The large publicly-quoted global search firms, such as Heidrick & Struggles, Korn/Ferry International and TMP Worldwide, revealed strong results in the third quarter, with financial services and technology increasingly proving the most important practice areas for growth.
All three continued through the year to buy smaller boutique search firms or take entire teams of consultants from rivals to strengthen these areas.
A planned acquisition by Heidrick & Struggles of the prestigious niche player Baines Gwinner collapsed in May after differences on integration. But Heidrick moved quickly to take the high-profile financial services search duo of Rupert Channing and Elizabeth Hammond from TMP Worldwide, which had in turn acquired the pair through its purchase of the Consulting Group boutique. Hammond will be co-head of global investment banking practice, reporting directly to Brian Sullivan, global head of financial services in New York.
Baines Gwinner ended the year exceeding the 15m (€25) in revenue Heidrick had agreed as a price tag, and continued to expand the business in Asia and New York. Sources close to Baines Gwinner say the momentum for the whole business now comes from across the board rather than from just a few consultants.
Similarly, at the Rose Partnership, founder and head Philippa Rose spent the year evolving a new structure for the search firm that essentially involved a greater delegation of responsibility to senior consultants. The headhunter expanded its area of business substantially, and ventured into the e-business arena.
In the buoyant markets of last year, you did not have to be a large firm to do good business. In February, Monima Siddique set up City Analytics, a search firm aiming to focus solely on research. Having worked in fixed income as well as equities as a salesperson at JP Morgan, CSFB and Kleinwort Benson, she felt she had an insight into the market.
'A lot of the large firms are so big they lose their focus. Demand for good analysts often takes the bank to specialist firms who can look hard for them for the right skills,' says Siddique. Her firm is wholly dedicated to City analysts and research professionals across the asset classes, and she says business is booming.
Helen Clifford of Clifford & Co, the research and risk management specialist, says the year offered an 'unbelievable' volume of work.
'In the rating house community there has been consolidation. AM Best recently lost three analysts to Fitch IBCA, which has come up in the rankings. In addition, there continues to be huge growth in credit risk and technology at the bulge-bracket investment banks,' says Clifford.
Medium-sized search firms also merged with one another to gain added strength in financial services and e-business. Whitehead Mann's merger with GKR went smoothly, and was the first step in a plan of expansion. The merged Whitehead Mann GKR straight away completed the acquisition of Pendleton James, the New York and Boston-based search firm with particular strengths in fund management.
Chris Leslie, co-head of global financial services at Whitehead Mann GKR, says: 'Our overall strategy is to build a focused search firm on a global basis. We have no intention of competing on the scale of a Korn/Ferry.' The search firm has also made a small acquisition in France and will be doing the same in Germany.
In merging with Tyzack & Co, the financial services-focused headhunter, the Whitney Group, also aimed to add technology expertise to take its financial services practice into the e-business field.
Medium-sized firms have also been successful by focusing on very specific areas of business.
Global search firms frequently come under criticism in financial services for being too large and lumbering to be able to respond quickly and nimbly in fast-changing and expanding markets. TMP Worldwide, however, which is often described as a 'giant', has been keen to point out over the past year that, in its financial services business, it operates like a boutique practice.
But until now, the largest of the global search firms have repeatedly said they offer 'human capital solutions' at all levels, and have presented themselves as one-stop shops for recruitment. There has been a growing polarisation between them and the boutiques, as the large firms have got bigger and some of the boutiques have concentrated on real niche business.
Heidrick & Struggles has come to the conclusion that the financial services industry, in the City of London in particular, does demand the specialist approach of a boutique search practice.
Consequently, it has reorganised the business in order to make financial services more of an independent entity within the broader framework of the global search firm.
The headhunter plans to open an office in London in March, staffed by 35 professionals. About a dozen partners are expected to be involved, headed by Rupert Channing.
Heidrick has been busy poaching the best headhunters in financial services from a handful of boutiques over the past six months. 'Realistically speaking, some of the best headhunters in this business are in the boutique firms and that is where we have looked,' says Channing.