Over the past two years, the employment market in the United Arab Emirates (UAE) has largely recovered to pre-pandemic levels, with healthy growth expected in the coming year.
However, that does not mean that the market has not emerged from the pandemic without some significant changes taking place. Similar to other parts of the world, employee preferences and expectations of employers have evolved to better suit today’s realities. Understanding how the market has shifted and the existing gaps in the market will be essential for starting a recruitment agency successfully.
As we have seen in many parts of the world, employees now desire more flexibility in their work arrangements - whether that is hybrid or fully remote options - and they are willing to leave their job to get what they want.
Employers, in turn, have made adjustments to their policies and raised salaries to attract and retain top talent. With two-thirds of employers in the MENA region planning to hire in 2023, recruiters will be in high demand.
The UAE’s recruitment industry is poised for solid growth over the next few years. Confidence in the market and foreign investment are contributing to a strong recruitment market. According to market analyst MarkNtel Advisors, the UAE’s overall HR outsourcing services market, which includes talent acquisition and recruiting, is expected to grow at a CAGR of 8.96% between 2022 and 2027. The online recruitment market is also expected to enjoy significant growth, with Research and Markets expecting the market across the Middle East and Africa to grow at a CAGR of 3.8% between 2021 and 2028.
Additionally, the UAE’s government’s push to increase the number of UAE citizens in private companies is creating opportunities for recruitment agencies to help employers with more than 50 employees meet their target and avoid penalties.
The opportunities in the UAE’s employment market are vast, making it a great time to consider starting a recruitment agency. To ensure that you get off on the right foot, make sure to take these eight steps.
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Figure Out Your Agency’s Niche
When starting a recruitment agency in the UAE, this step is incredibly important. Smaller agencies tend to operate as specialist recruiters and only focus on recruiting for specific industries.
Large, international agencies like Michael Page or Adecco will recruit for multiple industries. Therefore, you will need to consider where you may already have strong relationships with potential clients - as well as candidates - and pay close attention to the most in-demand jobs. At the moment, hiring activity is hot in financial services, e-commerce, and technology, so it might be worthwhile to consider focusing on recruiting roles in these industries.
Another consideration is whether to recruit international workers, UAE citizens, or both. While there are a large number of international companies operating in the country, and many companies hire talent from all over the globe, as mentioned earlier, there is a push to increase the number of UAE citizens employed by private companies. Recruitment agencies can also operate as traditional recruiters, executive search firms, specialist firms, large-scale labor recruiters, or temporary agencies. The majority of recruitment agencies in the UAE operate as traditional recruiters, but that should not stop you from considering other options.
Assess Your Competitors
In addition to learning about the recruitment market. It is crucial to gain an understanding of the competitive landscape when starting a recruitment agency. There are several agencies operating in the country ranging from multinational recruiters such as Uplers, Manpower Group, Michael Page, and Robert Half to locally-based firms.
Distinguishing your agency’s brand and services in this competitive market will be crucial to the long-term success of the business. It will attract the right employees and clients to stand out from the pack.
An opportunity for companies starting out in the UAE includes adopting and leveraging technology to operate as a data-driven enterprise. Utilizing AI in talent acquisition operations like candidate sourcing can also help your agency differentiate itself. Additionally, with candidate experience rising to the forefront of many agency agendas, it will be prudent to prioritize this when building your business model.
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Determine the Business Goals
Another important step for any entrepreneur starting a new business is planning out the goals and objectives for the enterprise. Creating a vision for how your agency will operate in five, 10, or even 15 years encourages you to imagine all of the potential paths your business may take. It is also crucial for the beginning stages of the business as you plot out the licensing costs and other fees required to get up and run.
This ensures that you create a business model that is scalable and agile in response to market changes. Additionally, it allows you to obtain a clear picture of the agency’s strategy and values for employees and other stakeholders and establish incremental goals that can be measured regularly.
Research Laws and Regulations
In order to open a recruitment agency in the UAE, the government requires businesses to obtain a license. The license is granted only to UAE citizens by the Ministry of Human Resources and Emiratisation (MOHRE).
