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Industry Analysis
In this section we first define the industry in which OWS operates. Secondly, the industry size, growth rate and sales projections are displayed, followed by the industry characteristics. These aspects will provide a clear view of the playing field OWS exists in and will later be used as a base for the market segmentation in the market analysis. Finally, we discuss the industry trends and long-term prospects which will contribute to the financial statements and the operational plan.
Industry definition
The industry in which OWS will operate is defined as: Activities of employment placement agencies (
code level: N78.1.0). Private employment services industry provides a variety of human resources to businesses. These services usually include labor market intelligence, talent acquisition, placement, advisory services, managed services and career management.Industry size, growth rate and sales projections
The industry size of the global private employment services industry in the year 2020 is estimated to be €465,8 billion according to the of the World Employment Confederation. Due to the global pandemic the industry size of 2020 was very close to 2017 when the industry size was at . In 2018 it became while in 2019 the industry generated an estimated in revenue. The findings from this research indicate that growth has been exceptionally slowed down in 2020 due to the Covid-19 pandemic but it is expected to continue in the years to come as the economy recovers from the crisis. In 2021, as economic and labor market conditions improved in many countries, the output in the most OECD countries even surpassed their pre-crisis levels.
FIGURE 1. ACTIVITY (VOLUME) OF EUROPEAN AGENCIES WORK SECTOR BETWEEN 2008-2021 (WEC Economic Report, 2022).
Figures 2-5 represent the global market growth from 2017 until 2020 in billion euros. The graphs also indicate the annual growth rate. In the context of this business plan, the focus is on Direct Recruitment in the crypto industry.
FIGURE 2. GLOBAL INDUSTRY SIZE AND GROWTH RATES OF PRIVATE EMPLOYMENT INDUSTRY FROM 2016 TO 2017 (WEC Economic Report, 2019).
FIGURE 3. GLOBAL INDUSTRY SIZE AND GROWTH RATES OF PRIVATE EMPLOYMENT INDUSTRY FROM 2017 TO 2018 (WEC Economic Report, 2020).
FIGURE 4. GLOBAL INDUSTRY SIZE AND GROWTH RATES OF PRIVATE EMPLOYMENT INDUSTRY FROM 2018 TO 2019 (WEC Economic Report, 2021).
FIGURE 5. GLOBAL INDUSTRY SIZE AND GROWTH RATES OF PRIVATE EMPLOYMENT INDUSTRY FROM 2019 TO 2020 (WEC Economic Report, 2021).
Year
Career management
RPO (Recruitment process Outsourcing)
Direct Recruitment
MSP (Managed Services Providers)
Agency Work
2017
NA
+16%
+53%
+10%
+7%
2018
-5%
+8,4%
+5,4%
+2,8%
+0,8%
2019
-1%
+25%
+6%
+13%
+1%
average 2017-19
NA
+16, 5%
+21,5%
+8,6%
+2,9%
2020
+14%
-10%
-16%
-3%
-10%
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FIGURE 6. ANNUAL GROWTH RATE PER CATEGORY (WEC Economic Reports).
Figure 6 demonstrates the average annual growth rate before Covid-19 ( 2020) for Direct Recruitment and RPO together was 19%. According to , a global industry size is projected to reach €831 billion by 2027, with 4% growth.
Industry structure
Concentration/fragmentation
While the private employment industry for traditional Web 2 jobs is (major players such as Adecco, Randstad, Manpower) with mostly huge corporations making use of their services, in crypto the situation looks different. There are perhaps 8-12 active crypto recruitment agencies that operate within different ecosystems. In this way, the professional recruitment scene in crypto is quite fragmented at the moment. The biggest agencies are:
5 forces analysis
Parameter
Estimation
Competitive rivalry:
Medium
While recruitment in general is very competitive, it becomes less the case in the crypto industry. Crypto recruitment is less competitive due to the high barriers to entry: to provide staffing services in crypto one needs to understand the terminology, know specifics of the skills required and most importantly, have access to the various crypto populated spaces where crypto enthusiasts communicate. At the moment there are 10-15 competent players in crypto recruitment and consider competitive rivalry to be medium.
