Empresaria Group plc (EMR.L) Earnings Call Transcript & Summary

Well, good morning, everyone, and welcome to our 2022 Empresaria Capital Markets Day. I'm Lucy Sharp, Chief Marketing Officer for the group. And thank you all for joining us this morning. Before we get underway, I just wanted to share a couple of notes with you before we start. We're going to start with a series of presentations from our Executive Director and our regional leadership team before turning over to Q&A. We would then like to invite you all to join us for some light refreshments and drinks just outside in the foyer. Now I have the poser to introduce our 2 executive directors this morning. Certainly, I'm joined by Rhona Driggs, our Chief Executive Officer. Rhona was appointed CEO in June 2019 and has over 30 years experience working within international staffing companies. She has been recognized for the past 6 consecutive years as one of the staffing industry analysts 150 most influential women in staffing. And for the last 2 years, with also listed on Europe's top 100 most influential leaders in staffing. Rhona is joined by Tim Anderson, our Chief Financial Officer. Tim has over 20 years post qualified experience and joined Empresaria in 2018. Previously, he has held finance positions in 3 FTSE 100 companies. I'm now absolutely delighted to hand over to Rhona Driggs to get today's presentations underway.

Thank you, Lucy. So now I have the pleasure of introducing the most important people in the room to us anyway. And it's the individuals on the far right-hand side. So I'm pleased to be joined by our regional team who have flown in from all over the world. So it's absolutely brilliant to have them here with us today. First, I'd like to introduce Garrick Cooper. He is our President of North America. Garrick comes with over 25 years' experience in the staffing industry and all aspects of staffing, working for publicly listed companies based in the U.S. We have next Rafael Moyano, who I will refer to as Rafa throughout the presentation. He joined the group in May of 2021. And again, I forgot to mention Garrick joined in September. So again, this leadership team is pretty new to the group. Rafael joined in May 2021 as Regional CEO of APAC. He's got over 25 years of experience, covering all aspects of IT and staffing and spent the last 11 years running the Asia PAC region for Adecco. Next, I have Julie Smith, Regional CEO of U.K. and Europe. Julie has over 30 years of staffing experience and joined the group in March of 2021. She brings over a wealth of experience and the value that Julie specifically brings as she comes from more of the staffing solutions side, which is absolutely, you're going to hear about some exciting launches we have planned later and Julie is going to be instrumental in helping us launch those initiatives. And last but not least, Amit Somaiya, who is our CEO for Offshore Services Group. I know everybody wants to hear about Offshore Services. So he's joined us all the way from India today. He actually cofounded the Offshore Services group with Empresaria in 2006, I think it was, right? In 2006. He has had stellar performance with the group. So I'm super excited for you to get a look into that business today. And we've actually put together even a video so that you can feel like you're in India, seeing the operation in action. So super excited about that. So again, on behalf of our entire leadership team, I want to welcome you and thank you so much for taking time out of your busy schedules to join us today. You're going to hear all about our road map to GBP 20 million. This is the first time the group has put out an ambition like this. And we're going to tell you how we're going to do it and show you -- give you more detail and more insight into the pillars to this growth. But first, I wanted to start with a little bit about the recruitment landscape because everybody's got macroeconomic uncertainty in their brains right now. And I want to talk to you a little bit about how that is I think going to be very different for the recruitment sector overall. So let me start by outlining some of the key factors that are impacting our sector. There's no doubt that global macroeconomic uncertainty has been dominating our headlines in recent months, especially here in the U.K. The threat of recession is looming, However, it is potentially coming at a time of unprecedented labor and skill shortages, which seems somewhat of a paradox. So if you look at some of the headlines, you will see these are all recent headlines that we have been seeing all over. In the past, while they're suggesting that there may be an economic slowdown hiring is unlikely to slow. We've heard from many people that even if a recession happens, they will likely be hiring through that recession because the -- the talent is so tough to find that this is going to be a very different story for recruitment going forward. And while the trade recession is real in some of our markets, it does feel different than previous recessions. Our job numbers are not showing signs of slowing and the U.K. still has low unemployment rate of 3.5%, which is the lowest since 1974. And while the U.S. saw a small increase in their August unemployment, it's still exceptionally low at 3.5%. As the headlines indicate, the challenges we've seen with the skill shortages will remain for the foreseeable future and companies will need to rely on recruitment companies to help deliver their talent. Future seeking leaders know that they cannot take their eye off the ball in terms of hiring and retaining employees while at the same time, they understand that markets could pivot quickly. As such, they will continue hiring with a focus on the more -- most critical skills and jobs, Instead of hiring ahead of demand, they will balance current needs for available talent and try not to overcorrect in an environment where talent shortages continue to threaten operations. New job types are coming about as a result of digitization. Skill shortages are no more widely felt in the technology sector as rapid digitization has led to the need to hire more -- to higher skill sets that didn't exist 10 years ago. Every organization has needed to enhance their digital capabilities and skilling and reskilling have struggled to keep up with the pace of demand. Demand from candidates for flexibility. Obviously, as we enter into the post pandemic world, it is clear that the new ways of working adopted throughout the pandemic are here to stay. On the Canada side, we see increased demand for flexibility in remote working. Employees now want to work where and when best suits their schedule. In our recent survey of more than 2,500 candidates across the globe, we discovered that attitudes towards work have certainly changed with 83% of candidates telling us that their attitude toward work had either significantly or somewhat shifted from before the pandemic. When asked to cite the main reasons for the change, the overwhelming majority indicated a desire for more flexibility closely followed by the need or desire for remote working. Then there's demand from clients for different workforce solutions. Clients also have new expectations. They want long-term strategic partners that support them with their workforce planning. They want to work with organizations that remove complexity and move beyond the transactional services to value-added solutions and consultative partnerships. Wage inflation. Wage inflation to has been hitting the headlines across the globe as organizations attempt to retain existing staff and job seekers are presented with multiple counter offers or multiple offers, enabling them to name their price. Finally, there's an increase for Offshore Services. As organizations look to increase efficiency and maximize profitability, we see increased demand for offshore services, as you will have noted in our half year results. We will be discussing more about our offshore services offering in greater detail and depth throughout our presentation today. It is truly a key differentiator for us. We will be addressing all of these areas throughout our presentation today. Now about Empresaria. So -- we exist for our candidate and our clients, and we -- and our aim is to positively impact the lives of people while delivering exceptional talent to our clients around the globe. Some of you who are familiar with us have spoken to us, this slide will look familiar, but I wanted to just highlight a few things. Currently, Empresaria has been in business for a little over 25 years. We have more than 3,000 employees operating from 19 countries, including the 4 largest markets -- staffing markets, including U.S., Japan, U.K. and Germany. We're structured into 4 regions. U.K., Europe, APAC, Americas and Offshore Services, which are all represented here with us today. And we -- we operate across 6 diversified sectors, including professional IT, health care, property, construction, engineering, commercial and Offshore Services. We are weighted more towards stable and temporary contract income, the temp to perm ratio as of half 1 was 57% to 43% -- and our diversity by geography and sector has proven to be a differentiator and COVID was a great example of this. What we experienced significant impact in our aviation and hospitality businesses, we benefited in other areas such as our health care businesses and our logistics business in Germany. We also, during this period of time, outperformed our peers during COVID because of our diversity. So there was a lot of concern about what was going to happen during COVID and how are we going to weather the storm. And I will say, without a doubt, that we, as an organization operationally came out of COVID better than we went in. This is just a quick overview. I won't spend much time on this slide, just to give you an idea of our geographical reach, including the areas in which we operate in each of the various countries around the globe. And I wanted to highlight some of the recent awards that are either we've won as Empresaria or that we've been acknowledged for. These are just a few of the awards, and these are, again, always in the past couple of years. And just to demonstrate that within our markets, and while Empresaria may not be well known as a brand and we're changing that, within our markets, we are recognized as thought leaders in our markets and experts in the services that we deliver. Wanted to give you a very high-level overview on Offshore Services because I want everyone to understand what that business is because we refer to it, not only do we have a section on it in our presentation today, but we refer to it throughout our pillars of growth. So first of all, we provide a wide range of services to clients from 3 offshore hubs 2 in India and 1 in the Philippines that was just opened in 2021. We service clients primarily based in the U.K. and U.S. markets. Our clients operate in the staffing sector across a wide range of disciplines, including health care, IT, professional and industrial, our services are tailored to meet our clients' needs and include any stage of the recruitment process. So it can be simply sourcing and screening resumes and helping a client potentially build up their database all the way to end-to-end recruitment. Actually talking to the candidates of voice physicians, placing them on assignment, et cetera. We also offer middle office including compliance and credentialing, again, offloading some of that administrative work to allow their businesses to focus on their core competency, which are sales and recruiting and client management. And then finally, accounting, finance and back-office support is also another area that we provide. And all of these things, I will have to say that not only is Empresaria diversified, this business is because it's a very large business is also very diversified. We cover a number of sectors. We have multiple clients, and we can provide multiple services depending on what the clients want. Finally, clients typically pay on a per seat basis with a dedicated team operating as an extension of their own team. So as an example, potentially a client may pay to [ 1,000 ] to [ 1,500 ] per month for a recruiter in India or recruitment process sourcing in India compared to what they might pay here in the U.K. to hire that same recruitment consultant. Our Offshore Services is a proven success for the group and is one of our key differentiators, and none of our competitors have what we have to offer. Now there are competitors who have captive centers potentially where they built them their themselves. But the differentiator here is this business was not built to be a captive center for Empresaria. This business was built to service external clients and their niche is the staffing sector. So with that, I am going to turn it over to Tim Anderson to give you an update on our progress to date.

