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Randstad CEO Too Early For Recovery.

Randstad CEO Too Early For Recovery.

Randstad NV Chief Executive Ben Noteboom has said it was too early to talk about a recovery in the staffing industry, but he was confident the sector will grow, albeit slowly, once the economy recovers, particularly in the lucrative segment for white-collar professionals.

Noteboom was speaking to Dow Jones Newswires in an interview earlier this week and said that the short-term outlook for the Dutch employment agency remained cloudy. Randstad in April didn't rule out an acceleration in revenue decline for the second quarter as visibility was extremely low. "The recent talk of green shoots in the economy is premature," Noteboom said. "You sometimes see signs of a recovery, but you don't know by what these are caused. It's too early to say the market is improving." The staffing sector has been pummelled by the economic downturn as demand for temporary and permanent labour has plummeted. In the past quarters, Randstad has reported double-digit revenue declines in all of its markets, including the U.K., France, Germany and the Iberian countries. Noteboom is confident that big players are well-placed to survive recession. "History shows market leaders emerge stronger from a downturn than smaller players," he said. "This will happen again." The staffing sector would grow once the market stabilizes, according to Noteboom, who added that some sectors proved to be resilient, including the government, education and health care sectors. Randstad's CEO sees potential in the white-collar segment, where staffing companies are still less active compared to the blue-collar segment. "It will take a while, but this segment will stand out, due to a rising penetration rate, an increasing demand for higher-educated staff in our regions, and because the segment is still very fragmented," Noteboom said. He expects to fill the gaps that smaller players leave behind, as many are expected to go out of business during this downturn. "Consolidation is, therefore, inevitable," he added. "Randstad is already well-placed in the professional segment, and will play an important role in that process." In 2008, Randstad generated around 17% of its revenue in the white-collar market, where it fills jobs in sectors like finance, engineering and health care. This segment is more profitable than others, which is why rivals like Adecco are also looking to expand in this area. Noteboom also saw long-term growth opportunities in India and China. Although Randstad's operations there are relatively small and haven't delivered "terrific profits" yet, Noteboom is confident that "my successors will thank me that we built up a position in these countries." "In India, we're talking about a middle-class working population of 300 million. Revenues are still low because of the low wages there, but salaries are rising 10% to 15% each year. In the long term, both India and China are huge markets and that's what we're focusing on now." Randstad in April posted a 52.6 million first-quarter net loss.

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