Thursday, March 15 1:45 pm Veranda DE Concurrent Session: Sales & Marketing Building Your Global Strategy Adam Pode, Director, Research and Analysis, Europe, Staffing Industry Analysts Ton Mulders, Director, Strategic Solutions, Europe, Staffing Industry Analysts If the World is your Oyster,.Where are the Pearls? 1
Agenda Why? How? Where? For any business in today s world, not expanding internationally is practically a sin. Source: Alexander Gordin, Wharton Magazine Agenda So why expand? How? Where? 2
Where Better Than the USA? Improving economy ~1.8% GDP growth The biggest single market in the world ~ $93.8 billion Good predicted growth rates ~ At least 7% for 2012 9,000 companies to choose from Source: Staffing Industry Analysis, The Economist and the US censue International Growth Drivers To meet client expectations To take advantage of fast(er) growing staffing markets To diversify your business /reduce dependence on the USA Leverage existing corporate technology, know-how and intellectual property, and To take advantage of lower competition (sometimes) 3
Global staffing market (to scale) Canada Norway Sweden Finland Ireland United Kingdom Netherlands Belgium Denmark Poland United States France Germany Portugal Spain Italy Switzerland Japan Mexico Brazil South Africa Australia Argentina Confidential Report NOT for Distribution 2012 by Crain Communications Inc. All rights reserved. Source: Staffing Industry Analysts A Question of Size Staffing Company Annual Sales Average number of countries in international network 10 billion plus 29 1 billion to 10 billion 13 500 million to 1 billion 6 100 million to 500 million 5 50 million to 100 million 2 Under 50 million 0 Source: Expansion Patterns of Major European Staffing Companies, Staffing Industry Analysts Briefing, 2009 4
The Explorers US, UK, Dutch and Swiss staffing companies are the most adventurous in expanding into new markets But now others beginning to show ambitions Synergie (Fr) Groupe Crit (Fr) Gi Group (It) Trenkwalder (Au) Whose Eating your Lunch? 5
Agenda Why? How do I expand? Where? Expansion Patterns Cultural or geographical proximity French staffing companies most inclined to launch in Luxembourg German staffing companies most inclined to launch in Czech Republic or Slovakia Dutch staffing companies most inclined to launch in Belgium or Poland US staffing companies most inclined to launch in the UK UK staffing companies most inclined to launch in the Netherlands Source: Expansion Patterns of Major European Staffing Companies, Staffing Industry Analysts Briefing, 2009 6
Buy or Build? Acquisition strategy Accretive to earnings Speed of entry Elimination of a competitor Acquisition of management talent Economies of scale Potentially improve technology, products or services Organic strategy Generally less expensive No culture clash or integration issues Consistency of delivery Cohesive technology across whole of the organisation Internal staff development opportunities Less organisational stress Pick acquisition model in accordance with your management style and acquisition objectives Centralised Acquire 100% - Tighter control Integrate and rebrand Cut and paste Export high-performing managers Service international accounts Horses for Courses Decentralized Acquire majority - Lower initial investment Take advantage of synergies but retain brand If it ain t broke don t fix it Rely on local management expertise Win local business 7
Agenda Why? How? Where should I go? Country Evaluations Staffing market Size Growth rate Level of competition/ consolidation Business environment Ease of doing business Political stability Corruption Legislative environment Temporary staffing legislation - Sector prohibitions - Restriction on assignment duration - Limits on % of agency workers Protections on dismissal of permanent workers Economy GDP 2011-2016 8
