thailand, where this playbook has seen us reach and actually exceed the 16%-19% conversion rate range we have adopted as a target. And for that, I'll be joined by Kim Lu, our CEO of our Southeast Asian business. And she and I will have a conversation about how Thailand's business has developed over time. In setting out what our playbook is for disciplined entrepreneurialism, the real exam question here is: What do we need to be doing to enable our subscale markets to replicate the path of, for instance, somewhere like Japan, what Jeremy just described? And I want to pull out three things in answer to this question.
While not necessarily sufficient by themselves, the three are, I think, absolutely necessary components to scale a specialist recruitment business, and the first thing is to touch upon strategy, which for someone like a country manager, really boils down to choosing to play where they want to win and where they can't win, and then focus on time and resources accordingly. To take an example, if you look at our business in Spain when we launched 15 years ago, the country had relatively high unemployment, and we looked at where the talent is scarce, and we found that in engineering and in tech, and we really built our strong foundations from there and then managed to grow other business verticals later. We are being, and we will continue to be, more clinical in redirecting our investment to those areas where we have a clear path to win.
Secondly, let's talk about people and culture, the heart of our business. The impact leaders can have on business results in our industry is hard to overstate. It's possible to have two countries with very similar structural drivers, but because you have great leadership in one country and not so great leadership in another, the business results are heavily impacted. Being able to consistently spot the right leaders and equipping them with the right environment to succeed is therefore a critical success factor for us, and I believe we're stronger on this point than we've ever been before. Our ACE Framework, which denotes leading with authenticity, care, and entrepreneurial mindset, has given clarity to our leaders to help them get the most from their teams and to do it the right way.
This means that a fee earner in Brussels or in Bangkok should be able to thrive in the same type of high-performance culture, something which, being candid, we couldn't always be sure of in the past. Disciplined entrepreneurialism, with a focus on people and culture, also means managing out underperformance faster. Having now set out really clearly for our people, what a great consultant looks like, we can now focus on the talent acquisition stage, for example, where skills-based hiring and testing aptitude and time to become a great consultant means we will be more successfully bringing in the right people into the organization. But then it continues through coaching and development, where people managers who are empathetic but also focused on the right key drivers are able to get members of their team who need support back on track.
Recognizing that our industry is not made for everyone. In the cases where the right outcome for an individual and us is to part ways, then we're well-placed to be sharper in making those difficult decisions, too. The third element of our playbook relates to operational excellence. There are lots of strands to this, but I want to reference productivity in particular, as David will set out, further in a short while. Our country managers are accountable for coaching their teams of directors to be focused on the right metrics that ultimately drive increased productivity, and making sure their teams understand that we are shifting from driving top-line revenue through headcount to a mindset where driving profitable growth is hardwired.
So hopefully, what I've outlined here helps to show that we have a clear sense of what is required to enable our subscale markets to get to scale, moving more of our portfolio from left-hand side to the right-hand side of our four-box model. And we thought, however, it would be nice to bring that to life, and we need to look more closely at a real-world example of this playbook in action. And so at this point, we're going to have a conversation with Kim, and we're going to look at our Thailand business. So welcome, Kim. Great to give maybe some color to your journey with the business first.
Sure. Okay. Hi, everyone. So I'm Kim Lu, and I currently lead our Southeast Asia business of six countries. I'm someone who's proudly grown with the business for the past 16 years, starting as a junior consultant in Malaysia, doing sales and marketing, and eventually had the opportunity to either set up from scratch or lead other teams that include supply chain, engineering, HR, and finance, which eventually led to the country leadership role in Malaysia in 2018, and as our Southeast Asia business grew, I eventually got the chance to lead the Philippines in 2020, where we've since grown our vertical coverage, and Thailand in early 2023, where it was a very established business from Geritt, and eventually, the Southeast Asia role in mid of last year.
Thank you, Kim. And maybe good for our audience to understand that my first role in the company in 2013 was as country head of Thailand, so we both know that market quite well.
Yeah. All right. So, Gerrit, I think we're going to spend some time just looking at Thailand. Yeah? Looking at its journey and what's brought it to the scale that it is today. Yeah. As an overall, we're gonna be looking at the period of twenty, ten-year period up to twenty twenty-three. That's shown on the left side of the screen, where we see really strong fee growth and even stronger profitability growth. Yeah. And as an overall, we're gonna be able to look at that decade through three very distinct periods. As a backdrop, we're gonna be summarizing that period through three charts, which will be seen on the screen. Yeah. So Gerrit, in the period of two thousand and thirteen to two thousand and sixteen, we see Thailand showing very strong top-line growth, and this is underpinned by growth in volumes and increasing average fees. Yeah.
This overall resulted in just growth, a lot of growth in productivity and overall profitability, and nearly six-fold, in fact. Now, we know growth like that does not happen by accident, which brings me to my question: What was happening with Thailand at the time in terms of building out the vertical depth and breadth to deliver such growth? What is the strategy, and where did you decide how to play?
