Kelly Group recruits overseas to overcome skills shortage at home
November 19, 2007
By INGI SALGADO
Cape Town - Skills shortages were escalating the practice of companies making counteroffers to employees who resigned after being poached, staffing services firm Kelly Group said on Friday.
Attempts to retain staff by matching or beating outside offers was "happening more frequently", said Kelly chief executive Grenville Wilson. This practice was affecting the Kelly subsidiaries that operated at the upper end of the skills spectrum.
Recruitment businesses lose commission when counteroffers succeed, as their candidates do not end up being placed.
South Africa's growth has swelled demand for skilled labour. However, shortages of skilled workers - particularly engineers, artisans and information technology professionals - have drained the talent pool.
Nevertheless, recruitment companies have tended to perform well in a climate of sustained growth. Paracon Holdings, the information communications technology resourcing and solutions group, last week announced that profit grew 52 percent to R67 million in the year to September as a result of significant demand for specialist skills.
Kelly issued a trading update last week that said revenue for the year to September was expected to rise between 15 percent and 25 percent.
Earnings a share were projected to grow more than three-fold. Normalised earnings would rise about 50 percent, Wilson said.
The group is due to announce financial results on Thursday.
Wilson said South Africa had not developed the skills required to handle economic growth, a long-term problem caused by an education system that produced insufficient numbers of matriculants with maths passes. He believed the only short-term solution was to import skills.
Kelly subsidiary Professional Assignments Group had initiated programmes that encouraged the return of expatriates from the UK and Dubai.
To date the company had brought back "no more than 30 or 40" South Africans working abroad, Wilson said.
In a globalised world where intellectual capital could move freely, South Africa had to do all it could to keep its skills at home, he said. Kelly would continue to seek acquisitions in segments of the market where it was weak, such as blue-collar placements.
Wilson said they would be funded by the strong cash flows that the company generated and some debt.
Last week Kelly announced the R110 million acquisition of iChoices, a call centre outsourcing business.
"It's a logical move into owning our own infrastructure and being able to provide a holistic solution," said Wilson.
Kelly plans to grow strongly into business process outsourcing, a priority job-creating sector of the government's accelerated and shared growth initiative.
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