Recruitment agency Hays has reported its first annual loss in 23 years after artificial intelligence and economic headwinds disrupted hiring across global employment markets.
The company recorded pre-tax losses of £54.5 million for the 12 months ending June 30, down from a profit of £1.5 million in the previous year, as its net fees slumped by 8 per cent.
Hays attributed the decline to global changes occurring at an unprecedented pace, warning that technological advancements are transforming traditional workplace structures.
"We've been through downturns before, but this time is different," Hays said in its annual report.
"The future is significantly uncertain, shaped by the potential impact of AI on jobs, disintermediation by technology platforms, increased macroeconomic uncertainty and threats from deglobalisation," the firm added.
"Our world has changed, and the pace and scale of that change has never been greater."
Impact of artificial intelligence on entry-level jobs
Junior white-collar workers are among the hardest hit by the shift, according to a report by investment bank Goldman Sachs, as major industries increasingly turn to automated software rather than entry-level staff.
Sectors such as management consulting, advertising, and software publishing are relying on artificial intelligence tools to perform tasks traditionally assigned to junior employees.
Major banks across the City of London and Wall Street in the United States are also investing heavily in artificial intelligence technology to streamline operations.
At the same time, customer service call centres globally are expanding their reliance on automated software robots to handle customer queries.
Goldman Sachs is a leading multinational investment bank headquartered in New York that provides financial research, securities, and asset management services. The City of London serves as the primary financial district of the United Kingdom, while Wall Street represents the central financial district of the United States.
Corporate restructuring and consultant workforce cuts
In response to tougher hiring conditions globally, Hays took decisive action to restructure its business and reduce operating costs.
The recruitment firm met its cost savings targets three years ahead of schedule, cutting annual expenditure by approximately £50 million over the financial year.
Hays has earmarked an additional £50 million in cost reductions for the financial year ending next June.
The restructuring included substantial workforce reductions, with the firm's total consultant staff falling 12 per cent year-on-year by the end of 2025-26.
In June, Hays confirmed it had completed the sale of its business operations across six European countries. The firm also launched strategic reviews of its operations across another seven global markets.
Hays plc is a British multinational recruitment company founded in the UK and listed on the London Stock Exchange. As a constituent of the FTSE 250 index, which tracks mid-cap listed companies, Hays operates as a major provider of specialist recruitment services worldwide.
Evolving workforce requirements and financial outlook
Hays reported that client companies looking to recruit are raising their standards while adapting to rapid technological shifts.
"Skills needs are evolving rapidly, demand is shifting towards more flexible, project-based and specialist work, and hiring is becoming more complex, shaped by regulation and technology," Hays said.
"Advances in AI and ongoing economic uncertainty are only accelerating this," the company added.
Technological disintermediation in the recruitment industry occurs when digital platforms and automated tools connect employers directly with job candidates, reducing reliance on traditional recruitment agencies.
Despite the headline loss, the company returned to profitability on an underlying basis during the final six months of the financial year, aided by its cost reduction program.
Full-year adjusted operating profits increased by 3 per cent, reflecting underlying operational recovery following the initial impact of restructuring measures.
