How Will A Recession Impact The Recruitment Industry?

Although the economy has been propped up throughout the pandemic, strain is starting to show with record inflation tightening its grip on the population’s purse strings. If global banks choose to tackle this issue with interest rate hikes as expected, a recession could be imminent. 

Employers generally look to reduce their headcount during times of economic uncertainty, which of course represents a challenge for staffing and recruitment agencies. However, if they are switched on and ready to react, recruiters can turn the situation to their advantage. 


What exactly is a recession? 


Definitions vary from institution to institution, but in the United States, the National Bureau of Economic Research (NBER) is considered to be the leading authority regarding the categorization of economic activity. NBER defines a recession as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.” 

In terms of specific criteria, it is generally accepted that two consecutive quarters of contracting economic output qualifies as a recession. 


Are we heading for a recession? 


According to economists in the United States, a worldwide recession is pretty much inevitable – it is more a case of ‘when’ rather than ‘if’ at this stage. 

Predictions vary, with some major banks expecting the recession to hit later this year, while many others believe it will happen in around 12 months’ time. Either way, a downturn is almost certainly on the way – Bloomberg Economics has gone on record to say that there is a 75% chance a recession will occur by the end of 2023. 

If inflation and interest rates continue to rise, the likelihood of a recession will increase significantly. The good news is that most experts agree that the downturn will be mild and relatively short-lived. 


Will a recession affect the recruitment industry? 


The recruitment industry is normally a reliable barometer for impending economic uncertainty. For recruiters, there are a number of telltale signs that a recession is on the way. 

Widespread hiring freezes are a primary indicator that something is going on behind the scenes. Businesses monitor output very closely, and when revenues start to dip, cost savings become a primary concern. As a first step, organizations will often attempt to streamline their employee headcount.  

Before embarking on a full organizational restructure, companies are likely to commit to a recruitment freeze. This is generally the precursor to layoffs, something that can have an even greater effect on the wider recruitment landscape. 

There is no doubt that the early stages of a recession are immensely challenging for staffing and recruitment firms – recruiters are suddenly swamped with candidates and left with very few roles in which to place them. 


packing box to resign


What happened during the last recession? 


Sparked by the collapse of major investment banks such as Lehman Brothers, the Great Recession of 2008 led to a 5.1% cumulative decline in GDP in the United States, which in turn caused around 8.7 million jobs to disappear in the space of 18 months. It was devastating for the staffing and recruitment industry, with more than a third of all recruitment personnel becoming unemployed.  

Having spent more than 20 years in recruiting before joining Mindscope earlier this year, Jennifer Martin is able to recall the fallout from the last recession: 

“During the Great Recession of 2008, most companies set a freeze on permanent hiring, with some of the hardest hit also forced to lay off staff. Employers remained cautious even after things started to improve – there was a significant pivot towards temporary staffing and shortterm contracts as a way of augmenting staff where needed.”

– Jennifer Martin, Operations Manager at Mindscope


While the staffing and recruitment sector bounced back to pre-recession levels just a couple of years later, the overall economy took almost five years to recover fully. 

Some staffing agencies were able to thrive by capitalizing on the rapid shift towards temporary staffing during the recovery phase. It has become a longstanding trend – today, much of the industry’s growth is linked to the supply of short-term workers in a tight market that is trying to overcome a significant labor shortage and skills gap. 


Recession-proof recruitment 


All of the above factors suggest a shift from a candidate-driven market to a client-led one – this requires staffing and recruitment agencies to adapt in order to remain relevant. 

Temporary staffing solutions should form the basis of any recession-ready recruitment strategy. Agencies that are able to pivot quickly from permanent to temporary staffing will be ideally placed to cope with the changing demands of cost-conscious businesses. 

Even after changing tack, there will be plenty of challenges to overcome, particularly given that it has been over a decade since the industry last navigated a recession.  

It will be uncharted territory for a lot of recruiters. Since the last recession, the industry has experienced historic growth, meaning that the vast majority of recruitment personnel have yet to experience the effects of an economic downturn.

– Dan Duic, CEO of Mindscope


A recession represents a notoriously difficult period for recruiters – job orders begin to dry up and candidate numbers increase to the point where there is little need for employers to outsource their search.  

While a sharp increase in applicants may necessitate the deployment of a recruitment agency to sift through resumes on behalf of the employer, this kind of work is nowhere near as lucrative as end-to-end placements. 

The good news is that recruitment technology can help facilitate a shift towards client-focused activities as well as maintain success in the temporary staffing sector.  


Utilizing applicant tracking software 


Proactive use of applicant tracking systems is the best way to prepare for wholesale changes taking place within the staffing and recruitment industry. 


Updating the candidate database 


The first hurdle that recruiters will need to overcome is data hygiene. A recession could impact the employment status of millions of people, making it essential for staffing and recruitment agencies to update the candidate information stored within their applicant tracking system. 

It can be a daunting task, but ensuring that all candidate profiles reflect up-to-date skills, experience and availability is crucial to the long-term success of any recruiter – with Mindscope, this work no longer needs to be an administrative burden. 


Learn More


Mindscope’s Kaptivate candidate engagement tool is a fast and hassle-free way to extract updated information from candidates that have been present in the database for some time. 

Kaptivate is a chatbot-style platform that enables recruiters to set up automated conversations with candidates to inform them of upcoming roles as well as establish their current employment status, rate expectations, availability, and contact information. Recipients can even be prompted to upload their latest resume, which can then be parsed into the Mindscope applicant tracking system to update their profile accordingly. 