Thanks, Kim. I guess when I started, my journey in Thailand, we were playing, for example, in our sales and marketing field on a, on an industry across. So going from consumer all the way to, heavy industry, and we were not winning. So we looked with the team into what are the real demographics of Thailand at that point, which was an aging population. It was underpinned as well by consumer spending going up. It had a booming tourism, and so at that point, we decided to only play in our consumer space and in the healthcare space, and by the ability to focus in that moment on these verticals, we managed to increase our credibility towards clients in terms of the knowledge we have of the market.
We were able to expand our database as well of candidates, much more focused, and as a result, we could give much more speed and quality to our clients in terms of the needs they have. And that started to go quite well at some point, and what we saw is that we really started to beat our competition in most assignments that we got. And actually, instead of going outbound to our clients and candidates, we saw that candidates and clients came to us for advice. It was a fantastic sort of appreciation for what our consultants are doing, of course.
So what we started to see is that in the market in Thailand, most companies were working as a generalist recruiter, and they started to shift to specialist recruitment as they saw, as they wanted to catch up with what we were doing.
Quite interesting to hear that our competitors were starting to emulate what we were doing, but I think one of the notable shifts during that period was headcount, which I believe in Thailand, more than doubled, and I can imagine that growth like that puts a strain on resources, so, Gerrit, maybe what can you tell us in terms of the shifts you had to make in terms of leadership structure to support that growth?
Okay, so we started off with a very basic management team, where we designed the strategy, also the type of people we would hire, the type of culture we wanted to build, and of course, the SLAs towards our clients. And as we had that focus, we really started to gain momentum, and what we saw is that there was a layer of senior consultants coming through the ranks, and we knew that we needed that level of senior consultants to go and accelerate into management careers, because otherwise we could not scale to that level of headcount that you just mentioned. So we designed a specialist project on how to develop these people into management, managerial positions, and that has really worked out well for us.
And what we saw is that the old managers had to then level up to become directors, and they had to learn how to manage through managers and really scale up their ability to bring a vision and a plan to bring their business more to the forefront, and also focus more on the bottom line. And at regular intervals, we had to look at corrections, because as an organic growth company, often what happens is that we build our businesses around the personality leading it. So every six months, we looked at what is the structure of the company, where do we want to bring it to? And from that point onwards, we saw the gaps in the development areas of our people, and it also triggered us to think about succession on a regular basis.
That succession has then brought the next level of directors up.
Okay. If I can just jump in there, since you mentioned succession, what were your thoughts at the time, Gerrit, in terms of grooming local talent and bringing that to the fore? And how is that reflected in Thailand and perhaps for the rest of Southeast Asia?
Thanks, Kim. When I started in Southeast Asia, we had one local talent, and the rest were non-native, and that was quite normal because we just recently launched a number of businesses in that region. But we had the idea of changing that for the long term and making sure that the sustainability of our business depends rather on local talent. We focused on three things. The first one was individual development plans, and we have a very strong talent development team that helped in making 360s, coaching development programs, and the follow-up on that. The second part, what was important, is to give exposure to our people to go and see how a big market works.
For example, we sent people to Japan or to Australia to see what the scalability could be and to give them an idea of visionary for the future of the business, and the last part was on the day-to-day. The line manager has to work on the leadership behaviors and correct and help people to adhere to what we believe in, in our ACE Leadership Behavior Framework. So because of that, in 2019, we were then able to appoint one of the directors to become the country head in Thailand. And later on, what we saw in Southeast Asia is that we could replicate that model elsewhere as well. So I'm proud to say that at the moment, we have five out of the six country heads are now locally grown talent.
And to build on that, Kim, we then had a period between 2016 to 2019, and there you can see that we had to go through a consolidation model, and that is underpinned by a number of reasons. The first one is that competitors start to come into Thailand more aggressively, and as a result of that, there was a pressure on our NFI. The second piece of when new competitors come into a market, they try to, of course, look at recruiters in the market, and we had a heightened level of attrition in that era.
And as I mentioned before, as we were trying to accelerate the junior level of our organization to become managers, we saw that they were focusing from their individual contribution to now trying to lead a team, and that had a drop in productivity as well. So that is that period, Kim. And then we come to the last period, two thousand and nineteen to twenty twenty-three. I'd like to ask a few questions there to you. How are you encouraging your senior leaders to think about headcount?
Sure. I think just to answer that, I believe at the start of this session, Toby and yourself, you referenced disciplined entrepreneurialism, and for me, on headcount, it's just taking that same discipline and applying that to any decision on headcount, and as a simple example, if we have a lever right now, the automatic reflex now is not to just simply hire, but instead we're objectively looking at productivity of each team, profitability, what is the job flow, and what is the market opportunity for that before making any hiring decision. It also allows us to put on a bit of our entrepreneurial hat and see if we could pivot someone who's currently operating in... You know, in a vertical that's a bit facing headwinds and maybe pivot our strong fee earners into high growth areas.
I think secondly, we really focus on maximizing our existing headcount. And you know that in a tough market, it's very easy for people to succumb to running just any job that comes their way. But with really clear discipline, we focus on what we are good at, and that is in the recruitment of mid to senior level positions. So we really train our guys to be very intentional in terms of building out the right relationships at the right levels, which allow us access to really those high growth, high value jobs which bring the highest margins.
Okay, thank you for clarifying that, Kim. And we saw at the latter half of this period that there was a consolidation from two offices to one. Can you maybe talk us through the decision-making there?
