Thanks to an alignment of mutual self interest, the beginning of the year is usually a good time to be a headhunter. Bankers with bonuses in their pockets are keen to move, while banks with replenished recruitment budgets are equally eager to hire.
However, this year, following a spate of staff poaching as search firms beefed up their ranks at the end of 2004, headhunters are left short-handed and unprepared for the busy season.
Longbridge International and the Whitney Group's London office were hardest hit by defections.
A few weeks before Christmas, Longbridge lost its equities consultant and fixed-income staff to the Options Group and Alexander Mann respectively.
Whitney Group's two-person fixed-income team and equity derivatives consultant left for Highland Partners in London. This followed the departure of two asset management specialists and its managing director.
The firms are trying to remedy their losses. Tom Seaden, Whitney's new managing director in London, said he plans to recruit five consultants this year, doubling the size of the business. Last month he recruited Chris Manfield, a fund management consultant, from Odgers Ray & Berndtson.
Longbridge has hired Jeff Bennett, former head of financial institutions banking at Bank One, to rebuild its financial services team. Frank Varela, Longbridge's chief executive, was unperturbed by the exits.
He said: "We've been lucky for the past four years in that we've had no movement. Now we've a few at once. So what?"
He also denied that Longbridge plans to merge with Napier Scott, a London fixed-income search boutique, although he did not rule out such a move.
Staff departures may not be symptomatic of terminal malaise but they belie a broader trend familiar to the executive search industry - globalisation. Pre-Christmas recruiters were international players looking to boost their European presence. London firms like Longbridge and enfeebled, albeit international, players such as Whitney lost out.
Jeremy Kemp, managing partner at Highland Partners in London, indicated the company plans a return to the European financial services market. "We are part of a global search firm and we need a strong presence in financial services in London," he said. Highland Partners is the executive search arm of Hudson and was spun off from TMP Worldwide, an online recruiter and recruitment advertiser, in 2003.
The Options Group, a boutique firm of Wall Street headhunters, has a London presence but wants to expand it. David Korn, managing partner, said there are plans to hire three consultants. Last year, it opened an office in Hong Kong, joining London headhunters Hogarth Davies-Lloyd and Sheffield Haworth, which also opened international premises.
Tony Barnes at Waters Barnes, a headhunter of headhunters, said firms are moving staff around the world to fill gaps. "There aren't enough good people in the market. Losing key staff is a massive problem."
One example of global mobility is Mike Brennan, global head of financial markets at Alexander Mann. After successfully setting up the firm in Asia, he was recalled to London last year to help kick-start the European executive search practice.
With the backing of Advent International, the private equity firm, Brennan is hiring 15 financial services consultants for a new office in London. Its rivals say they are unimpressed. "Alexander Mann is recruiting anything that moves," said one.
Nevertheless, Alexander Mann's new London office may be just what is required. Darryl Adachi, a senior partner in the financial practice of Heidrick & Struggles on Wall Street, said executive search firms often fail in their international aspirations because they do not commit sufficient resources to new geographical markets. Taking out a long-term lease on an office is an indication of commitment, said Adachi.
Paying for a top-quality search consultant to spearhead the operation is another.
Even as international headhunters rush to beef up satellite offices in anticipation of a first- quarter hiring boom, they should tread carefully. The industry offers numerous examples of global ambitions gone awry.
Whitehead Mann closed its US office in October last year, Sheffield Haworth closed its Frankfurt and Paris offices in 2002 and 2003, and Armstrong International pulled out of the US in 2001.
The outplacement industry offers a timely reminder of the risks. Last year it suffered from a dearth of redundancies, while headhunters revelled in the wave of hiring.
In September, Lee Hecht Harrison, a US-based outplacement provider, announced it would close its UK business, including a financial services office opened in 2000.
Lee Hecht now operates through a strategic partnership with Penna, a UK provider.
Bernadette Kenny, vice-president at Lee Hecht, said breaking into the British market proved harder than expected. "It is difficult to grow in a mature market with well-positioned competitors with whom clients have long-term relationships. We are better able to serve our long-term customers by aligning ourselves with Penna," she said.
London's headhunting boutiques may wish that international rivals poaching their staff reach a similar conclusion.