Thank you, Rhona. I'm just -- I don't want to let [ Rafa ] down. He told me I need to do my jacket up. It looks smarter. Is that good, Rafa? You happy? Excellent. He puts us all the shames as Rafa. Thank you, Rhona, and good morning. So before we move on to our growth plans, we wanted to give you some of the background to the journey we've been on over the last few years and why we think this is well positioned to deliver on our ambitions. Firstly, though, a reminder of our strategic objectives. These haven't changed and continue to underpin our growth plans. So firstly, to build scale in key markets and sectors; secondly, to increase diversity of profits by sector, markets and service; thirdly, to increase productivity and efficiency; and lastly, to make selected targeted investments to deliver growth. So the group has changed significantly over the last few years. Back in 2018, we were a collection of disparate specialist brands with disconnected operational autonomy and Group -- functions, focusing only on financial planning and control. Now we're a cohesive Group for a common purpose, strategy, vision and technology platform with centralization of key functions and sharing of expertise. Back when myself and Rhona joined the group in 2018, it really was a very different place. We were a collection of siloed, disparate brands and that was the strategy of the group at the time. That was a deliberate approach. But we can see very quickly that this wasn't sustainable and wasn't delivering value for our shareholders. There was a lack of an overarching operational plan. This is operated in a way that they felt was best for them, resulting in divergence of approaches and our lack of cohesion. We have no group identity, either internally or to our clients. People across the group, employees did not identify the Empresaria brand. If you ask them who they work for, they would only say they brand, they potentially wouldn't even have heard of Empresaria. We had a lack of organic growth and a very strong reliance on acquisitions to deliver growth in the bottom line. There was limited to cross-selling. We weren't making the most of the opportunities we had with our clients. We also had a number of loss-making brands and locations that simply hasn't been addressed. We had no common IT systems. Each brand has its own applicant tracking system, website provider, et cetera. And our leaders' compensation wasn't aligned to group objectives, and in many cases, they were simply remunerated as a percentage of profit. So what do we look like now? Well, we have a common strategy and values. Our operations understand and are bought into what the group is trying to achieve and where it is heading. We are now aligned into 6 sectors in 4 regions, led by these guys here. We have a strong regional leadership team that we didn't have before, that is enabling us to share knowledge and drive cooperation. We have a group identity, if you speak to our employees across the group now, they identify as being part of Empresaria. Yes, they're still part of their brand. And yes, that's still how they approach clients in the main. But they understand they're part of something bigger, and that really gives them a boost and they really take something strong from that. Since 2018, we've also addressed those loss-making operations. We either closed or consolidated 6 and showing that all of our operations are positioned to deliver a meaningful contribution to the group. We now have centralized resources at both a group and regional level, across a number of key nonrevenue-generating functions such as marketing, IT, HR and finance. This enables our revenue generators to focus on what they do best. The group now has a common IT strategy built around a single front office platform and technologies is critical in being able to recruit -- sorry, to compete in recruitment today. The industry has changed a lot since Empresaria was first founded, and this is now an absolutely critical area and was previously a weakness for us. Our move to a market-leading solution with a single global database, is enabling us to improve our processes, our speed and quality of delivery as well as helping to drive our cross-selling efforts, and we are already starting to see benefits from this. It's the single biggest group-wide project that Empresaria has ever undertaken. And that would have been unthinkable back in 2018. Our choice of platform also enables us to expand our capabilities, integrating with partner technologies very easily to improve our operations and help us move forward. We have also made some significant changes to our operating models in a number of key brands. The 360-degree model is commonplace in recruiting. That is where an individual consultant will do both the sales role and then in turn, look to fill that role themselves. This creates a reliance on key pillars and is inefficient. Few people are equally skilled at both of those functions. We have moved a number of our operations to what we call a 180 model. This is where the sales and recruitment teams are separated into 2 specialist teams. This creates a more efficient and effective process both for us but also for our clients. It creates a broader relationship with those clients that significantly reduces the reliance on individuals. We've also centralized purchasing for key contracts. So as a result, we're saving on key areas such as job boards, LinkedIn and our front office system. At present, we're saving more than GBP 200,000 per year on those items alone compared with our brands engaged individually. But probably more importantly, we're getting a bit of service with those providers, we are now a bigger client to them. So now we can get more out of them. And that for me is probably a bigger benefit than the cost saving. And our leaders' compensation is now aligned to budgets and an element of their conversation is also aligned to our group targets. So we're aware we have a lot of meeting with people. We're aware that our net debt position can sometimes be perceived as a risk, I wanted to address that upfront. And firstly, the reason we have net debt is due to historic acquisitions, principally those that we did in 2016. As a result, our net debt peaked at GBP 22.3 million in June 2017. But we have made good progress in the last few years in reducing that. And at June '22, we were down to under GBP 11 million. Now that's despite investing a further GBP 5.2 million in some of those 2016 acquisitions to buy out minority interests, along with GBP 2 million that we invested in purchasing a business in Peru in 2018. As well as that, we have purchased over GBP 1 million on our own shares to settle historic share awards, and we've been able to return GBP 2.7 million to shareholders in the form of dividends. And as you can see from the table, if we haven't done that additional acquisition spend, our net debt position would have been substantially eliminated. And we measure our debt to debt ratio, which is adjusted net debt as a percentage of our trade debtors because we see there's a very strong relationship between our trading and our debt position. That has reduced from 52% in June 2017 to 31% in June '22. So we made very good progress in that area as well. We are very comfortable with our debt level. We don't believe it is a risk to the group, and this is why we've got this slide in frankly. But we continue to target a debt to debt ratio of 25%. So we're nearly at that target now. During COVID we really proved the strength of our balance sheet. In the downturn, our working capital unwinds and our net debt position reduces significantly. In the first half of 2020, we had a working capital inflow of GBP 11.4 million. As a result, our debt position reduced from over GBP 19 million at the end of 2019 to just GBP 8.9 million at June 2020. [indiscernible] that, all of our covenants continue to be fully compliant with during that period. And as many businesses did, we went out and we negotiated looser covenants. I'm talking about the original covenants. We didn't, in hindsight, needing have those moves to covenants, we would have complied with all of the original ones during that period as well. So our transformation and our strengthened balance sheet leaves us well positioned to deliver on our ambitions. We've identified 3 key areas that we will believe will be the drivers of our success. Our 3 key pillars for growth are accelerated growth in high potential sectors, diversification of our client offering and continued growth in Offshore Services. These pillars will enable us to fulfill our ambition of delivering GBP 20 million adjusted operating profit in the medium term. As we go through the presentation, we've got a little illustration of what this might look like and how those pillars will build up to that ambition. So for our 2022, we have a GBP 10 million adjusted operating profit as the market forecasts. Our other operating sectors, which fall outside of those 3 pillars, we expect to continue to deliver organic growth. So that is primarily our commercial sector and net of any increase in our central and regional overheads, we expect a GBP 1 million contribution from that area. Our first pillar growth in high potential sectors is shown as contributing GBP 4 million of operating profit. And now I will hand back to Rhona, who will talk through our first pillar.