Asia Pacific 5 = Most Attractive, 1 = Least Attractive Country Staffing market size Regulation 1 Ease of doing business 2 Economic growth 3 Staffing growth 2011 Long term growth Potential Competition/ consolidation Stability/ corruption 4 Total China 1 4 2 5 4 5 5 1 27 Australia 5 4 4 3 3 2 1 5 27 Hong Kong 1 4 5 5 4 2 1 4 26 Singapore 1 4 5 5 4 2 1 4 26 New Zealand 2 2 5 3 4 2 2 5 25 India 2 3 1 5 4 5 4 1 25 Japan 5 4 4 1 3 2 1 4 24 1 OECD Employment Protection Index/SIA 2 International Finance Corporation 3 IMF (2011-2016 GDP) 4 World Bank Governance Indicators Western Europe 5 = Most Attractive, 1 = Least Attractive Country Staffing market size Regulation 1 Ease of doing business 2 Economic growth 3 Staffing growth 2011 Long term growth Potential Competition/ consolidation Stability/ corruption 4 Total Sweden 4 5 4 4 4 3 2 5 31 Germany 5 4 4 1 4 2 2 4 26 Italy 4 4 2 1 4 4 4 3 26 UK 5 5 5 2 2 1 1 4 25 Belgium 4 4 4 2 3 2 1 4 24 Netherlands 5 5 3 1 2 1 1 5 23 France 5 2 4 1 3 2 1 4 22 Spain 4 2 3 1 2 4 2 3 21 1 OECD Employment Protection Index/SIA 2 International Finance Corporation 3 IMF (2011-2016 GDP) 4 World Bank Governance Indicators 9
Eastern Europe 5 = Most Attractive, 1 = Least Attractive Country Staffing market size Regulation 1 Ease of doing business 2 Economic growth 3 Staffing growth 2011 Long term growth Potential Competition/ consolidation Stability/ corruption 4 Total Poland 3 5 2 3 5 5 2 3 28 Turkey 2 2 2 5 4 5 3 2 25 Hungary 2 4 3 2 4 3 3 3 24 Russia 2 5 1 4 3 5 3 1 24 Czech Republic 2 3 2 3 2 4 3 3 22 Romania 2 2 2 3 3 4 3 2 21 1 OECD Employment Protection Index/SIA 2 International Finance Corporation 3 IMF (2011-2016 GDP) 4 World Bank Governance Indicators North & South America 5 = Most Attractive, 1 = Least Attractive Country Staffing market size Regulation 1 Ease of doing business 2 Economic growth 3 Staffing growth 2011 Long term growth Potential Competition/ consolidation Stability/ corruption 4 Total Canada 4 5 5 2 3 3 2 5 29 US 5 4 5 3 3 3 1 3 27 Mexico 5 3 3 4 4 4 2 2 27 Argentina 3 3 1 5 2 5 2 1 22 Brazil 5 1 1 4 3 4 2 2 22 1 OECD Employment Protection Index/SIA 2 International Finance Corporation 3 IMF (2011-2016 GDP) 4 World Bank Governance Indicators 10
Middle East/Africa 5 = Most Attractive, 1 = Least Attractive Country Staffing market size Regulation 1 Ease of doing business 2 Economic growth 3 Staffing growth 2011 Long term growth Potential Competition/ consolidation Stability/ corruption 4 Total Qatar 1 1 3 5 5 5 2 3 25 South Africa 4 5 3 3 2 1 2 2 22 Kuwait 1 1 2 5 3 5 2 2 21 UAE 2 2 3 4 3 3 1 3 21 Saudi Arabia 1 1 4 4 2 5 2 1 20 Egypt 1 2 1 4 1 5 4 1 19 1 OECD Employment Protection Index/SIA 2 International Finance Corporation 3 IMF (2011-2016 GDP) 4 World Bank Governance Indicators Hot Spots Higher Potential Lower Potential Not Recorded 11
Our Focus Japan Sweden Brazil Italy Poland Qatar Japan Staffing Market by Sector Deployed Construction 4% Public Other Sector 8% 3% Services 57% Manufacturing 27% Staffing Market Facts Market Size 52 billion Market Growth 2011 7% Market Share (Top 3) 13% Source: Staffing Industry Analysts Estimates GDP Forecast 2011 +1.4% Source: IMF Source: CIETT 12
Japan Positives Large but condensed market Highly skilled and well educated workforce Relatively young market (founded 1986) - Penetration Rate 1.7% - Highly fragmented Increasing adoption of Western business practices Negatives Language/Culture - Local business partner Large, well-established local competitors - Includes staffing companies owned by Panasonic, Fujitso, Nippon Life Insurance, Nissan, Bank of Tokyo/ Mitsubishi, Asahi Mutual Life, etc Job for life tradition Ageing population Brazil Staffing Market by Sector Deployed Staffing Market Facts Public Sector 2% Construction 2% Other 18% Manufacturing 15% Services 55% Market Size 6.4 billion Market Growth 2011 20% Market Share (Top 3) Fragmented Source: Staffing Industry Analysts Estimates GDP Forecast 2011 +4.5% Source: IMF Source: CIETT 13