The Ministry of Labour’s Resolution No. 1283 for 2010 on Licensing and Regulation of Private Recruitment Agencies details the rules and regulations for operating a recruitment agency in the country. Applicants for a license must also have a clean criminal record and have a head office registered in the UAE where all business is carried out.
Other laws governing how businesses, including recruitment agencies, should include Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations in the Private Sector, known as the UAE Labour law. This law prohibits forced labor and discrimination and outlines employers’ obligations to employees.
Make sure that you know about all of the relevant laws governing labor, privacy, workplace standards, and payroll to protect your agency’s reputation. Consider seeking out an adviser to ensure your agency is not breaking any of the country’s laws.
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Calculate Business Costs
When you are starting a recruitment agency in the UAE, you will need to carefully calculate the costs of setting up and operating the business. Before the business is allowed to operate, you will need to obtain a license. The cost of a license depends on whether you are opening a brokerage agency - which serves as a mediator between employers and employees regarding salary and the terms of employment - or a temporary recruitment agency.
The brokerage license is AED 50,000, while a temporary recruitment agency license is AED 100,000. A bank guarantee of AED 300,000 for brokerage licenses and AED 1,000,000 for temporary agency licenses must also be provided to MOHRE for the duration of the license.
To obtain a license, applicants will need to submit documents including a passport, the family book, identification, a certificate of good conduct, commercial name booking for the new trade license, written and signed acknowledgment from the applicant, and a sketch of the establishment’s premises. Selecting and registering a business name can also be tricky, as there are specific rules that business owners need to follow. For instance, the name cannot be considered offensive, it has to be available and not taken by another enterprise, and it can’t be an abbreviation.
Another decision you will need to make is whether you intend to establish your business in a free zone or on the mainland. This choice can have significant implications for your business opportunities and your tax liability, so make sure to consider your options carefully.
The technology setup of the agency is also critical. It can be a huge advantage to start off as a digital-native, cloud-based enterprise, especially as legacy companies work to transform their business systems to obtain the most advanced solutions. 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.
Business owners should also take steps to protect their enterprise with policies that insure against key business liabilities. Some forms of insurance to consider are professional liability and SME insurance plans. Next, determine 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.
Develop a Marketing Plan
The next area to consider when starting a recruitment agency is how your agency will utilize online and traditional channels to raise awareness and build the brand. 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 account for.
The way that your recruitment agency is marketed can have a substantial impact on the company. Since the market is competitive, it is necessary to consider how your agency will stand out. Developing a marketing plan provides the blueprint for how your recruitment agency will be presented to clients and job seekers. It should be authentic to the brand and speak directly to your target audience. This will help you build a loyal following and a positive reputation in the market.
Invest In Recruitment Tech Solutions
Technology can also make a noticeable difference to a recruitment agency. Building a digital-native enterprise can offer an advantage over traditional incumbents grappling 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, so it is worthwhile to invest in tech solutions such as AI, cloud computing, automation, and advanced data analytics.
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.
Prioritize Your Agency’s People
The most crucial element of a recruitment agency is the workforce. This could be a differentiating factor in your business. To ensure that employees join and stay with your agency, consider how many employees you will need to get your business off the ground and define what their roles will be. Even as a start-up, employees should have a clear sense of how their career may benefit from working with your agency.
As the face of your agency to candidates, clients, and future colleagues, it is your responsibility to keep employees happy and motivated. 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
Getting Your Agency Started
Despite the complexity involved with starting a recruitment agency in the UAE, it can be a worthy venture for the right person. The employment market is experiencing strong growth and tremendous opportunity across several industries, which makes it an incredible time to take the plunge and get your recruitment agency off the ground.
To help your recruitment agency take off and fly smoothly, an AI recruitment software like Manatal is a tool worth looking at. Its innovative features, including ATS and CRM, are specifically designed to optimize your process and minimize any obstacles that are likely to pop up along the way.
Start your 14-day Free Trial now and discover how Manatal can help you take firm steps into the recruitment game.
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