Threat of new entrants:
Low
At the first sight, the entry threat can seem high but a crypto agency needs to have a deep understanding of the crypto landscape plus have a profound network of people interested in crypto. This parameter is therefore considered to be low.
Threat of substitutes:
Low
A substitute threat is seen as low because there are many alternatives to using recruitment services but the result will not render to be as efficient and strategically wise. Startups might prefer posting a job vacancy on social media or a simple job platform but, as statistics show, the most in-demand candidates aren’t browsing traditional job boards for their next opportunity; especially those with a tech background (fewer than 14% of software engineers reported using a job board to find their current job). Traditional job boards are losing their appeal to top talent — 62% of software developers - the most in-demand talent out there - are open to new opportunities, but only 13% of them are actively looking. Job boards are therefore unable to provide strategic support to the companies. Another substitute widely applied today is to do a wake-up call to friends and the most proximate telegram chats in an attempt to find the right fit. While word-of-mouth is one of the best strategies to cherry pick trustworthy individuals with a good reputation, this method has little potential to scale and cannot be consistently counted on.
Bargaining power of buyers:
High
As a service, the most important goal is to satisfy the client so that bargaining power is high
Bargaining power of suppliers:
Medium
Candidates are able to choose the offer they like but since it is the client who eventually decided on the candidate, bargaining power of suppliers is considered lower.
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Based on the obtained perspective, we can say that the crypto recruitment industry looks quite attractive given competition is high on two out of five criteria.
Industry critical success factors
Success comes down to making a good match - having a large talent pool, many community connections and partnerships. For this to be achieved, the following points must be account for.
Industry trends
To understand where this industry is going we have looked at the PESTEL-analysis and some of the most relevant trends for this industry.
Political
Economic
Social
Technological
Environmental
Legal
Both Web 2 and Web 3 regulations need to be taken into account as OWS will be working cross-border with different clients and candidates.
Increased job demand on blockchain specialists
Growing amount of remote positions and Digital Nomading (Partially due to the pandemic). Millions of people were forced to work from home in 2020 and 60% of them have rapidly adjusted to the new normal and would not see themselves working at the office full time ever again. Share of remote job searches grew with 360% between June 2019 and June 2021. The number of remote workers is expected to amount to 36.2 millions in the USA alone by 2025.
DAOs opening up a way for social and economic coordination in different industries including private employment
Eco-friendly projects looking to implement DLTs
More crypto regulation in 2022 clarity and prohibition): The Markets-in-Crypto Assets (MiCA) regulation will also come into effect, which will provide a unified legal framework at the European Union level and create more legal clarity for service providers and issuers of crypto assets.
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Industry long-term prospects
Blockchain and crypto industry is shaping the future of the economy and increasing its pace while the majority of the population is still not ready for it. This creates a paradox where demand for specialists is a lot higher than its supply. Being equipped with Web 2 skills becomes not enough for working in Web 3 - people need to develop trust and learn to deal with some degree of regulatory uncertainty. This is why traditional Web 2 agencies with no experience of working in the crypto industry do not currently have potential to fill this recruitment gap - they first need to learn the basics of Web 3 and practically change the ideology of their candidates - showing that crypto is not all scams. Additionally, this needs to happen very fast before the candidate loses his/her attention in a position. All in all, we conclude that traditional recruitment services as they are today have a long learning curve ahead before they will be able to operate efficiently in the Web 3 space.
In the meantime, as job demand for blockchain specialists continues to grow, Web 3 employers need recruitment assistance from the insiders - professionals who have access to large crypto networks but most importantly, have the right mindset about crypto and are able to persuasively communicate it to the less familiar candidate.
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