Sure. To be honest, consolidating an office was definitely not an easy decision, but we all know that whenever we are at a crossroad, you go back to the fundamentals of what makes us good and successful. And at the start, you mentioned our fundamental of people and culture, and what we found that we were operating in that market is we did struggle with leadership, that's one, but more than that, we struggled to acquire and develop the talents from that region into the levels that we expect from an RW consultant. Yeah. Also, as a small team operating remotely, they were not able to really capitalize and leverage off a very successful Bangkok office, missing out on healthy team competitions, cross-collaboration, cross-selling, all the good stuff that really helps to build a high-performing team.
So after a couple of years operating in that region, we found that we've actually already established our footprint with the clients. They knew who we were. We've got solid relationships, and with just a bit of planning and organization, we found that actually we could lower our cost base, save on time and financial costs, and really still serve our clients very well from Bangkok.
Okay. Thank you so much for joining, Kim, and I hope this real-life example gave you a bit of a flair of what it means to scale a specialist recruitment business. With that, over to you, David.
Thank you, Gerrit, and thank you, Kim. As Toby said earlier, we see a clear path to achieving a higher through-cycle conversion rate in the medium term than we've achieved in the past. We have a refreshed approach to running the business and a clear program of specific actions. So I'm going to spend the next 15 minutes or so just providing an overview of what disciplined entrepreneurialism means for our financials, and in essence, why we have the conviction that we do, that a higher margin business is in reach, and importantly, what it means for you. When I made the decision to join the business, one of the things that really stood out was the strong track record of growth.
As you can see from the two charts on the slide, there was, on average, 13% top-line growth in fees in the six years up to 2019, with 23% average annual growth in operating profit. Management focus at all levels of the business was, in very simple terms, about driving that top-line growth through the deployment of more headcount in more countries, which, when combined with the broadly supportive end markets, generated higher profits, and it worked well. However, what we didn't achieve was a sustained improvement in our conversion rate, i.e., economies of scale. The increased scale did not bring with it the quantum of operating leverage into profits that should be inherent in models like ours.
With the exception of the potentially unsustainable hiring frenzy of twenty twenty-one and into twenty twenty-two, margins peaked at around 13% in the two thousand and seventeen to two thousand and nineteen period, despite the expanding fee income. And this is brought into even starker relief when end markets are less supportive, such as those we've been trading through for much of the last two years. In short, how the business grew in the past, which was fine given those end markets, is not right for the current end markets. As Toby's already said, the spirit and magic of the business remains absolutely the same. Our business thrives on the flair our fee earners have for building long-term relationships, where they become trusted by their clients and candidates for their knowledge, quality, and professionalism.
Furthermore, it's right for our fee earners around the world to have a good degree of autonomy in how they service their clients. So how clients in the Taiwanese semiconductor industry operate is, as you'd quite expect, quite different to French technology startups, to take just one example. But that autonomy must be combined with a strict focus on a set of guiding principles that operate across our business and more rigor in how we evaluate our performance. This, for me, is what Disciplined Entrepreneurialism is all about. So from my vantage point as the CFO, there are a number of specific outcomes we are targeting which, over the medium term, have the greatest potential to move the dial to help us deliver that through-cycle higher Conversion Rate, and these are shown on the slide.
In aggregate, we believe delivering on them will see our through-cycle conversion rate go to a range of between 16% and 19% over the medium term. This is in excess, therefore, of the previous peak the business has delivered since the global financial crisis. So let's now take a bit of time to look at each of these in greater detail. As Toby has already said, our business is driven by people and our cost bases as well, and that's well brought out on the chart you can see on the left-hand side of the slide, which shows fixed staff costs representing broadly 70% of our total cost base across each of the last 10 years. And then, with the inclusion of the variable element, this then takes total staff costs to approaching 80% of the cost base.
So driving greater efficiency from our people must therefore be the starting point for the targeted benefits from disciplined entrepreneurialism. The single most material lever we have is fee earner productivity. Measured in terms of net fee income per fee earner, in nominal terms, there was a gently upwardly rising profile in productivity up until the pandemic, with the surging hiring market as economies exited COVID clearly causing a sharp uptick before a subsequent shift lower. As can be seen when we adjust for inflation, however, it is much less clear that the business was realizing greater volume-driven productivity from fee earners. Wage inflation was the big driver of the rising productivity. A conclusion you see very clearly when you take the best proxy we have for the volume productivity element, which is perm placements per perm fee earner.
On this view, in the chart on the right-hand side, you can see essentially that volume productivity is flat through to 2019. As a reminder of the sensitivity of our model to shifts in fee earner productivity, we've highlighted on this slide that for the 12 months ending June 2024, just a 10% uplift in fee earner productivity would deliver an additional fee income of around GBP 26 million, with GBP 18 million of that coming from permanent fee earners and GBP 8 million coming from temp fee earners. It's clear, therefore, why we are focusing hard on making sure we maximize this opportunity when end markets recover. So let me touch on what we're already doing, and we'll continue to embed to drive higher fee earner productivity.