Thank you, Tim. Our first pillar of growth is focused on building scale and accelerating growth in our high-potential sectors. This includes capitalizing on our core sectors of IT, professional health care. The skill shortages in these areas are expected to continue for the foreseeable future and in fact, are at their highest level in 16 years. A recent study published by Korn Ferry finds that by 2030, there will be a global human talent shortage of more than 85 million people or roughly the equivalent to the population of Germany. We will execute our plan leveraging our existing footprint, client base and expertise to expand our professional sectors into key markets, growing our health care sector in the U.S. where it is projected that the demand for health care workers will outpace the supply by 2025 and the expansion of our IT sector by scaling existing locations leveraging our footprint to enter new locations and focusing on increasing our temporary and contract business mix. As mentioned, we have operations in 4 of the largest global staffing markets. U.S., U.K., Japan and Germany. We are not currently providing professional recruitment in 3 of these 4 sectors -- or 3 of these 4 markets, I should say. Nearly every organization has professional needs such as accounting and finance, HR, marketing, support roles and many others. By leveraging our existing client relationships for ease of entry such as in the U.S. where we're currently providing IT and health care, we will be able to offer these additional services, while at the same time, gaining new clients in this space will help facilitate growth through cross-selling with our health care and IT services. Phase 1 will be the launch in the U.S. and Japan. Our first launch is targeted for early 2023. Phase 2 will be to launch into Professional in Germany and expand our professional offering in Australia. Additionally, we are focused on growing our existing professional businesses in the U.K. and Asia PAC. In the U.K. our professional business has been primarily focused in the London area, and we have opportunity and planned expansion into other areas of the U.K. An example is Manchester, where we already currently have an office that are providing creative and digital marketing recruitment, but we're not providing professional services. In Asia PAC, we will leverage our existing professional network of offices currently operating across 7 countries that are predominantly permanent recruitment focused to sell our regional capabilities while also taking the opportunity in markets that are not restrictive to open the door to temporary and contract services as well. How will we be successful? With our new launches, we will adopt a consistent approach in terms of services and skills alongside a global branding strategy. We will leverage our existing client relationships as the initial point of entry. We will utilize our professional expertise that we have developed in other parts of the group, alongside our regional sales capability and will leverage our offshore services to quickly ramp up our recruiting in these markets. I will actually now, it's my pleasure to turn it over to Garrick Cooper, President of North America to talk about health care in the U.S.

Hi, everybody. I'd like to walk you through our successes and the opportunity we have within the U.S. health care sector. The U.S. health care, it's a huge market. Matter of fact, last year, it grew to $39.8 billion. Record demand for health care jobs are continuing to increase. And if you look at the center of the page, jobs have more than doubled since pre-pandemic. The chart on the right shows the projected employment growth through 2030. And as you'll see, most of the roles within that charter roles that we support today. Including nurse practitioners, which are expected to grow more than 52%. We've adapted and expanded our service offering to meet the growing demand. In 2019, we are primarily focused on specialty pharmacy, which includes your pharmacists and pharmacy technicians. Allied Health, which covers your therapists, technicians and assistants and local long-term care. We had a reliance on a small number of clients, good clients, but not a lot of them. As the pandemic took hold, we had plans for growth, but the pandemic became a launch pad for that growth. I think Rhona had mentioned, we had entered the pandemic and we came out stronger than how we entered it. Same with our health care group. So today, while we're continuing to focus on growing our specialty pharmacy, allied health and local long-term business, we are expanding our offerings. Those offer -- or we have expanded our offerings. These offerings include all of nursing, travel and general. For those of you that may not be aware of the travel nursing sector, it's very prevalent within the U.S. They're looking for registered nurses in various competencies that can travel to locations to get work done. An example of our travel nursing on the East Coast, last year, we had a state that had critical demands, but they had a challenge. They couldn't fill those critical demands and pull talent from companies in that state. They reached out to us, and we were able to locate nurses with compact licenses that can travel to other states to do the work. Travel nursing, it's very appealing to nurses because they typically earn a lot more, they have flexible work schedules and they have options for location. According to the U.S. Health Affairs, Travel Nursing grew 35% in 2020 compared to the previous year. It's expected to continue to grow more than 40%. It's a huge area. We are also supporting dental. So dental hygienist, dental assistants, big demand. We've been doing that for about a year now, we've seen very strong results. But we have a much broader client base. One of the things that COVID did for us as we were planning our growth, it actually allowed us to capture more clients faster. With those clients, because we fill their demand through that COVID period, we've remained on as their clients, and we continue to capture more opportunity there. Okay. Our keys to success. So we've proven our ability to deliver. During the pandemic, we received an unprecedented amount of orders. The volume was great. We ended up filling over 1,600 nurses during that period when our clients needed us the most. We've demonstrated our expertise in staffing behind MSPs. Does everybody know what an MSP is? Okay. So we can fill orders directly to our clients, but a lot of our clients need large supply chains or supply basis. So they may need 20 suppliers, they need 120 suppliers. They'll go to a third party to manage that supply base for them. The great thing about being in an MSP is you have opportunity for large volumes of business. We're very adept at that. Through our growth filling those 1,600 nurses and many other roles we were able to successfully scale our business exponentially because of that. Okay? We're powered by our Offshore Services. Rhona gave you a short preview. And it's going to talk a little bit more about that. But 100% of our recruiting team within our health care business is our offshore recruiters. During the pandemic, we more than doubled our recruiting team up to 80 recruiters in an 8-week period because we had a massive influx of new opportunities. So the great thing about our offshore services we can scale up and scale down based on whatever we need to fill for our clients. Our U.S. staff for our Healthcare division. They're all sales related. They're all engaged directly with our customers. They're meeting with our customers, but we align our recruiting needs to our offshore model. In summary, we're a highly specialized health care recruiting service with a proven track record. We are powered by our offshore services operation and able to effectively expand our reach and have the ability to scale. A testament to this, and it was on the award slide. We recently received nomination from staffing industry analysts to be on the list of the 2002 fastest-growing staffing companies in the U.S.

We were awarded #67.

Number 67? Yes. I'll now turn it over to Rafa.

