8 Steps for Starting a Recruitment Agency in Singapore

The employment market in Singapore roared back to life after COVID restrictions began to ease. Companies have responded by creating new jobs and leaning on recruitment professionals to acquire the necessary talent. 

However, in the small city-state, a combination of factors is creating a complex hiring market. This could make it a great time for a recruiter to venture out and consider starting a recruitment agency. 

Since pandemic restrictions have been lifted, the unemployment rate has dropped. For all residents and non-residents over 15 years old, the jobless rate declined by more than a percent, from over 3% in 2020 to 2.1% in September 2022. 

While the low unemployment rate is good news for the country, it has also coincided with a population dip. Many people returned to their home countries, and fewer overseas talents could enter the country for an extended period. The number of non-residents declined from 1.68 million in 2019 to 1.56 million in June 2022. While this is an increase from 2021, it is still not back to pre-pandemic levels.  

This situation creates what Indeed’s APAC Economist Callam Pickering called a “more difficult recruitment environment” that could make it hard for the economy to grow robustly. This challenge means that recruitment professionals will be in high demand to help businesses meet their talent acquisition needs. 

Taking the step to address the talent shortage can help the country meet corporate needs for talent to fuel growth. Employers will need specialist recruiters to help them fill skilled tech positions and emerging roles that are in short supply even in normal circumstances. 

Filling this gap can have a significant impact on issues affecting the entire workforce. Despite some headwinds and fierce competition for talent, recruiters who consider starting a recruitment agency can make it a successful venture in this hiring environment. These aspiring business owners should consider the following eight factors before starting a recruitment agency in Singapore.

What is your agency’s niche?

The first step when making plans for starting a recruitment agency is deciding what part of the employment market your business will serve. This process includes determining if the agency will place candidates in temporary or permanent roles as well as whether they will have a generalist or specialist focus.

Generalist agencies tend to have a broad focus and access to a wider pool of applicants. These agencies tend to focus on entry-level jobs or roles that do not require a lot of experience. While this will provide more flexibility in response to changes in the market, you may not have deep enough relationships to source candidates for more lucrative, senior roles or jobs in specialized, hot industries. 

Specialist agencies may have more knowledge of specific industries or focus primarily on recruiting for senior-level positions that generate higher fees from clients. These agencies may have more insight into employers’ hiring needs and deeper relationships with candidates in particular fields, which can be an advantage over incumbent agencies such as Hays, Robert Walters, or Michael Page. However, a shift in market demand or a slowdown in hiring in your chosen area can negatively impact business growth. 

In Singapore, recruiting for the most in-demand jobs can yield the best results when getting the business off the ground. These jobs include retail jobs such as customer service representatives and e-commerce specialists, teachers, media and communications roles, and healthcare professionals. The goal is to assess your strengths, understand the current market demand, and examine how the recruitment industry may evolve in the long term. 

Understand the competitive landscape

The next important area to consider when starting a recruitment agency is your competition. As a newcomer to the market, you will need to know the strengths and weaknesses of incumbent agencies such as Hays, Robert Walters, and Michael Page. This will help to create a business model that exploits gaps in competitors’ services or that provides new services that appeal to clients’ current needs. An example could be providing recruitment services virtually, overseas recruitment, or focusing on populations that could benefit from upskilling before job placement. 

Additionally, the shortage of workers due to the closed borders during the pandemic has intensified the competition for talent making it essential to differentiate your recruitment services by showing clients that your agency can source the right candidates for their job vacancies quickly and efficiently. Setting your agency apart from competitors quickly will be crucial to the long-term success of the business - and it will attract the right employees and clients.

Get familiar with local laws and regulations

Setting up your business the right way is a critical step in the process of starting a recruitment agency in Singapore. The country is known for its many regulations governing many aspects of the business world, and the employment market is no exception. 

Recruitment agencies are required to apply for a license based on the 1958 Employment Agencies Act. A bond or security deposit of between S$20,000 and S$60,000 is also required to obtain the license. This is required to protect job seekers. Other regulations that apply to recruitment agencies are the Employment Agency Licence Conditions, Employment Agencies Rules 2011, Employment Agencies (Exemption) Order 2011, and Employment Agencies (Exemption) Order 2014. Learn more about this legislation here. 

Although the regulations are strict, it is necessary to understand them and ensure that your recruitment agency follows these guidelines. Operating without a license can lead to fines and possible jail time.

Know the full investment cost

In addition to the regulatory requirements for starting a recruitment agency, it is also prudent to get a full picture of all the costs associated with setting up and operating this type of business in Singapore. The cost when you apply for the license is S$400, and S$100 when the license is issued. Learn more about applying for an employment agency license here. 

Start-up costs generally include:

• Business registration: You will need to incorporate the business as either an Employment Agency or Executive Search Agency. You will also need a Certificate of Employment Intermediaries for all senior management, which ensures that the agency’s managers are well-versed in employment legislation. The minimum capital to register the company is S$1.
  