Our key focus here is increasing visibility on productivity at a more granular level through the business and driving better conversations and therefore better decisions. At our half year results in August, we spoke about the capacity we have in the business to absorb greater placement volumes. We shared the chart in the middle of this slide, which shows perm volume productivity across our global regions as at June of this year, as a proportion of where they were running at June 2022, when hiring markets were probably at their peak. Even adjusting for the fact that the business was potentially running too fast in 2022, the key takeaway is that we still have, on average, somewhere between 15% and 20% of productive capacity to absorb greater volumes before we do anything new to sustainably improve our productive capacity.
However, you can also see that there is some variation across our regions. So in a way that the business hasn't really done previously, we're using this information to drive better decisions. So what do I mean by this? Well, to take an example, given the disparity in capacity levels you can see on the slide, making the business case to hire an additional fee earner or even just replace the natural attrition we have seen in the ANZ region, will naturally have a higher bar than an additional hire into, for example, Southeast Asia. With the simple reason being that the disparity in capacity means we currently would have greater confidence that all else being equal, the marginal hire in Southeast Asia would be more likely, given the market conditions today, to drive better returns.
This decision process is then also applied locally as we measure and track the productivity at the local team level. So we're also developing and deploying the modern technology tools to support the business and improve productivity of our fee earners, as you've already heard from Kev and Faye regarding Zenith and the way we're embracing AI tools respectively. This data-driven approach to headcount management, supported by the leading-edge applications, is already starting to show some early positive impact. As reported at the half year, our tenure of fee earners has significantly improved, and this, in part, is helping drive volume productivity back up above 0.9 during the second quarter, as you can see from the chart.
Now, this uptick is currently in large part driven by the tenure mix of the now reduced fee earner population, but it does demonstrate the results that can be achieved through the greater focus and hence why we believe materially higher productivity will come as we see improvements in the end markets, so continue to think about our front office model. We have also been making changes in how we structure ourselves to drive financial benefits, and to better understand this, it's worth considering how the front office typically runs. Alongside our fee earners, the consultants, the team managers, and the directors, we also have fee earner support staff who undertake a number of tasks such as research into likely candidate pools and setting up interviews and meetings. The fee earner support staff do play a really important role in our business.
However, through the surge in hiring markets following the pandemic, we expanded this group quite materially, as shown by this chart. With the fee earner support staff to fee earner ratio peaking in the first quarter of 2023, when our total group headcount also peaked. Also, the way in which we have used these support staff has varied significantly across our markets, with some markets having north of one support staff for every two fee earners, while others operated on a nearer one for 10 ratio. So through analyzing the nature of the work that they do and being more disciplined in how many we need, we've started to bring down our headcount levels there more into line with the current state of end markets, as you can see from the chart, and we're also ensuring greater consistency across the markets.
So consequently, the fee earner support numbers have fallen faster than fee earners since the first quarter of 2023, and we continue to optimize this, taking the data-driven approach across our markets. So as well as operating our front office more efficiently, we've also been taking meaningful actions to do the same in our back office or business partner functions, and this is the third element of the program we are pursuing to drive a higher through-cycle conversion rate. So as a reminder, our business partner functions are namely marketing, HR, technology, legal, and finance, and they're the enablers for our client and candidate-facing colleagues to deliver that fantastic talent solution that we offer.
Earlier, I talked about the necessity of autonomy in our model, so that our fee earners can take an appropriately tailored approach to supporting the clients and candidates in their local markets and the particular verticals. Sometimes, though, this autonomy had spilled over into the structuring of our back office, where in large part it wasn't really necessary. Certain activities across our support and business partners, partner functions are consistent the world over, such as candidate sourcing, CV formatting, accounts payable, expenses management, just to name a few. In cases such as these, the right operating model is to optimize the process and then standardize it globally. Furthermore, there's then also scope to consolidate the delivery of these processes, such that the activities can then be shared across a number of markets, be that regionally or globally, using a global business services model.
We made a start on this strategy before the pandemic and now have increasing numbers of services and transactions operated in, for example, Hyderabad, Manila, and Johannesburg on behalf of a number of markets, and our commitment to the disciplined entrepreneurialism will see this extended. Global business services will mean less duplication, and as a result, we would anticipate a falling ratio in the cost of support and business partner heads to fee earners over time. This does remain work in progress. We do, however, have conviction on the benefits of operating our support and business partner functions globally from some early proof points. One function that has recently undergone this shift in determining the right target operating model, including the right location for the delivery of certain global business services, is HR.
As a result of this project, that function is on track to hit targeted savings of over GBP 1 million next year, while offering a more consistent and a higher standard of service to the business, and this followed a similar move in technology in recent years. It's really important to say, however, this is not just a case of blunt headcount reduction. Rather, these moves are driven by a thorough assessment of our existing operations, a comparison to industry best practice, and then a decision regarding what needs to change to deliver that operational excellence and improve the support given to the business. So we'll continue to grasp the opportunities this way of working offers across all of our business partner functions.
So driving fee earner productivity and optimizing our front office and back-office operating models are our key people-focused action areas in our pursuit of disciplined entrepreneurialism. What about non-people spend, though? Well, as we saw earlier, our non-people spend accounts for only around 20% of our cost base, but we still see opportunities here. There are two that we're particularly focused on: the office footprint and procurement. One of the questions that's probably been raised most frequently as we've interacted with investors over my first year in the business is our commitment to our existing office footprint. The question that has been raised as to whether a business of our size, measured by fee income, really needs a network of offices of over 60....