All right. Good morning, everyone. So my name is Rafa. I know there is a famous tennis player name, exactly the same than me, but I came to this world first, so I get the credit for that. So as Rhona mentioned in her introduction, I've been dealing with IT and technology for a few years. So for me, it's a lot pressure to be here today to talk a bit about the IT sector, how we see it, to talk about what are the experience and what are the ambition that we will have on the different regions. And last but not least, to tell you how we are going to succeed -- on the IT and Technology division. So I think the first thing we need to talk is about COVID. There is no doubt that COVID has accelerated the digital agendas of every single company. [indiscernible] how they need to digitalize their offering, but also how they need to enhance the way they interview with our own people, but also how they deliver experience to both internal and external candidates. So COVID has really boost the need of IT roles. And when we talk about IT, we not just talk about the sector, but we also talk about the skill set. So you have heard for Rhona that Empresaria is a very diverse group. Yes, we are diverse, but we are highly specialized And IT, we know that is one of our biggest focus. So you can see here that the sector has been growing in the past and it will keep running in the future. So there is a lot of research that talk about how the market will grow in the U.K., we will be around 20% growth by 2030, how we'll grow in the U.S., how is a big shortage in Japan? So IT skills will be keep needing in the future, not just right now. But it's a sector that is evolving and it's really all the time moving for both candidates and clients. We have new languages coming. We have new technologies and we also have new trend that is affecting. So it's extremely complex to be successful there. What it means for a recruitment company like us, it means that its speed is key. Every candidate right now has a different offering, so we need to be really fast in order to deliver those. And the fact that this is also affecting our candidates, it means that they have multiple choices so they consider multiple aspects before taking one offer. And that is not just the monetary but a lot of different ones. The 3 biggest markets are U.S., Japan and U.K. and the good thing is that we have a presence on the 3 of them. So in a nutshell, there is a huge opportunity. We will be helping our clients to really feel these hard-to-fill roles. And on top of that, we will keep top of mind of our client and candidate to be able to deliver on those sectors. What is our opportunity and how -- what are we doing by region? And I start with my region, Asia Pacific. We have seen early success in our focus on IT, and we have growth across 7 different countries in more than 28% year-on-year. We have a very successful operation in Japan, but is only delivering in Tokyo Metro and Japan is a big country, so we have plans to expand to other regions like Osaka or Nagoya. In the U.K. and Europe, our plan is to expand our U.K. client base. We have been quite successful delivering perm and temp across Continental Europe, but not yet capitalize our presence in the U.K. We -- as you have heard before, we have a strong presence in Professional in U.K. So part of the growth will be to leverage this client base. And we will also see a great opportunity to have a fully dedicated team delivering IT on Germany. In the U.S., we have been very successful delivering permanent -- placement in each areas like artificial intelligence, like fintech, like autonomous driving. But we are also now putting new areas where we are focusing. And this is biotech and also robotics. We have a large presence in the U.S., and we are very successful in health care, so we need to leverage our presence and cross-selling also on the health sector. And you have heard also for Garrick, there is a big MSP business there. So we aim to get market share but leverage all the relationships that we have with the existing MSPs. And how we look success or what are the things that we are going to be in order to be successful. So you have heard from Rhona. We -- before, we were not really cross-selling. We were not able to leverage our client base. A big part of this success is going to be to start to do that with a lot of focus. So for IT, we will leverage our commercial and our health care and our professional divisions there. We also have now a dedicated regional team that is able to sell and to focus on the IT. So we will get market share but pushing our sales workforce. We also have right now a common ATS, so allowed us to have a global database. So in those days, that market is needed and client can't find everywhere, we will leverage our global database. We also have -- you have heard we have offshoring capabilities. So we will leverage the offshoring capabilities when we go to IT that allowed us to scale up faster than our competitors. And last but not least, we don't need to reinvent the way on. We have done -- we have delivered very successful operation in across 3 different regions and continent. We just need to do that again in different location and territories. So it's a complex problem but an easy solution at least on our side because we are capable to do it. So this summarizes a little bit the first pillar, but it will add GBP 4 million into our road map to the [ GBP 20 ] profit a share and I would like to introduce now Julie, who will tell us a little bit about another pillar that is Empresaria Solutions. So Julie.

Thank you, Rafa. Good morning, everybody. My name is Julie and I'm sitting there thinking, "Oh, who do I know are famous Julie? How can I follow Rafa?" And the only Julie I could think of is Julie Andrews, but I promise I'm not going to sing to you today. Well, I am today I'm going to talk to you, and I'm really happy to share how we've listened to our clients and how the introduction of Empresaria Solutions will meet the clients' needs. We know we've previously been very complex to buy from when it comes to our larger enterprise clients. They telephone with a staffing partner that can service them across multiple locations and disciplined without needing to interact with multiple points of contact. So our clients are looking at us to be a strategic partner that goes beyond a transactional relationship, a partner who can support them with workforce planning and deliver value-added services. Empresaria Solutions will be the umbrella that we can service our clients under for new sales and regional cross-brand collaboration on new services. We will be the extension of our clients' teams, buying them back valuable time to focus on the core elements of their own businesses. We will be invaluable to the client in getting projects, moving and working. So how are we going to do this? By providing recruitment services that go beyond the usual transactional recruitment with bespoke solutions, designed, planned and implemented by our experts to meet our clients' needs. For example, rather than just finding clients candidates for clients, we can manage the whole process for them, be it candidate attraction, compliance handling and even getting their employees onboarded. We can be the extension of not only the recruitment team but talent acquisition, HR and even procurement. Clients will be able to benefit from the huge leverage Empresaria Solutions will provide powered by the diversity and expertise of our brands while only having that one point of contact. This will reduce confusion on what, who provides what services for the client. Using our consultative approach, elevates Empresaria position away from other traditional recruitment suppliers. Empresaria Solutions is about supporting the client to succeed, growing and succeeding together, a true form of trusted partnership and an evolution with our clients. So here, we can look at some examples of the services we will offer that will move us from that transactional supplier to a trusted partner. We will service our clients globally with both agility and scale. Our diverse reach through both sector and geography will be accessible through one point of contact. We will also deliver an expanded set of solutions which can be executed in full or as individual components. Let's take RPO, that's Recruitment Process Outsourcing. RPO can be a full end-to-end process from detailing the role with the client to designing a full employee value proposition to onboarding their employees. This usually comes with a service fee per month for the management of that RPO plus a per placement fee. However, many clients do not want to have that full end-to-end RPO solution, so we can separate the offering, allowing clients to pick the parts that they really need us to manage, parts that can be turned on and off, flexed up and down as their needs demand, and this creates an agile and flexible solution. For example, if the client has their own talent acquisition team and that handled all the recruitment, Empresaria Solutions can manage parts of the process for them, like assessment centers, testing and profiling, taking references or first stage interviews, all these tasks have been to free up time for the clients team. So what is the benefit to the client? Well, valuable time back for them to concentrate on their core business and lower operational costs that they do not need to have the heavy headcount to manage that whole process. Looking at statement of work, it is not new to the industry, but providers are not supplying clients with true statement of work, and this poses a risk to them. In our core team, we have over 25 years in experience of managing statement of work projects for blue chip organizations. We've clearly defined projects we can support clients with managing all of the deliverables, time lines, work location and payment terms and conditions. And in this current market, this is invaluable when headcount costs are at a premium. A payroll function is when a client identifies an individual that they want to work in their organization, but they don't actually want them on their books. We will pay these individuals on a weekly or monthly basis and charge a fee to cover cost and administration. This solution offers time and cost savings to the client. We also have the capability to leverage our Offshore Services to deliver these new capabilities and Amit will be talking you through Offshore Services in more detail shortly. I mentioned what the benefit is to the client, but what's the benefit to Empresaria? And this is what makes it really exciting for us. We elevate our position within our clients. We land and we expand. As the strategic partner, we will optimize opportunities with access to multiple buyers within organizations, increasing sales by providing diverse solutions, giving us extra resilience to meet changing market conditions. Thank you. I would now like to hand you back to Rafa who will take you through some of the early successes he's had in APAC with [indiscernible] RPO. Thank you.

