Recruitment specialists Kelly and Adcorp have coped admirably with the economic downturn.

Bruce Whitfield:
Results out today from two of the biggest players in the South African recruitment sector, Kelly and Adcorp, and we will talk to Richard Pike from Adcorp in just a moment but first Grenville Wilson from Kelly who is the chief executive at Kelly Group and you seem to have weathered the storm of the first quarter of this year, I'm talking about the calendar quarter Grenville, pretty well.

Grenville Wilson:
Yes, we are happy with the way things have turned out.

Bruce Whitfield:
Did you see that recruitment market though come under some pressure in January February when this market turned very sour and the economic outlook dipped substantially as the power cuts kicked in?

Grenville Wilson:
Yes definitely and I think more in some sectors than others because our professional specialty brands, the likes of PAG Accountants on Call and front-line have really performed well because the skills shortage still you know keeps that segment of the recruitment and staffing services industry going but we have definitely seen an impact in sectors like, because of the higher interest rates, we have seen an impact in the financial services sector and in the retail sector in the temporary employment services arena.

Bruce Whitfield:
If you look at an announcement for example that came out of Standard Bank, it was actually a Bloomberg story on Standard Bank, and the fact that they put a hiring freeze on and when you see stories like that you must go cold and tremble at the knee a little bit Grenville?

Grenville Wilson:
You know we do but you know luckily we have got the construction industry booming, we have got hospitality and tourism booming, we have got mining booming, and so those sectors of the economy in terms of skills will pick up the slack.

Bruce Whitfield:
Is there a correlation also between the power cuts and employment demand just in terms of confidence levels? Did you see any correlation there?

Grenville Wilson:
You know I think what happens is you know people go into a sort of a bit of a state of shock and then they will vacillate so what happens is you will get a longer sales cycle because people don't want to take decisions, they want to take a wait-and-see attitude. But you know when there is work to be done and demand to be met in certain sectors that we have identified you know a business must go ahead so it is still happening out there luckily for us.

Bruce Whitfield:
Temporary staffing is always strong but it has come under a little bit of pressure. What is perhaps surprising in the current economic environment is that permanent recruitment actually is strengthening.

Grenville Wilson:
Yes but as I said the main reasons for that and we have got some really good statistics from the US staffing industry, they have really good statistics, and that backs up what is happening here; in the skilled jobs and the professional specialty which covers like accounting, finance, technical, engineering, legal and health care you actually continue even now they are projecting strong growth in excess of 5 percent in those segments particularly and also in the permanent segments but also in the temporary services in those segments. Where you get hardest hit is what you call the commercial, clerical and sort of like general industrial on the temporary side.

Bruce Whitfield:
Operating margin expanding nicely by 110 basis points. Can you sustain that considering that things are still quite shaky with interest rates, Chris Steward our market commentator was saying we could even see another hundred basis points in interest rates before things flatten off?

Grenville Wilson:
Yes but interest rates don't really, well I mean if you look at Ebitda margin that is before interest and Ebitda margin but overall we are confident that in the short medium-term we are going to continue to be able to improve our margins particularly because the skills shortage sort of offsets any margin squeeze because of the tightening in the economy but through our business mix and driving the high margin which is the low volume business like the permanent recruitment you can continue to improve your margin and of course really driving real productivity hard within the business and low-cost production we are confident that we are going to be able to do that.

Bruce Whitfield:
Grenville Wilson thanks very much indeed, the chief executive officer of KellyGroup.

Bruce Whitfield:
Richard Pike joins us now, he is the CEO of Adcorp in a similar space and I suppose you have also noticed, no doubt Richard, an increase in demand for those permanent placements? The factors that are impacting the skills shortage globally must be going in your favour on that front as well.

Richard Pike:
That’s correct, you know ,if I look at our results our core headline earnings per share are up 30 percent this year and very much we did well in the permanent recruitment space but that said it probably contributes about 13 percent of our business at the moment so it is not the major contributor, the major contributor is the flexible staffing business and to a lesser extent our business process outsourcing activity.

Bruce Whitfield:
Sure, I mean business process outsourcing is quite small in the life of Adcorp but when it comes to flexible recruitment or part-timers, is there pressure in that market from your experience?

Richard Pike:
It sounds like a copout but it is yes and no. You know we have about 25 000 white-collar contractors at any point in time and about 40 000 blue-collar workers and I think you find in markets that are uncertain as they are at the moment that plays into the hands of blue-collar staffing and we are overweight in terms of blue-collar and it was a decision we took some time back and made some strategic acquisitions in that space and definitely that is doing particularly well. White-collar does have an exposure to the financial services sector so yes it will feel pressures but some of the initiatives that we have undertaken and some of our clients in that space moved to single vendor and we have gained market share in that space.

Bruce Whitfield:
In English, sorry just to get a translation on that particular one Richard. In English, basically, financial services players are looking to individual providers of talent and saying look you have done us well in the past, we will come to you only, let's talk about perhaps cutting your margin a little bit on that front.

Richard Pike:
What they have done and it is probably because more and more of the buying decisions are going through procurement departments but they are looking for an exclusive supplier arrangement whereas in the past they have used a number of service providers and the theory being in the past to spread their risk but we have seen a number of big clients going to one single supplier and we picked up quite a bit of that exclusivity.

Bruce Whitfield:
You mentioned the 30 percent increase in core earnings growth, it was however for the 14 months to the end of February because of your new year end, if you did a like-for-like comparison though, 12 months on 12 months, would the numbers have been very different?

Richard Pike:
No it would have been the same. What we were required to do is to report two extra months tagged on to last year's 12 month period so they very much would be in the same realm.

Bruce Whitfield:
Richard Pike, thank you very much indeed, and before him, Grenville Wilson, Richard Pike is the CEO of Adcorp, Grenville Wilson is the chief executive of Kelly Group.