Part of the thinking in setting out the four-box model that Toby shared earlier is to be transparent with the framework that we're using to appraise our office network going forward. As Toby set out, we see around 20% of our portfolio by fee income in that bottom left quadrant, where we're asking ourselves the toughest questions. By way of example, in terms of operating profit, pre-pandemic, we had loss-making offices, which represented a drag of around half a percentage point in our margin. Some of this was due to new offices that were yet to mature, and we would expect their performance to improve as they establish themselves in those new markets, particularly given the productivity benefits I've already talked about.
However, if we continue to see loss-making offices once end markets recover and productivity improvements have been embedded, and if there's no broader group benefit for maintaining that presence, then through the lens of Disciplined Entrepreneurialism, we'll make sure that drag on the group's profits is removed. Secondly, in terms of non-people spend, we have our procurement, where, with a greater focus brought by new resource, we're already seeing benefits. The chart on the slide demonstrates the current challenge. Looking at the cumulative non-people expenditure by supplier, the takeaway is that the business has an incredibly long tail of suppliers, some of whom we may be only transacting with a handful of times in a year, and in many cases, our operational cost of transacting with that supplier are likely higher than the value of goods we actually bought from them.
So we're now much more thoughtful about how we deal with our supplier base, depending upon where they are on that curve. The way in which we will deal with our strategic suppliers, where we need to be engaging frequently and investing time and resource in contract negotiations, will look different from how we engage with our more transactional suppliers, where the availability of substitutes is high. And with those more transactional suppliers, we will also drive for consolidation and more efficient processes. But across the curve, we see opportunities to realize savings from a coordinated approach to procurement. So bringing this all together then, our drive for disciplined entrepreneurialism entails a specific program of actions, and successfully executing against these gives us conviction that we can achieve a higher conversion rate through the cycle over the medium term.
On the slide, we have described the improvements we believe can be realized from each of the five building blocks, so going from left to right, as I said earlier, by far, the most important is fee earner productivity, where we highlight the impact on fee income of a 10% uplift in volume productivity, and given the productive capacity we have in the business, an uptick in market conditions that drives additional volumes can be absorbed, requiring no additional headcount. Furthermore, the benefits we are focused on driving from Zenith and the time savings already being seen from our targeted deployment of AI gives our fee earners additional means to absorb higher lead flow, which weren't fully available to them even as recently as the post-pandemic peak.
As such, we're focused on driving drop-through of the incremental fee income of around 80% from the fee income to operating profit. Business partner support and front office support are driven by our more efficient model, leading us to realizing headcount cost savings, whilst the office optimization benefit will be realized as a result of every office we have contributing to the growth and profitability of the group. Finally, procurement benefits are realized by driving a reduction in the portion of our total non-people spend, which we see as currently addressable. So the output of this is a through-the-cycle, medium-term conversion rate target of between 16% and 19%.
So alongside our commitment to maintaining a net cash position of around GBP 50 million, we're also focused on reducing the net interest cost, which has historically been driven by carrying debt in the U.K., through the more efficient management of cash balances in our overseas jurisdictions. Our medium-term outlook is for our underlying working capital profile, driven by consistently strong management of receivables, to remain broadly unchanged, and so accordingly, with our major capital expenditure programs largely behind us and our principal organic investment opportunities being the high growth above group average margin, service line diversification opportunities that Gerrit, Jess, and Sinead outlined earlier, and then we've also got the further opportunities in our specialist recruitment and outsourcing offering across our markets, so as a result, the higher conversion rate we anticipate gives the foundation for us to target a higher residual cash flow per share.
By this, I mean the cash flow available for distribution to shareholders after all required expenditure and investment by the business has been conducted. This measure, residual cash flow per share, is preferred as it focuses the business on optimizing the cash consequences of everything we do. It's consistently measurable from period to period, and ultimately, it clearly aligns with our capital allocation policy, and as you can see from the chart, our strong cash generation, with average cash flow per share of GBP 41 in the 2017-2019 period, enabled the business to improve its cash balance and deliver shareholder distributions encompassing both ordinary dividend and share buybacks.
With margins expected to be three to six percentage points higher than in the past, this would translate to an increase of more than 30% in cash flow per share, which, given our capital allocation priorities noted a moment ago, would support the opportunity for increased capital returns to shareholders. Finally, I just want to touch very briefly on disclosure ... the greater discipline we are seeking to drive means we are holding ourselves to account against a basket of metrics to track our progress, many of which we have not talked publicly about in the past. We have also reviewed our external disclosures, taking on board feedback about the gaps to our peers, as well as just asking ourselves whether there is more we should do to enable the investment community to better track our progress.
We've summarized the output of this review on the slide, which I'll leave with you to digest at your leisure. With that all said, that concludes my prepared remarks, and I'll hand you back over to Toby. Thank you.