Thank you, Julie. So as Julie mentioned, RPO is one of the hot solution right now on demand on the market. So just to probably to put you on the same framework, not only in my region, but in every region, we are competing against large and very mature players. But guess what, we are winning them. Why? There is no magic formula. You can see here 4 of the reason why we are able to be more successful than them. The first one is about sales. And we mentioned before, we have a dedicated sales team who have expertise on all the solution and able to provide the regional and global expertise that we have across Empresaria area. The second one, we are focused. And in our region, we are focused in IT. As I mentioned, we are not a large player. So we really need to be very specific where we wanted to compete, and this is the arena in my region of IT. Third pillar is about flexibility and agility. You have heard before about RPO is various [ stents ]. So we really need to be flexible to adapt and to be able to deliver on our clients' needs. So both the ability to do it and the flexibility to make a big difference in this market. And last but not least, it's about our delivery model. We have regional and global expertise, but the delivery is done local. We always have a project manager to understand the need of the client and the industry of the client, but the delivery is doing by local people. And when it's needed and is taking more than one market, we also use our Offshore Services. So the 4 pillars really make a difference. But for me, it's easy to come and tell you how good we are. So I think it's much better to take some clients' opinion and some testimonials about things that we have done for them. So the first one is about Brankas Teknologi. I don't know you are familiar with Brankas Teknologi, but is the largest open finance technology that we have in Southeast Asia. Most of the payments that are being conducted digitally and all the data flows it come from this company. They have a very specific need. The wave of technology come and they were looking for a lot of position for developers in a technology called Golan . I don't know if you are familiar, but Golan is basically how you program on Google, very neat, very rare. We were able to sit with them, we were able to redefine the need, and we were able to successfully deliver on their needs. And you have here Bala, who is the Chief of Staff who have really say that, yes, thanks to us and our flexibility, they were able really to get with all the needed engineers that they was having and we were successfully able to deliver that. Second example is about GoTo Finance. Again, you are not familiar with GoTo Finance. GoTo Finance is part of the GoTo Group. The GoTo Group is 3 main companies is Gojek, Tokopedia and is GoTo Finance and is an equivalent or Uber or any platform that really connects not just car driving, but also delivery food by an e-commerce transaction that you wanted to do. Again, the wave of technology came. They need hundreds of people, especially developers, where to find? Difficult to find. We were able to put a team, a scale up very fast and being able to deliver successfully in all their needs. And here, we have also the lead of Tech Talent Acquisition, saying that thanks to our flexibility, they have been able to be successful, and we were successful with them. So again, RPO is a hot project in the market, but yes, our ability to deliver. And with those 4 pillars, I believe we are able to deliver what will make a big difference. And with that, I would like to hand over again to Rhona that will summarize how we are successful here. Thank you.

So I have to tell you, I'm super passionate about this -- super passionate because the -- when I got here, we were largely just doing temporary and permanent placement at a time, maybe a little bit of high volume here and there. But we were not adding any value-added solutions or offering any sort of innovation to our clients or coming to them with different solutions to solve their business problems. Julie comes from this was her whole career in delivering this to blue chip companies here in the U.K. and Europe. And my last little bit of time spent with my previous company before joining Empresaria, I also ran the largest division -- managed service division within the company that I was in. This area I'm super passionate about because it gives us multiple points of entry. It allows us access to these bigger clients that are looking for much more sophisticated solutions. They don't want just a staffing provider who's going to give them temporary or permanent worker. They really want a true strategic partnership, and this is what I love. The strategic partner stuff is my thing. So how will it be successful? So we have planned our first launch of Empresaria Solutions to the external market in Q1 of 2023. This will be accompanied by an aligned sales and marketing strategy, and we'll start by introducing this offering to our existing client base and what a great way to go back to our existing clients and say, "Guess what? You know us, you trust us, we've delivered and guess what? We've now got these solutions to offer you. Let's sit down, roll up our sleeves and talk about what your workforce planning looks like in the near term." Our blueprint will be global to ensure consistent client experience. I am also super passionate about this. Over my number of years and working with large multi-location global clients they say, I want to be -- make sure that my client in the U.K. is treated the same as -- or sorry, my location in the U.K. has treated the same. And given the same level of services in my U.S. operation or as my Asia PAC operation, that's something that we are going to be super consistent with and ensure that we have that client experience that wows them. And finally, we will leverage our Offshore Services to ensure that we deliver this with maximum efficiency. This is a differentiator for us. Our competitors who are offering some of these services today are not powered by our Offshore Solutions that can really leverage and provide the efficiency and the scalability that will allow these solutions to be successful. So this is our second pillar. And now we've covered off, let's say, $6 million of this growth. And now we're going to talk about the last $4 million, which is our Offshore Solutions growth. I'm going to start by -- before I turn it over to Amit, our CEO of Offshore Services, we are going to play a short video. I promised you guys a movie. So here it is, as an intro to our offshore services to give you a real view into this amazing operation. [Presentation]

Thank you, Rhona, for introducing that video. You mentioned the movie. So I must give a disclaimer. I'm less handsome over here and more handsome out there on the screen. Good morning, everyone. I'm the Chief Exec at IMS, part of Empresaria Group, wherein we provide Offshore Services to recruitment in the staffing industry. And I'm going to be sharing more about our strategy and how it complements to our growth plan. Now you would have heard my colleagues talk about the first 2 pillars. And you would have noticed across those 2 pillars how Offshore Services has been an integral part of the delivery. But before I talk more about the strategy, I'd like to give some insight and perspective on Offshore Services. We provide outsourced recruiting, back office, accounting, payroll to the recruitment in the staffing world. But our industry is actually a subset of the broader business process outsourcing industry. And that's quite large in size, close to $240 billion and estimated to grow at a compounded annual growth rate of 12% in India through till 2028. The merits and benefits of outsourcing are undeniable. And that's the reason as to why the sector has been growing with such velocity. Our sales, we have been able to create a niche by providing outsourced solutions tailor-made for the recruitment in the staffing world. The recruitment industry is highly competitive, margins shrinking with technology intervention, the highly volatile economic market as well. With outsourcing solutions, recruitment companies are able to make their business model more resilient, process efficient and cost effective. That's where we come in. And it also unleashes them to focus on their businesses in terms of client engagement, business development and let the processes be managed by us. Now the merits of what I just described is very evident. If you look at the research by staffing industry analysts, close to 48% of recruitment and staffing firms across U.K. and U.S., which are researched, use outsourcing or are contemplating using outsourcing over the next 12 months. And more than 50% of those would be using more of it. At the same time, we've got 52% of the market which still hasn't considered or are still exploring whether this could be an opportunity. And that gives us the leeway to keep on growing and expanding our business model and gain more market share. Our 3 focus areas to deliver on to our strategy are continue to build scale. We are close to 2,700 people strong, and we intend to keep on adding more clients by strengthening our sales team and their efforts and bringing more rigor in our marketing. The second major area is diversifying our services portfolio. When we started off, it was just recruiting services and then we went on to provide mid office, what we call compliance, credentialing, then the back office in terms of accounting, payroll. We intend to diversify this portfolio by introducing outsourced marketing services, outsourced IT services as well, statement of work as well as niche BPO to complement this sector. And finally is to expand our delivery capabilities. It was entirely being delivered off from India up until last year. And during 2021 with the support of Empresaria Group, the other brand which are present out there on the market in the Philippines, we leverage their strength, their presence, their local knowledge expertise and set up a pilot team of recruiters. And this year, in 2022, we are close to 90-plus recruiters in the Philippines and continue to expand. So the intent is we expand our delivery capabilities by augmenting Philippines, as well as look at other options where we could set up centers, delivery hubs, so we can keep on expanding and make our delivery process more risk averse. Having said that, I'll now request Tim to come on and take through the rest of the presentation. Thank you so much.

Thank you, Amit. So just to recap, first, on our illustration of how we can deliver on our ambition to deliver double operating profit compared to where we are now. So we start with the current market forecast of GBP 10 million for 2022. As I mentioned before, we then look for a further GBP 1 million contribution from our commercial operations less an increase in central or regional overheads. There's GBP 4 million from our first pillar to deliver accelerated growth in high potential sectors that's including through launching Professional into more of our markets, leveraging our existing client base, growing health care in the U.S. and expanding our IP offering, growing market share and investing and delivering temporary recruitment in the U.S. Our second pillar contributes a further GBP 1 million through expanding our service offering. That includes through delivering regional and global services as well as expanding our offering beyond transactional staffing. And our third and final pillar, as Amit just talked through, is continued growth in Offshore Services, so the expanding our client base, further diversifying our offering and enhancing our delivery capabilities outside of India. And that we believe can take us to our ambition of delivering GBP 20 million adjusted operating profit. So how might this look on a time line? With the investments we are making, including the launch of new offerings and locations, we would expect growth to accelerate through this period. So I just wanted to pull out some of the key events and milestones under each pillar. So firstly, looking at accelerated growth in high-potential sectors. We have the Phase 1 Professional launches in the U.S. and Japan. Then we have the Phase 2 launch in Germany, along with the expansion of Australia as well as the [indiscernible] expansion of our IT offering in Japan. And then secondly, looking at diversifying our client service offering. We have the launch of Empresaria Solutions. And then thirdly, continued growth in Offshore Services and we've shown the expansion of our service offering. We've illustrated the growth of delivery outside of India by the point in which we expect our Philippines headcount to grow beyond 300. And then to deliver the numbers that we've shown in this time frame, we would expect our headcount to exceed over 4,000 by the end of this period. And I highlighted earlier the progress that we've made in reducing our net debt and our growth plan will build on this. Our operational cash flow will fund our road map. So that includes opening those new locations. So yes, there will be some start-up losses we would expect, but initial CapEx requirements should be low. There will be investment in growing the capacity in our Offshore Services business. to house an additional -- well, additional 1,300 heads from where we are now to get us above 4,000 will require additional office space, the IT, et cetera, to support that. But that would be investment that would occur through the period. Having working capital requirements driven by the pace and mix of growth, along with our ongoing investment in technology. Actually, the substantial majority of the spend takes to a common first -- sorry, common operating platform has been spent, and that's been incurred. There will be some CapEx on second wave of technology as well, but those would be expected to be much smaller. We continue to have significant headroom in our facilities of nearly GBP 15 million at June '22, and that gives us flexibility to deal with any phasing of these investments or any acceleration of any working capital requirements. And as our debt to debt ratio falls towards our 25% target, our balance sheet flexibility will continue to increase. Now I'll hand you back over to Rhona.

