SThree hit by tech industry job cuts and weak economic conditions

SThree experienced a significant drop in fees in the first quarter amid a sluggish macroeconomic environment and large-scale layoffs in the technology sector.

The specialist STEM recruiter revealed that net fees fell by 6% year-on-year to £93.7 million between the start of December and February 29.

Businesses in the United States and Germany, two of the company’s five largest markets, were affected by weak technology hiring, while the former territory was also hit by a drop in demand for positions in life sciences.

Tech companies have continued to cut jobs in large numbers this year as high interest rates have driven up borrowing costs and people spend more time outdoors due to the lack of related restrictions to the pandemic.

Paypal, Amazon, Microsoft, Google-owner Alphabet and video game developer Electronic Arts are just some of the prominent names that have announced cuts since January.

Just over 50,000 layoffs in the technology sector have already been announced in 2024, after 263,180 losses the previous year, according to the website Layoffs.fyi.

Timo Lehne, chief executive of SThree, said the group had achieved “a good performance against a strong basis of comparison and in a market environment that remains challenging from a new business perspective”.

While recruitment in the technology sector remains fragile, SThree has seen strong demand for engineering jobs, particularly in the renewable energy sector.

Lehne added: “While the sentiment we report is much the same as the previous period, the strength of our contract extensions continues to be a particular strength, demonstrating the need for our customers to retain STEM skills essential and flexible talents.

Meanwhile, job agency Staffline revealed it made a loss of £11m last year, compared to a profit of £3.8m in 2022.

The Nottingham-based company attributed the loss to impairment charges linked to the closure of a classroom training business at its PeoplePlus subsidiary.

Still, Staffline said it delivered a “strong performance”, with total revenue up 1 per cent to £938.2m, largely driven by market share gains from its recruitment division British.

The segment has won or renewed contracts with supermarket giants such as Tesco, Morrisons and Marks & Spencer, as well as food manufacturer Bakkavor and wine retailer Laithwaites.

Albert Ellis, chief executive of Staffline, said the result demonstrated “the resilience of the group’s operating model in a challenging macroeconomic environment as well as the success of our strategy”.

Actions of the Staffline group were down 3.7 percent at 26p late Tuesday afternoon, while Three actions were down 2.1 percent to 415p.