Thanks, David. Excuse me, sorry. We hope what you've heard today has helped demonstrate why we have confidence that Robert Walters can operate with greater efficiency and obviously at higher levels of profitability. With our refreshed organic growth strategy, we will manage our portfolio in a more structured way that will drive better decision-making, and we've identified the areas of the business with greatest potential to drive the very best returns. Disciplined entrepreneurialism entails a program of very specific events which we are implementing across the business, giving confidence on a higher through-cycle conversion rate and stronger cash flow per share. Thank you all for listening. David's gonna come and join me now, and then we're gonna do some Q&A. I think we've got some hopefully some mics floating around as well.
And then what I'll do is David and I will aim to answer the questions. I might draw in certain members of the team as well, depending on the questions.
Yeah, okay. Yeah.
Do you wanna... Tom, do you wanna kick us off?
Yeah, sure. Yes, I've got three, but I'll go one at a time if I can.
Yeah, that's fine.
Yeah, yeah, fine. So firstly, just on slide 15, on that sort of quadrant that you put up, I think it was encouraging that, you know, 70% of your sort of specialist recruitment and BFSI mix is underpinned by sort of favorable structural drivers. We got the spotlight on Japan, you know, obviously accretive to the group margin, in excess of the medium-term target as well. But in that vein, please, could you expand on the margin profiles that you're currently seeing in the Netherlands and Belgium, given they were the other ones that you sort of called out, in addition to where you think you could take those margin profiles long term, sort of on the back of improved productivity?
Yeah. So I can answer that. So we're talking top right here, favorable market, good controllables. We touched on Japan, Netherlands, Belgium I mentioned as well. All well in line with that 16%-19%, and in some cases, Japan's a good example, well over that, actually. So obviously, you know, we're looking to try and move that top left segment. I think probably an example of a market that fits nicely in that top left segment, which is favorable market conditions, perhaps more work on the controllables is the US, obviously USA. No reason why we shouldn't be looking to get through to that conversion number that we've talked about.
Okay, thanks. And then just secondly, on sort of the outsourcing piece, I think slide 33, it sort of flagged, I think 60% of 2018 NFI was generated from three BFSI clients. I just wondered if you could sort of quantify the skew to BFSI as things currently stand and how you see that sort of fee mix evolving over time as end markets recover.
Sure. Why don't I... Where's Andrew? Well, I know Andrew and I talk a lot about this, but Andrew.
Thanks for the question, by the way. Sorry, don't have my back to you. So good question. BFSI is still a strong, a very strong segment for us, and we intend to continue to play there 'cause we are a market leader there. However, as you will have seen from the customer slide, we are diversifying now into new segments such as pharma. So we still intend to maximize our opportunity in BFSI, but we also have a strategy now to actually diversify into other segments because our operating model and our commercial model and our technology, et cetera, are all liftable and transferable.
Okay, thanks. And then just as a follow-up, actually, to that question, could you maybe as well give us a flavor as to the relationship between outsourcing and sort of the specialist recruitment side of the business, i.e., have there been any instances recently whereby you've won outsourcing mandates and then were able to leverage that relationship to generate work on the recruitment side as well?
Yeah, I can pick that up. Absolutely is the answer. Try and maybe think of it as Andrew touched on it. It's generally large enterprise businesses that look at that outsourcing world. You know, we have in excess of 50 clients we operate with currently in outsourcing. And if you think about the big enterprise businesses, and I won't mention specific names, but I can think of one such client. They have outsourcing services, specifically RPO. They also use our workforce consultancy service with Jess. They also use our recruitment services, and they also use our advisory services. In some cases, you've got clients that across the whole platform, they're engaged with us. You look at Jess's business, 15 clients she operates with at the moment, and they are all born out of the outsourcing relationships that we have.
The opportunity to build further clients into Jess's world is significant, and we haven't even got into looking at the recruitment clients. It's, yes, the short answer, and it's about embedding and then building out those solutions.
Thanks.
Was that it, Tom? You-
That was it.
That was it. Okay. Steve. Well, Sanjay, sorry. Sanjay has got the mic, so maybe... Sorry, Steve.
Yeah, Sanjay [Panmure] at Liberum. Just a question on the U.K. market and specialist recruitment within the U.K. Do you think that that can get to the kind of group margin target as well?
... and what particular measures might be needed? Is it about sector specialism, or is it, it's about kind of how exactly do you think you could get to that target in the UK?
Well, look, I think from my perspective, I think, you know, the vast majority of the markets we are in, we can get. Absolutely, there's no reason why we cannot get to those group margins across our businesses. Many of them are already there, and some even above that. So, the UK, as everybody knows, is a tough market at the moment, but there's nothing in my line of sight that would suggest that with the factors that we've talked about today, the discipline, the productivity, and the structuring, that we can't get the UK business to exactly that sort of margin.
A couple from me. I'll go, first of all, with the recruitment outsourcing business. You mentioned obviously that's, you know, there's different phases to it, from invest right the way through to maturity. I was wondering, you know, could you sort of outline where we sit on that beginning, middle, end of the life cycle of a contract, please?
Sorry, what, what do you mean?
You know, you take on the contract-
Yeah.
First up, it's investment, you know, potentially, you know, 2-3% margin, and gradually you know you build up and become profitable. We're wondering where, though, across a three-year period, you know, beginning year would be 2%, finish year 15%. Is that... What's the profile during that period?