Brazil Positives 5 th largest country (by geography and population) 7 th largest economy - One of the fastest-growing - Largest in Latin America - Diverse - Extensive natural resources Negatives Term limit on length of assignment - staffing companies are pseudooutsourcing companies Difficult business environment Low value industry - 4 th highest number of agency temporary workers in world Italy Staffing Market by Sector Deployed Public Sector Other Construction 3% 3% 5% Staffing Market Facts Market Size 5.8 billion Market Growth 2011 20% Services 49% Manufacturing 41% Market Share (Top 3) 41% Source: Staffing Industry Analysts Estimates GDP Forecast 2011 +0.6% Source: IMF Source: CIETT 14
Italy Positives Relatively young labour market - Founded 1997 Low levels of competition - Less than 100 staffing companies in operation (but lots of Executive Search firms) Negatives Volatile economy - Austerity measures Staffing companies must conduct business in minimum of four regions Business concentrated in North Relatively few multinational clients Organised crime Sweden Staffing Market by Sector Deployed Public Other Sector Construction 4% 8% 2% Services 57% Manufacturing 29% Staffing Market Facts Market Size 2.1 billion Market Growth 2011 21% Market Share (Top 3) 47% Source: Staffing Industry Analysts Estimates GDP Forecast 2011 +4.2% Source: IMF Source: CIETT 15
Sweden Positives Good business environment Stable economy Well-educated workforce High wages Relatively liberal regulatory environment Negatives High taxes Temporaries must be employed by agency (hence Swedish Derogation) - 90% pay when not working Poland Staffing Market by Sector Deployed Services 25% Other 5% Manufacturing 70% Staffing Market Facts Market Size 748 million Market Growth 2011 20% Market Share (Top 3) 40% Source: Staffing Industry Analysts GDP Forecast 2011 +3.8% Source: IMF Source: CIETT 16
Poland Positives Population: 38 million - Most populous postcommunist member of EU One of the fastest growing economies in Europe - No recession! - 6 th largest in EU Good source of skills to export to other markets Well regulated staffing market International client base Negatives Foreign business disputes issues Competition from other international staffing firms - Margins under pressure Mostly blue-collar Qatar Staffing Market by Sector Deployed Staffing Market Facts Public Sector 14% Construction 12% Other 12% Manufacturing 17% Services 45% Market Size 72 million Market Growth 2011 98% Market Share (Top 3) Fragmented Source: Staffing Industry Analysts Estimates GDP Forecast 2011 +20.0% Source: IMF Source: Staffing Industry Analysts 17
Qatar Positives Richest Muslim country - Banking sector relatively unscathed Construction boom - World Cup 2022 - Tourism Less than 50 staffing companies Two thirds of businesses are international companies - 12 year tax holidays for foreign investors and foreign companies allowed 100% foreign ownership -No income tax Negatives Unusual labour market - Reliance on foreign workers - Qatarization policy - No contract switching Very conservative and bureaucratic Local contacts essential Economic dependence on oil and gas Regional instability NA staffing companies well-positioned to take advantage of international growth High growth opportunities outside NA In established staffing markets In emerging staffing markets Summary The most attractive markets are normally the most competitive Having the right people just as important as having the right location 18
Any Questions? Survey North America MEA Latin America Europe BRIC Asia Pacific 0% 10% 20% 30% 40% 50% 60% 70% 80% https://www.surveymonkey.com/s/9qtdjwb 19
WE Austria Belgium Denmark Finland Fran\ce Germany Greece Iceland Ireland Italy Luxembourg Netherlands Norway Portugal Spain Sweden Switzerland UK CEE Estonia Latvia Lithuania Poland Czech Rep. Slovakia Hungary Slovenia Croatia Bosnia H. Serbia Montenegro Romania Bulgaria Macedonia Albania Turkey CIS Armenia Azerbaijan Belarus Kazakstan Krgyzstan Moldova Russia Tajikistan Turkmenistan Ukraine Uzbekistan Western Europe CEE CIS Completing SIA s Global Footprint 20
European Website 21