Okay. Finally, closing comments, and we will turn it over for Q&A. So in summary, as you can see, we have assembled a highly experienced leadership team who are all committed to delivering on our ambition. There is absolutely no doubt in my mind we will deliver. We have done a lot of hard work over the past few years to transform the group, and we are confident that we are now well positioned to accelerate our growth. Our diversification by geography and sector will continue to show benefit and our diversification will be instrumental in our ability to be -- to successfully scale the business and deliver profitable growth. We have proven our agility in our response to COVID. That, coupled with our new regional structure will further strengthen our ability to respond and adapt quickly to changing market conditions and capitalize on opportunity. We have a proven balance sheet able to support our growth ambitions, and we are confident we will deliver on our initial ambition of GBP 20 million adjusted operating profit, and we're not going to stop there. So with that, I want to thank you again for joining us. And I think Lucy is going to facilitate Q&A for us, and we will be all available here to answer any questions that you have. Thank you.

Thanks, Rhona. We'll now turn it over to any Q&A. We do have some microphones roaming around. So if you can wait until the microphone reaches you to answer your question. If you just raise your hand, we can see you where the questions are. If we start just here, microphone coming.

It's Andrew Gibb from Cenkos. Just a couple. Just digging more into the detail behind the sort of growth to GBP 20 million. Just on the sort of cost side, where do you think you're going to have to get to in terms of sort of on the fee earner side in the first instance? And then obviously, you're broadening out the offering in terms of the sort of professional side, will there be a mix benefit in terms of sort of higher-margin placements just coming through in terms of that GBP 20 million?

Can you just clarify the question? Can you take cost but then you said...

Yes. Well, no, I just think where we are on the sort of fee earners side of things where you think you're going to have to get to -- obviously, you've given the sort of numbers on?

Number of headcount?

Yes.

So yes, I think we have -- it might be and each of the regions, say where they're expecting their head counts get to over this period just to illustrate that because I think they've all got those figures. They will get in to be earlier in the week.

I can start we are 250 right now, and we will be around 500 when it comes in.

We're about 250, and we will be about 350 by the end.

We're a small but mighty team in the U.S. and the '80s and we'll be at 118.

I would also say we don't looked in that ends way as someone like Michael [ Pagewood ] because they're very much in that 360 model, whereas we're going down more than 180 approach. So it's not -- to my mind, it doesn't mean I think you've got people who are doing sales and you've got people who are doing delivery. Neither of those are fee earners in the way you perhaps meet it, but they're all contributing to us as a business earnings [indiscernible]

And then in terms of any sort of benefits on the sort of mix profile, if you sort of think around the sort of professional side of things, maybe sort of higher margin, just obviously, you're going to bring a lot of volume on but just any benefits on the mix side of things?

Yes. I mean there might be an impact on the gross margins where we talk about net revenue, you might see a change in the mix there. But really, for me, it's more about how do we convert that down to operating profit, which is really about how we operate. Some of our lower-margin businesses are actually some of our best at converting that net fee down to bottom line profit. Now that can have an impact on working capital that mix, particularly if we see more success on the temp side because temp business is more working capital intensive, which is why I sort of talk about depending on the speed and mix of revenue growth that can impact the working capital requirements.

And there was sort of no mention of M&A in that? So are we assuming sort of this GBP 20 million is pure organic?

Yes, this is absolutely an organic plan.

All organic.

Thank you. Any further questions? Don't be shy to raise your hands. Excellent. The gentleman here. If you don't mind stating where you're from that would be great.

It's [ Roni Crane ]. I'd just like to ask you guys why you felt you could join Empresaria, what's the -- what's in it for you -- the obviously, you've talked about the leadership team having different incentives [indiscernible] wisely like what's the -- why Empresaria versus quite big companies, why Empresaria versus someone else?

That, I mean no problem. I mean you saw through the presentation, Empresaria means agility, flexibility and really it's a company who provided allows you to really have to try new things. And as you can see, we are trying a lot of new things. Leadership style, I don't need to mention. I think this is something that whenever you work for a company, you need to align on the leadership style and the strategy that is more short term when you look to a 3, 5 years plan and with no fear to try things, this is what made me join the company.

There's a vision for growth. We're not afraid to try and grow. And we will grow.

They're all on the same , and I worked for one before. So that was kind of an easy move. But for me, it was really the amount of opportunity that there is to really take advantage of and I've come to -- it's prime for the taking, really.

And Amit, just your views on how things -- obviously, you were here before 2018 I mean just....

Since 2006.

Yes, exactly. What's new management, new direction given you going forward?

Well, that's an interesting one yes. So -- now I guess there is a lot of intentionality now. This is one thing which I'm visibly seeing. And in a good way, there is a very strong purpose to reach out over there. I'm also seeing the lack of fear of going out and trying to do something new and keeping up with the times and that's something which is very much evident. And I guess whether it's recruitment or staffing or any other business today, the markets are extremely dynamic. And if we are not perceptive or reading into how the market is going to be evolving, then we could either resist change or just want to go back in our separate ways. And that's something which I'm not seeing over here right now with this new management.

Any more questions? Yes, we've got a couple more over here. We start with perhaps the gentleman in the white shirt.

So it's [ Arjit ] Thompson from Close Brothers. You talked at the start about the wider market and the difficulty of hiring. In terms of your sales, how is that affecting you? And are there any particular areas that you're finding it difficult in terms of churn or getting people yourselves?

I think a couple of comments on that. First is what we are seeing is a high amount of counter offers. So in the U.S., I think what was it in our IT business alone in period of time that you measure, I don't remember the specific period, but 40% of our offers were countered. So that is really something that we are seeing from an impact standpoint. In terms of demand, we're still seeing the demand to be extremely strong. And the one thing I don't know that we've shared enough about today is the fact that this new technology platform that we're putting in place will allow every single operation across the group globally to have a single candidate database. That is very unique, not common in the industry. Very few companies truly leverage a global database. And I think that will continue to allow us to compete more effectively with the times in terms of the talent shortages and the labor shortages we're seeing. So I think the biggest again, I would say the #1 biggest factor impacting us, and we did lose a bit of revenue, right? We would have finished the year phenomenally in our IT in the U.S. had not been for that 40% counter offer rate. So of course, we're looking at putting -- we're putting in more stringent process. A lot of this is retraining, recruitment. Recruiters aren't used to working in this market. So we're spending a lot of time retraining. I host quarterly CEO chats down to the levels. I mean they all nominate team to come on these chats and I sit down with the team and we strategize and we brainstorm. I don't just work with this team. I'm done in where the magic happens really. Is at that recruiter level?

And we're not a victim of the counter offers. We expect it. So we're preparing for that. So we're going into each situation with multiple candidates so that if one pulls out, we're ready to ready with backup, yes.