It's largely gonna vary by job, by scale, by industry, et cetera. In some respects, you know, year one could even be a small loss, you know, as we actually invest in the capability, the technology, and the infrastructure required to put our people on site, for example, with the client. Then in following years, we'll come through to the margins. They are, you know, currently unlikely to be slightly diluted, potentially to that group average, but, you know, the average is a range, and there's certainly some clients where you could absolutely see good profitability coming through and clients getting into that range or even above that range. It's gonna be a mix, as in all parts of the business. Yeah, it'll be varied.
Also, just to touch on, we're looking at the total wallet share. So you might have an outsourcing solution, which takes a year to get to profitability, but you could have recruitment services immediately, which are profitable. So we tend to try and look at the whole portion of what we're providing to our clients.
You mentioned the investment in Zenith, David, is now, you know, pretty much done, you know, rest of the rollout aside. What do you sort of anticipate then the total cost of that project and rollout, just out of interest?
Yeah, so all in, it's gonna be in the region of slightly north of around about GBP 25 million, spread over those years. As Kevin said, you know, development complete this year. There'll still be a bit of deployment cost into 2025. But as I've said in the past, I'd expect the sort of the CapEx expenditure of the organization to tail off through 2025. You know, we're currently sort of in the 10-15 million GBP range. I'd imagine we'd be, you know, down sub-10 million going forwards. There was still, you know, embracing a lot of the technologies, there will still be investments that we will make. What we do have is a very robust, as you can imagine, investment case, requirement for any new investments that are made.
The rest of the world obviously is a, yeah, quite a drag on that, the performance there on the overall conversion ratio. Is there, you know, any thoughts on being, you know, completely brutal with some parts of that business and either taking that office footprint of 66 and closing offices and maybe even exiting certain countries? I know it's a difficult one to ask in this audience, but
Yeah, I mean, I'm not going to get into specifics, obviously. I think brutal probably isn't the word, it's just discipline. And I think Chris Eldridge, who's joined us, he's brought that into our America business. That has been a drag. We know the market there, we know the opportunity. I think we're getting better there. So yeah, it's far more discipline. Clearly, there are parts of that business that fit in the bottom-left segment, and how we can move them to the bottom-right segment.
Through cycle that range, where do you see peaks and troughs within that you would have your eye on in that modeling process?
Look, I think at the moment, you know, we're looking at that range of 16%-19%. I think that's a range that, you know, as end markets recover, you know, will be achievable in the next few years, you know, defining medium term. But it's something that's there. And I think, yeah, I think in very buoyant markets, we might be slightly, we could be slightly top end of the range, even above. But I would like to think that as we go through with all the actions that we're taking, we can build up the margin position of this business such that even in downturns and slow markets, we're not down at the levels that we've seen, you know, last year and in the current year.
Then one possibly for Faye and her team. As you're building out the profiles, making them almost, you know, slightly more generic, faster to market, are you seeing the stuff that you're looking at coming back from people's CVs becoming more generic as responses to your, you know... Everybody comes back the same because they're all doing the keywords of, you know, for what you require for the role. Is it being used, yeah, by candidates, the other side?
Mic's up. I've got a mic.
Oh, you have? Yeah.
Yes, is the absolute and simple answer, so yeah, recruiters are using AI to become more productive, but almost every tool is available to a candidate to use, and so,
... there are really interesting tools popping up if you want to try them for your next role.
Not anyway.
There are literally tools being marketed that will apply while you sleep, and you drop your CV in there, and it'll apply to five hundred roles at a time for you. You know, there are even AIs that will help you answer interview questions or, you know, a clever candidate will say, "Yeah, help me prepare for an interview." So yes, we have seen the standard of applications rising. Actually, we've talked to our clients a lot about it, and some are choosing to say to applicants, "You are not allowed to use AI in the process," and that's been very public in the marketplace. Some large companies have already come out and said that.
But a lot of companies are also choosing to work with candidates to say, "Yes, use AI to augment yourself and be faster, but be transparent with us and tell us, you know, more about you as a human." So what we're doing and seeing, and a lot of our clients are seeing, is that we'll put more human into the process because you wanna make sure that you're actually meeting the real person behind the augmented and, you know, brilliant, shiny front.
Does that, in essence, help you even more become the filter to these companies who, you know, it would receive 50 CVs the same, and then it's your job to find the filter to that?
Companies are drowning in applications in some respect, which is why they're picking up the phone to us.
Thank you.
Thanks. It's Rob Plant from H2 Radnor. Perhaps sticking with the innovation lab, two questions: Where are you drawing your knowledge from? Is it all in-house, or do you partner with technology companies? And when you look at competitors, is there a particular field where you think you're leading the way?
So where we're drawing our knowledge from is every day is a school day. We are all learning. Everyone in this room, everyone, even at Microsoft, is learning. I've sat in the room with Microsoft, where we've been trying to prompt an AI, and we all come to a standstill, and the engineers ask the AI how better to prompt it, and that's truly the value of having a Copilot that helps you progress on. So we are really focused on building our skills, and so you saw on the slides there that we are being really social with our teams all around the world. We're encouraging them to use the AI and all learn together. Our learning and development teams are getting involved, and same with front office and back office.
