City jobs cuts coming to end as Robert Walters predicts upturn

The swathe of job cuts in the City may be coming to an end, according to the recruitment company Robert Walters, which yesterday said companies were now starting to take on staff.

During the stock market slump of the past three years, investment banks, accountants, lawyers and IT companies have shed thousands of jobs. But Robert Walters yesterday said a degree of optimism in the recruitment market was returning. "In certain areas there are signs of improvements, for example, there is a shortage of supply for accountants in the City at the moment and IT companies, where jobs were ravaged, are now looking at recruiting again, " Robert Walters, the chief executive of the company, said. "Recruitment hasn't quite turned around yet across the board, but the situation is not getting worse and we are cautiously optimistic about 2004 - more optimistic than we have been for several years. But banks still have overcapacity in their staffing levels, despite all the cut backs."

After a sharp cutback in the use of casual workers, companies are also more willing to hire temporary staff as trading conditions improve and the number of people willing to switch jobs has also picked up.

"In the past couple of years, everyone has wanted to stay put as moving elsewhere was a leap in the dark and people felt safer sticking with what they knew. Even if there are no new jobs created, the market stagnates when people decide not to change jobs. But people are starting to become more confident about switching jobs, so the ingredients are there for a frothy soup ahead," Mr Walters said.

Robert Walters itself has had to make redundancies as it battled to control its own costs in the face of a fall-off in business. The downturn in recruitment has inevitably hit Robert Walters hard this year and it yesterday reported a 14 per cent drop in turnover for 2003. In the UK, turnover was down 22 per cent and it only just broke even.

Banks have been trying squeeze out lower fees from the company over the past year. This forced Robert Walters to cut back headcount by 13 per cent last year, and these cost-cutting measures helped lift group underlying pre-tax profits to £2.2m. Mr Walters said further headcount reduction was now unnecessary and it would now be able to increase numbers.

Its one area of growth last year was in Asia, where turnover, fee income and operating profits all improved. Singapore saw strong growth and Hong Kong has recovered following the outbreak of the Sars virus.