It's [indiscernible]. I suppose we've seen quite a lot of the largest offers update the market. Reassure but we're slightly more cautious tail on the outlook. And I guess looking at your growth plans that have been put in place some time ago, how confident are you that you can still deliver if we move into a tougher global market? Perhaps more hiring freezes that sort of thing? And is it because of the model. So IMS, for example, or some of the specific disciplines you're in that buffer you from some of that. I'll be interested in the senior management team in their view in each of their different businesses?

So maybe just given the overall comment on the plan firstly, just to say that even if there is that downturn, these actions and these investments are still things we're going to do. And we showed during COVID that actually what we wanted to do was continue our strategy, continue to invest, continue to develop. So we came out of COVID stronger than we went in. But that would be the same in this situation as well. So if we do suddenly spine were recession, it doesn't mean we're not going to go ahead with those actions. So I just wanted just to give that as a context for you.

Well, and I want to add one more thing before -- because there's still market share to take in a downturn, right? I mean, we are small compared to our peers. There's no question, right? It's obvious. So there is market share to take. They're not going to stop using altogether, right? And there's opportunity for us to go in and take Robert Walters market share. We take market share from Page . So again, it's all about us really building. We have -- we really weren't a sales organization. And we are building that capability now, and we're going to be fierce when it comes to going out in the marketplace and taking share in developing that client base. So again, even in a downturn, that's what we're going to do. And now I'll let them answer.

I would say even in a normal market, there's change, right? And as we go into tighter macroeconomic conditions, there's always going to be a change, but it's around our sales efforts. And our teams are somewhat insulated. We're where we've really captured depth within our clients. So it's not transactional anymore. It's much more broader and then with also our IMS operations, we can scale them we can adapt and we can move. If a client goes down over here, we don't have to lay off recruiters. We can switch them to another group.

So -- so maybe to add just a bit more for the IT. So as I mentioned in the beginning, there was a big part of it that has come from an acceleration, an acceleration [indiscernible] in Physics, don't last long. So yes, we read on the news that the crypto companies, e-commerce, some of the big platforms, they are slowing down or stopping hiring, but there is still a lot of market and that's the beauty of Empresaria. We are so flexible and agile, that we find now that there are companies who are catching up in education and health care. So we don't -- we are not exposed to this large client. So whenever even some of them reduce, we still can move and of course, with the Offshore allowed us to scale up scale down very easily.

Yes. I agree with my colleagues. In my region, we have many diverse businesses. And so we've already kind of got a bit of a up and down. But I think the ability to be able to bring in some of these new solutions when our clients are feeling the pinch themselves, yes, and maybe it's they stop hiring, but we can show them how they continue to run their business by outsourcing some of these solutions to us or parts of it. But we're going to be able to benefit from that and the clients are also. So given the flexibility, and we're not that massive that we can adapt very quickly and take advantage really of what the market throws.

To a certain extent, our business model is unique as an Offshore Services. Besides supporting our internal brands, we are also supporting 200 different other recruitment and staffing firms. And these are all geographically dispersed. Close to 55% of our business comes in from the North American markets. We've got close to 45% coming in from U.K., predominantly U.K. part of Europe. And then we got some parts of Australia as well. So one is the geographical diversification is to have the market's movement happens, and that helps us to capitalize on those markets, those areas which are growing. But everybody is saying this recession is going to be different. I don't know how different I'm pretty young. So I haven't seen any decision. But -- we are also present into certain sectors, which are resilient. We're very strong in the health care sector and doctors, nurses, allied health care professionals, they are needed their demand even if the economy is going to be weak. We still need -- there are ailing patients, hospitals need to run. Nursing homes need to run. So that's a sector which we are pretty strong, and we keep on growing. So we've got the agility and the ability to move geographically as well as across industry segments. When COVID happened, there was a sharp decline in the business. But within a span of 120 days, there was such a rapid movement. Everybody had cut down their workforce so strongly, they quickly needed to start hiring, especially the digital boom which happened. They needed more IT candidates out there in the market. And our business absolutely went through the roof. So also during tough times, recruitment staffing firms need to see as to where their margin is actually being spent or how they conserve the profit. So outsourcing is absolutely a worthwhile strategy to think of. So give and take, whether it's Christmas or no Christmas, we still sell like hot cakes.

And just one other follow-up question then. So -- you talked about the central candidate database being really important, and I can see how that adds a lot of value, but can you give a bit more color in specific examples of how you actually drive cross-selling within the business? So I get a sense you have disparate brands. It's been a business that's been built through M&A over the years, but actually now you've got common strategy, very clear alignment objectives and you've got IT systems process in place to drive that kind of cross fertilization, perhaps even across geographical bonds, certainly across discipline and say a bit more color on exactly what that actually means, what you're doing to drive that systems you're using?

I'll give you a couple of examples. Just in the last 2 quarters, we've presented opportunities for our clients in the U.S. to Australia to the U.K. and to China because they're developing operations there. And so there's visibility. We can see that our other brands are in those markets without having to make 100 calls, right, and we can do that. Another example is our health care business, very, very strong #1 supplier in a massive MSP for a client that probably everybody here has heard of. And they recently -- that client has decided to move all their digital roles, all their IT roles into that MSP. So they came to our health care brand and said, "Hey, you've done so phenomenal here. We'd love for you to support us in IT." They don't focus on IT. But our IT brand does. So it fostered that conversation, got them to the table, and we have a potentially $50 million MSP coming online for our IT group here in the next 3 months.

That's not our spend, by the way. That's MSPs spend. That's an opportunity.

Yes. There's just a lot more dialogue conversations, visibility and all the brands are thinking about what can I do to grow Empresaria, not just about themselves.

So the opportunity that Garrick mentioned there is also feeds into our professional launch in the U.S. because, again, they have with those MSPs, we have existing opportunity in Professional that is open to us, but we don't have the operation there to fulfill it. And that gives us a good relatively easy way to start that operation and get some demand very quickly.

And the reality is in some of those cases, we're already getting the Professional roles. But we're declining then because that's not been our focus. We're making it our focus.

Yes. And I would just add also, there's a great example of our Aviation business, of course, is recovering less quickly, then we see the aviation market recovering in the U.S. and the U.K. So tell them about the example. No, that's you, where you were helping them to start to look at pilot positions in the [indiscernible]

Yes. So I had outreach from our aviation group and they said, look, we want to bring pilots to the U.S. I just so happen in my background worked in the aerospace and aviation area. So I knew a lot of information, and we were able to pull. Give them insight on what it would take to actually build that in the U.S. so they didn't have to start from scratch. So that's something that they're actively working on, whether that's the direction they want to go.

You have a couple of good examples of cross-selling and also regional sales.

Yes. But I mean, probably one of the ones with the database that shows a little bit of the strength of having a global database. We have the client and they ask us to really do a telemapping on several positions. So we were able with a central point to look at our database and to be able to prove a little bit what kind of skills we see that they are enforced in several markets. So it brings benefits to be able to see from one single instant to see the data from different countries. And with cross-selling, yes, I mean, as I mentioned before, in example, were before very niche and very focused on our areas of expertise. So now we'll start to find opportunities. And if you are able to be a professional or being well known on the professional area, why not introduce other professional brand can do the same for you.

I think for me, is that change in the culture. Tim said before here on were here, everyone was very siloed. So actually having all of us together and we work together the time to actually bring in Empresaria into the siloed brand every day working automatically starts to make them think more instead of just thinking, this is my brand. This is what I do. It's really changing that culture, encouraging them to think outside the box. If they have a conversation with somebody, they now know there are people to go to, to spread that around. We've had success in the U.K. recently, we've been able to merge a number of our brands into one very nice office just up the road actually, and that has created some really good cross-selling opportunities already, but they're in the same office and when will speak to each other, even though they were just down the road. Those conversations are happening every day. And there are banks that need IT support, yes. So those conversations have happened and we've already seen success with that. So I think it's have the database with the visibility, but we also need the culture and kind of that collaboration and continuing to kind of take everyone on that journey to make it really work.