So this is a time to really solidify that lead that we've got by all working together and sharing our knowledge. I'd hope that we can stay in the front of our competitors, but, you know, we're also talking openly about it.
If you're interested in hearing more, by the way, Faye is a keynote speaker at the LinkedIn Talent Summit, so log on early. She's really the person who's doing a lot in this space. Ed, I think you,
Yeah. You've talked a lot about the self-help in terms of-
I think you might just, yeah.
Sorry. You've talked a lot about the self-help in terms of margin improvement and operational excellence and efficiency. One thing I was just interested in is, and as you've also talked about the markets being tricky and waiting for the markets to recover or seeing the recovery come through, what level of self-help do you see in terms of driving NFI growth through cross-sell within this one brand concept and driving that's internal sales growth, and are there internal KPIs, even if they're not being publicly disclosed?
Yeah, so this all started. I mean, the big driver there is obviously the cosmetic part of the rebrand, but that is not the reason we did this. This is about an education as much for our own people and actually understanding that, you know, what we all do. Now, if I take a market like Indonesia, that still is really principally perm recruitment. It's fairly vanilla. That's what it does. Then I take a market like the UK, Australia, far more evolved, far more complex, and far more solutions that are provided. So we are building towards, through our own internal upskilling and training and development, our recruiters becoming better solution sellers. Being able to sit with clients, Jess's world is an exact example of this 'cause our clients don't often know what they need.
So how do we position our people to land and sell the solution? So we can see obviously, you know, gains and improvements there over time. I think, the other thing as well is that as we start to build that in, we have things like global collaboration days. So we launched on July the ninth, the whole company, globally, all came together. They were all targeted with cross-selling within their own clients, not from within their own product line. And we had over 600 new leads that got generated. We've now built in a brand-new global cross-selling scheme. We've never had that before. So it's very, very clear metrics and targets and rewards, if you like, if we realize money from that cross-sell. So, yeah, we're at the beginning of this, but we're very clear in terms of what we see as being possible.
Webcast.
Okay. I think there's a couple from the webcast.
Thanks. I think one, so just a couple of questions on the webcast. The first one, I think sort of picking up on, you know, reference to the point in the cycle. Obviously, it's been a tough last couple of years, so any sort of perspective on why, in that context, fee rates have held up? They seem to be holding up. You may otherwise have thought there'd be pressure on that. So any perspective on that?
It's probably, it's a sort of an amalgamation of two, really. Firstly, you've got... I mean, arguably, you could look at it and think fee rates would come down. There's more competition, there's less jobs, but the reality is that's countered by the fact that you've got increasingly low unemployment rates around the world. You've got a huge shortage of candidates. You heard about the big-
...demographics in Japan, this is endemic. You've got increased nationalism, so it's getting harder to procure great people. So that has really meant ultimately supply and demand. So that's where fee rates have held strong.
Thanks. And then the second one on the webcast is just around productivity, and sort of, you know, recognizing that maybe across the industry, there's been sort of lots of talk of productivity. Is that sustainable? Do you feel that's sustainable? If so, why?
I think, as I said it in my prepared remarks, productivity is the single biggest lever that we have as an organization to drive, conversion and profitability. And you look at where we are in the cycle, and I suspect our peers and the other industry, the rest of the industry is in the same place, is that people were running very, very fast in 2021, 2022. So, you know, what that tells us, you can run at much higher levels of productivity than the business, and the sector is today. Now, is it... Or can we get back to those levels? Probably not. But as I said in my remarks on the slide, there's a lot of capacity against that position, and we've got these tools that we've talked about today.
So I think certainly what we're focused on, obviously, I can't speak for peers in the industry, but what we're focused on is enabling us to get back as much of that capacity through, A, the discipline of looking at it team by team, office by office, and then secondly, using the tools and new systems like Zenith that we've got to enable the recruiters to have a more productive day.
Hi, Dan.
Just going back to the recruitment outsourcing comments earlier, where obviously new contracts, you said, could be working capital consumptive and potentially loss-making. Easy to do when profits are growing strongly and everything's going fine, but any reluctance, therefore, as to how many of those you're prepared to chase and potentially win when profits are much more under threat?
From my perspective, not really. I think it would be nice, you know, we want to win business, we want to grow the business. Clearly, you know, as part of the onboarding, there are some clients who actually acknowledge the fact that it's an investment both ways and will help through that cycle. So again, that could be part of the onboarding negotiation. But yeah, it's clearly easier to absorb losses in an upcycle. But equally, you know, we are moving into a number of new businesses. They're not all gigantic and huge, and therefore, the losses are probably potentially more modest. No, look, we are applying a very disciplined, strict lens to the clients that we work with.
As we talked about in March, you know, during the second half of last year, we actually walked away from some clients where the economics didn't make sense for us. So I think, you know, from our perspective, you know, we will keep a very laser-focused lens on the returns, and if it's the right thing to do, we'll do it. If it means we lose a bit of money, then we'll deal with that at the time.
Okay. I think, Danny, nothing? No. Okay. Thank you very much indeed. Really appreciate all your time, and thanks for coming to the offices. And if you have time, we've got some drinks out there, so please, you know, let's all gather in there, have a conversation out there. Thanks very much.