Candidates can be contacted en masse as part of a campaign linked to profiles that have not been updated for several months. Targets can be identified by using the candidate list filter within Mindscope to sort profiles by date last updated. From there, large contact lists can be brought into Kaptivate for campaign distribution purposes. 

As a result, recruiters no longer need to spend valuable time messaging, emailing, or calling candidates with little reward. 

Maintaining an up-to-date database in this way will give recruiters a head start during the recovery phase of the recession, when more opportunities begin to materialize. 

As temporary roles become even more prevalent, recruiters must be able to react quickly in order to place candidates ahead of the competition – Mindscope is designed with express staffing in mind. Recruiters can use the platform to automate tasks as they pass through each phase of their recruitment workflow. It is an end-to-end solution that encompasses all aspects of the temp hiring process. 


Finding suitable candidates 


Once a vast talent pool has been established using Mindscope’s innovative parsing tools, recruiters are able to efficiently search their database in detail in order to check availability and find the most suitable candidates. The intuitive, yet advanced Boolean search function enables Mindscope users to filter candidate lists to match the skills and experience requirements of the role. 


colleague discussing work


When job seeker numbers increase significantly like they do during a recession, it can be difficult to pinpoint the best candidates. There is also the issue of diminished job security – experienced full-time workers are less likely to leave their existing job to pursue a new opportunity due to fears of instability in the market. 

In high pressure situations, it is tempting to place applicants that are merely a partial fit for the role. However, there is a good chance that it won’t pay off in the long run and recruiters are better off applying extra due diligence when looking for candidates. The assumption that these additional processes take too long is quickly dispelled through the use of a modern applicant tracking solution. 


Onboarding candidates 


Efficient onboarding is pivotal to achieving timely placements. Onboarding software is designed to automate the process of requesting and retrieving mandatory candidate information such as licenses, certifications, and ID documents. 

With access to a cloud-based portal, candidates can quickly upload files – automatically checking them off the list and notifying the recruiter. If anything is missing, automated alerts will be sent to candidates to prompt them into action. 


Marketing and CRM 


A client-led market elevates the importance of retaining existing clients as well as attracting new ones. Contracts and job orders become increasingly scarce as the financial impacts of a recession take hold, so it is vital that staffing and recruitment firms focus on maintaining fruitful relationships with their client base. 


Client relationship management  


Client retention is going to be a key battleground for staffing and recruitment agencies. However, staying in the loop regarding client activity can be extremely difficult, so it is essential to utilize a client relationship management (CRM) system in order to remain proactive and organized.  

Mindscope’s all-in-one CRM software supports seamless communication with clients through the deployment of personalized email templates. All historical correspondence is tracked automatically within the relevant client contact profile. Additional SMS and VoIP integrations make it possible to file text messages and telephone records too. 

Detailed notes can be attached to each record before scheduling follow-ups and sending meeting requests directly from the Mindscope system. By keeping these tasks organized, CRM technology makes it easier than ever to create campaigns and work through prospecting lists. If an opportunity progresses, it can be converted into a job order with just one click. 


How to Improve Your Recruiting Process


Communicating with clients 


When client job orders are no longer flooding in, recruiters need to focus their efforts on presenting their strongest candidates to employers – Mindscope’s document generator is a really efficient way of doing this. 

Template-based documents can be created and sent to specific client contacts speculatively, outlining why a specific candidate is a good fit for the company – regardless of whether there is a current opening or not. This is an approach that is commonly utilized by agencies when recommending their ‘most placeable candidates’ (individuals with specialist skills or qualifications that are hard to find). 

The document generator pulls information directly from a candidate’s profile and formats it in a professional manner within a templated document. This could take the shape of a blinded resume, portfolio, or application form, giving employers an overview of the candidate’s skills, experience, and qualifications. Corporate branding can be applied to create a professionally presented document that is sure to grab a client’s attention. 

When distributed using Mindscope’s mass email functionality, these candidate submissions can be sent to up to 500 recipients in one click to give leading candidates the maximum amount of exposure. 


Book a Demo


A recession can increase the financial pressure surrounding the recruitment process, so clients want to know that their time and money is being well spent. Mindscope’s client transparency portal provides an insightful overview of recruiter activity while allowing the client to have their own input. 

They can track recruiter progress in terms of the number of resumes reviewed, phone calls made, screening sessions conducted, and more. There is even the option to become involved in reviewing shortlisted resumes (blinded) and request interviews with recommended candidates – all from within the portal itself. 


Websites and job boards 


Attracting new clients is likely to become more challenging as job vacancies diminish, so an impressive online presence is essential for any agency that wants to be taken seriously by hiring managers. 

An expertly crafted specialist recruitment website is the only way to tick all the right boxes. It is the perfect outlet for staffing and recruitment agencies to professionally showcase the benefits associated with their expertise. 

Even more importantly, an industry-specific website that encompasses search engine optimization (SEO) features is far more likely to get noticed in the first place – elevating agencies above their competitors during a potential client’s web searches. 

When choosing a website created by Mindscope’s dedicated marketing division, agencies will also be able to integrate SEO-optimized job boards that are automatically formatted for Google Jobs. This is a unique feature that can help staffing and recruitment firms stand out when competing for clients. 



Mindscope offers applicant tracking, CRM and digital marketing tools that combine effortlessly to give staffing and recruitment agencies the best chance of navigating a turbulent industry landscape. Request a demo today and discover how Mindscope can transform your approach to candidate and client management.