• Opening a business bank account: After shopping around to determine which bank is best for you, it is fairly simple to open an account. Information that you will need to provide may include:
  - Completed Corporate Account Opening Forms (signed by authorized signatories).
  - Board of Directors Resolution authorizing the opening of the account by the signatories to the account. This must be prepared by your company secretary.
  - A certified True Copy of Resolution sanctioning the opening of the account and the signatories to the account.
  - A True Copy of the Certificate of Incorporation, certified by the company secretary or one of the directors.
  - A True Copy of the Company’s Business Profile from the Company Registrar.
  - A True Copy of the Company’s Memorandum and Articles of Association (MAA), certified by the company secretary or one of the directors.
  - Certified True Copies of Passport (or Singapore IC) and Residential Address Proof of the Directors, Signatories, and Ultimate Beneficiary Owners.
• Phone/internet services: With more businesses operating remotely, selecting a good service provider can be a make-or-break decision when starting a recruitment agency. Make sure to carefully consider your options.
  
• Office space: Companies in Singapore need a functional business office to operate. While keeping your budget in mind, the location should be a key factor. Consider a co-working space to save money in the early days before expanding to your own office space if you need to.
  
• Website and social media development: The costs of setting up and managing an online presence for your business can vary depending on if you go the DIY route or hire experts. The only cost associated with creating a website yourself is purchasing the domain, and social media accounts are free to create and operate. Hiring a web designer and social media manager will be an ongoing expense to factor in for your agency.
• Business hardware and software: If you intend to start small with your recruitment agency, hardware costs may only be limited to the purchase of a computer, printer, and phone. Software should be purchased with the aim of simplifying day-to-day operations and improving the client experience. A customer relationship management (CRM) tool, Microsoft or Google office suite, and an applicant tracking system (ATS) are essentials for any recruitment agency.
  
• Insurance: Business owners should also take steps to protect their business with policies that insure against key business liabilities. Some forms of insurance to consider include professional liability, management liability, and commercial general liability.

It is also important to factor in the costs associated with recruitment operations, such as posting on job boards, purchasing a LinkedIn premium membership, joining professional associations, employee salaries, IT and accounting support, and marketing. 

These costs should be weighed against your agency’s potential earnings based on your business model. For instance, contingency recruiters are paid a one-time fee equivalent to 15-20% of the role’s annual salary after providing them with a successful candidate. Retained recruiters charge a higher fee for placing specialized or executive positions. Setting up a business in Singapore is a complex and costly process, so it is worthwhile to also invest in the services of a professional to guide you through the process and ensure that there are no errors along the way. 

Outline business goals

Creating a vision for how your agency will operate in 5, 10, or even 15 years has many benefits. It encourages you to imagine all of the potential paths your business may take. It will also ensure that you create a business model that is scalable and agile in response to market changes. It will also help you paint a clear picture of the agency’s strategy and values for employees and other stakeholders and establish incremental goals that can be measured regularly.

Develop a marketing plan

The way that your recruitment agency is marketed can have a substantial impact on the company regardless of how the business is structured. Starting a recruitment agency is not simple, so a marketing plan can provide the blueprint for how your recruitment agency will be presented to clients and job seekers. Creating authentic, customized messages for your target audience will help you build a loyal following and a positive reputation. These are crucial aspects of building a thriving business. 

Digital marketing practices deliver tremendous value to companies, so evaluate how your agency will utilize online and traditional channels to raise awareness and build the brand. Equally important is minimizing negative experiences and erosion of brand value so that your agency can have a chance of long-term success. 

Invest in technology

Technology can also make a noticeable difference when starting a recruitment agency, and digitalization has been a focus for the Singapore government. Building a digital-native enterprise can be a key advantage over traditional incumbents with legacy solutions and processes. Professionals also tend to prefer working for companies that allow them to learn how to use leading-edge technologies or provide career advancement opportunities. In this way, investing in tech solutions such as AI, cloud computing, automation, and advanced data analytics can help your agency attract top talent and potential high-performers. 

Along with solutions that are dedicated to specific business functions like finance or payroll, recruitment agencies should consider investing in a cloud-based CRM and ATS solution to simplify daily tasks, speed up candidate sourcing and hiring processes, and provide intelligence about how the business is functioning. Ensure that you are selecting tech solutions built with security and local regulations in mind that will grow and evolve with your business.

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Invest in top talent

The most crucial piece of starting a recruitment agency is your workforce. They are the first introduction of your agency to candidates, clients, and future colleagues. Consider how many employees you will need to get your business off the ground and ensure that their roles are well-defined. Even as a start-up, employees should have a clear sense of how their career may benefit from working with your agency. 

Invest in keeping employees happy and motivated to maintain a low turnover rate and protect the agency’s reputation. Some important ways to invest in your workforce include:

• Providing career development and training opportunities
• Cultivating positive and diverse work environments
• Hiring people who display empathy and listen to each other
• Creating a work environment and business model that account for employees’ well-being and workload

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Taking the plunge

Starting a new business is no simple task. However, with a clear vision, careful planning, and trusted partners, your recruitment agency will have a chance to succeed in an evolving industry. As you get your recruitment agency up and running, look to partners like Manatal to protect your business in areas like security and compliance while you focus on the daily responsibilities of running a business in Singapore.

Being a recruitment professional means keeping up with the times and identifying what recruiting software will be a must-have ahead of time. If you want the best recruitment support in one place, Manatal is the answer.

Its AI recruitment software is a SaaS cloud-based solution, giving you access to top-notch ATS and CRM platforms. Try our 14-day Free Trial and discover how Manatal can prepare you for 2023 and help you stay ahead of the game.