I think we had one more question. [indiscernible]

Just a couple for me. I mean, I mean no pressure on you, but clearly a big component of the growth is coming from Offshore. So I just wanted to delve into that area a bit more. Just sort of understand the reasons to use the service, is there a big sort of cost benefit to using in terms of sort of typical placement? And just a bit more on the sort of competitive backdrop and just where you sort of sit relative on that basis?

Okay. So first of all, no pressure taken. We are accustomed to be growing at such fast pace and velocity. And that's the fun in this game. The outsourcing industry is pretty fast paced, and there's got a lot of opportunity in that sector. Having said that, your first question was in terms of the cost benefit, which really comes across to the recruitment staffing industry. Typically, what happens is if you end up buying a recruiter over here in the U.K. or, let's say, in the U.S. By the time you have onboarded a recruiter, provided a person desk space or even if the person is working from home, giving them access to your technology, licenses, and your typical cost vis-a-vis the cost of getting somebody similar out there in an outsourced environment is close to 60% cost effective, yes. Now -- if we remind ourselves 25, 30 years back, the recruitment stocking industry was very different. Our margins were higher. Database was king. So recruitment staffing firms used to consider database as their USP. And so I got access to this network, these talent pool, my recruiters know x or y. That was what they really leveraged in terms of the high margin. and us to get very high profitability. But over the years, the entire industry has become more supply chain driven. Margins are shrinking. It's become more of a procurement cycle. Database is all across. You've got candidates across social media, LinkedIn, whatever. So now what started happening is the real value proposition which recruitment company has had is moving away from their people to the process. If you can get the process much more efficient and much more neater and you can reduce that cost over there in the supply chain, that's where you start making the money. So that's how outsourcing comes to be effective. Now this just doesn't happen like if you are a recruitment of a staffing firm, you walk up to us and say, I want to start outsourcing from tomorrow. It's not a plug-and-play solution. We need to understand your strategy, which markets you operate in, what's your existing delivery model, how you intend to actually replicate that model over there back in India or in the Philippines. We identify the teams, how we would train them and how they would start working inside your systems to be more efficient, productive over a period of time. So that's how an outsourcing model is able to create value. And some of our customers -- many of our customers today, I still remember way back in 2006, 7 years we used to go across knocking on those of recruitment companies over here in the U.K., and they used to say, recruitment back in India impossible. That cannot happen. But I guess, globalization, the economic changes and technology coming in, they are more open to such conversations. Many of our customers today have got a bulk of their deliveries out there back with us. And that's the reason as to why we were 2,700 people.

Just a bit on the sort of competitive sort of landscape and sort of where you sit?

When you see competitive landscape?

I'm just thinking is there -- there are other big sort of players in the space or have you got a good first moves?

Yes, yes, absolutely. If there is no competition, I would be worried because then we are either on the road to Omaha or I don't know where. So yes, it has attracted a lot of people. I don't think -- I think we were one of the first movers out there in the market. So we definitely are the market leaders in this segment. But there are other players as well. There are large centers in the Philippines. Some other centers in India as well. But I can't go on the card because this is not official, but we consider ourselves as 1 of the top 3 globally. We have a pretty large in size.

And just finally, a sort of broader question. I mean the benefits of international diversification well versed in terms of recruitment. Anything in terms of your road map to '27 there's going to be a big change in terms of the geographic mix of the business? Or do you think the growth is going to be pretty broad-based in terms of the existing base that you've got at the moment?

Yes. I mean we're in enough countries. I mean we're in 20 -- I think different countries. The key thing really is to develop our scale in those. And part of why we've highlighted those opportunities and professionals because we're in that really big or proven markets, but we're not doing some of the things that we're really good at. And so that's where the opportunity is for us is to really enhance our scale in those markets.

I would also add that diversification across the geography is what's going to be the enabler for us to really grow organically, right? Otherwise, that chart would look a lot different in terms of acquisitions. And I think when you look at the opportunities that exist even for IMS, who wants to enter other markets and open up other business opportunities in different markets, they've got -- we're already there, and we showed that with the Philippines operation. It's like you want to open there, great. We'll get this brand engaged. We'll get this business engage. We'll teach you about the market. We'll give you everything you need to do, and they were able to launch. I mean, how long did it take you to launch in the Philippines initially?

6 months.

Yes. I mean you wouldn't be able to do that otherwise. And I think the -- as Tim said, we're in enough geographies. We need to maximize the geographies we're in, but our ability to scale in those geographies is massive.

I think there's another question down the side.

Richard Knight , Allianz I wonder if we are moving into choppier market conditions, which seems likely, should we see the GBP 20 million target as an incremental GBP 10 million that you think you can get that GBP 10 million from those sources almost no matter what, over a time period? And I just wonder, therefore, about the rest of the business, what hasn't been covered the existing business, where the puts and takes are what might be turning around what you might be a little bit worried about in a more difficult environment, what actually has a resilient recovery in what you've not stressed today?

Yes. I mean I think it depends on how choppy those waters get rid as to what impact it could have on these plans. As I said earlier, these investments and these things are things that are going to happen even if we do go through a difficult period because we think they're the right thing to do for the group. And with the existing client base we've got, we've still got opportunity to develop profitable new operations or profitable investments. Pretty good impact -- of course, the overall time line to that GBP 20 million, whether if we went into a serious recession, it could be that then we did see a dip, but we'll be well positioned to grow back strongly out of that. In terms of the rest of the business, it's really mainly our commercial sector that isn't covered by those 3 pillars. So our commercial sector is quite chunky. I mean it's quite a -- a reasonably sizable part of the group. I think it's about 1/4 of our net fee income. And it is very profitable for us. It's one of our more profitable sectors. But in terms of our overall strategy, our focus for growth is in other areas where we see there's more opportunity. But they are also very resilient. Those commercial businesses. I mean, we're in LatAm, we're placing roles into supermarkets, probably in the retail sector, supermarkets are things which are normally fairly resilient through the recessions in terms of certainly from a hiring perspective. And then in Germany, we have a logistics business, again, where they're dealing with receive markets and clients. And then our temporary business in Germany is a key part of our commercial sector, which is potentially more susceptible to the economic circumstances [indiscernible] deal principally of manufacturing clients and automated, but they're not a big part of our property at all at the moment.

But 75% of that business, again, is some way related to food and everyone still needs to eat in a recession. So that's the good news with that commercial -- commercial space. And we saw that in the logistics business, the first year of COVID, that logistic logistics business exploded. Demand was crazy for people ordering in home, grocery services, et cetera.

I've got another question just over here.

[indiscernible] I just wondered if there is a recession and a downturn which everyone is worried about, will that encourage recruiters to use outsourcing to save costs to a great degree?

Yes, it would. That's -- See, this recession is slightly different. This is my take on it. I'm no expert. But what I'm reading in between the lines is that it's an inflationary trend, which is actually going to be driving this recession globally. But there are certain sectors which still continue to grow. And therefore, you will still need people. And the demand for people is also being fueled by skill shortages. So it's difficult to find people. That's also a problem. So you would still need more handset deck to source screen, validate, make candidates compliant and put them out over there, especially in those sectors where demand is still going to continue. But margins will shrink because of the recession -- and therefore, recruitment companies in order to be -- to sustain their model, we continue to be viable, we'll have to look for alternative source of action. And the other thing we're doing is after having offered recruitment services, we are realizing that we can actually get more share of the pie of their spend. So we started introducing accounting back office payroll solutions. Now we've got a team of close to 200 accountants doing accounting inside the U.K. and the U.S. for recruitment and staffing firms. The next product we are intending to launch is outsourced marketing services because now today, it's not just about sourcing candidates. It's about engaging with candidates, creating talent tools, ensuring that talent pool is engaged with the brand of our customers, the clients. And therefore, there is a marketing intervention which is required. So we are intending to offer outsourced marketing solutions as well. So on and so forth, we'll keep on adding portfolios in order to get more share of their spend. So if recruiting water even dip, there are other portfolios as to where we can actually grow and continue getting a share of our revenue.

Any further questions? If not, I think we will close there. Thank you all so much for coming and please do join us just outside, we have some finger food and drinks, and we'd love to continue the conversation with you out there.