Robert Walters plc (RWA) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the Robert Walters 2024 Half Year Results Presentation Webcast. I'm Toby Fowlston, Chief Executive; and joining me today is David Bower, Chief Financial Officer. In terms of our agenda today, I'll shortly hand over to David to walk you through the financial and trading performance of the business over the first half. I'll then give an update on our operational focus areas before moving on to give an overview of some of the key areas in which we see the greatest opportunity to strengthen our medium-term performance, as well as the flavor of the actions that we're already taking to deliver on this. And as usual, we'll leave plenty of time to then open up for Q&A. So as we begin, here are my key messages for today. Firstly, conditions were challenging during the first half of the year. We continue to see hiring markets globally rebase relative to the post-pandemic peak of 2022 and early 2023. And then within certain geographies, more recent macroeconomic turbulence and political uncertainty has dampened client and candidate confidence. This impacted our financial performance during the first half with lower net fee income, predominantly driven by lower volumes. That being said, the value of the service we provide our clients and candidates continue to be seen with average fees remaining strong across all of our markets. Secondly, whilst our near-term planning assumes any material improvement in client and candidate confidence levels will be gradual and likely not occur before 2025, we are not looking at 2024, as a last year, far from it. We took the right actions during the first half for our clients, candidates and wider stakeholders. We managed our cost base tightly, continue to pursue operational excellence, and we expect further progress in the second half. And thirdly, though the current trading backdrop is challenging, it has only served to deepen our conviction in our plans to further strengthen the medium-term performance of the business. We are looking forward to our Capital Markets event in September, where we will provide further detail on our activities. But I will say today that the [ sleuth of ] actions we are progressing will be additive to improvement in our end markets when that arrives. The actions that we are taking will continue to differentiate Robert Walters on the quality of its service, drive higher penetration in our existing markets, improve tech-enabled productivity and people efficiency and ultimately, enable us to win as one Robert Walters. On that note, I'll hand you over to David.

Thanks, Toby, and good morning, everyone. So I'll begin with the group financial summaries. Reflective of the conditions in global hiring markets, which Toby touched on a moment ago, group net fee income in the first half of GBP 166 million was down 14% year-on-year in constant currency terms. In reported terms, group fee income declined by 18%, reflecting the foreign exchange impact of the strengthening pound year-on-year against the group's primary overseas functional currencies, most notably the Japanese yen. The actions we have taken to control our operating costs resulted in a decrease of 13% year-on-year, which has mitigated around 2/3 of the GBP 36 million reduction in first half fee income with a breakeven position at the operating profit level, as a result. Net cash finished the period at around GBP 49 million. Notwithstanding the challenging hiring market conditions, we continue to have a strong balance sheet and given the actions taken to date to ensure the business is well positioned for an improvement in end markets, the Board has declared an interim dividend of [ 6.5p ] per share, in line with the prior year. Let's now turn to a review of trading during the first half in each of our segments. Throughout my remarks, all references to net fee income year-on-year percentage movements are in constant currency terms. Asia Pacific specialist recruitment net fee income was down 10% year-on-year, principally driven by volumes with average fees holding broadly stable. Whilst we continue to see a strong performance in Japan, up 2% and an improved performance in Greater China. Australia and New Zealand both remained challenging, driven by reduced levels of temp work demand in those markets. In Europe, specialist recruitment net fee income was down 13%, with perm down 17%, while temp held up better and was down 7%. In both cases, the fee income reduction was volume driven as again, average fees were stable. Low client and candidate confidence in France was further impacted by political uncertainty, as the half closed. Meanwhile, the Netherlands was more resilient and has now been broadly stable for the last few quarters. And we also saw a solid performance in Belgium against a record first half last year. In the U.K., specialist recruitment net fee income was down 20%, again volume driven, while average fees increased principally due to favorable mix effects. In London, we saw fee income down 16%, though momentum did improve across the half with 2 consecutive quarters of sequential growth. Conditions were, however, softer in the regions year-over-year. In the rest of the world, specialist recruitment fee income was down 9%, almost wholly reflecting perm performance and again, volume driven in part offset by growth in average fees. Our largest rest of world market of the Middle East were sequentially stable across the first half. There's also a solid performance in Mexico. Meanwhile, in the U.S.A., hiring conditions in the technology sector remained tough. In recruitment outsourcing, net fee income declined by 23%, reflecting lower volume hiring requirements from the predominantly financial services sector client base and the exit of certain clients during the second half of 2023. Finally, and while still at a lower base, workforce consultancy, which operated in our outsourcing offering continued to perform well and indeed was ahead of our expectations. Turning now to look at group operating costs, where we have continued to tightly manage all aspects of our cost base. Period-ended head count of 3,625 was down by 15% on the first half last year, driving a reduction in staff costs of GBP 11.8 million. Headcount is now 18% below the peak we reached in the first quarter of last year, as you can see in the chart on the right-hand side. This decrease has been achieved predominantly through being very selective about replacing natural attrition. In addition, we took the decision to remove a limited number of roles at a cost of around GBP 2 million, which is absorbed in our reported operating costs in the period. Reflecting the reduced trading performance, available compensation fell by GBP 10 million, while the close control of other direct operating costs, which is marketing and travel, resulted in a further reduction of GBP 3.9 million. Turning now to cash flow and our period-end net cash position, which remains strong. The trading performance, we have lower operating cash flows in the prior year, with the increase in working capital of GBP 9 million, reflecting the usual working capital cycle of the group in the first half of the year. Capital expenditure in the period was GBP 4.8 million, lower than the prior year, with reduced spend on the group's office estate more than offsetting slightly higher intangible spend, principally related to the final development phase of Zenith, the group's in-house CRM systems. Period-end net cash of around GBP 49 million continues to give us a strong balance sheet. Finally, turning to guidance. As noted in this morning's statement, current trading remains unchanged from that reported at our second quarter update a couple of weeks ago. Notwithstanding, with still challenging markets, we have made good progress on cost reduction actions during the first half, where we mitigated around 2/3 of the impact of profit of the year-on-year fee income reduction. We expect further progress on our cost reduction actions during the second half, and these will clearly further mitigate the year-on-year impact of any reduced fee income driven by market conditions. As a result, on a full year basis, we expect to offset the greater proportion of the year-over-year reduction in fee income than the 2/3 we achieved during the first half. I'd also draw your attention to the other elements of technical guidance detailed on the bottom of the slide, which I trust is self-explanatory. So with that, I'll hand you back over to Toby.

Thanks, David, and I want to take a few moments to update you on our operational focus areas. So in doing so, it's worth just quickly taking stock of where we are in terms of the market conditions that we see at present. My time in this industry has encompassed the dot-com crash at the term of Millennium, the 2008, '09 global financial crisis, and of course, the COVID pandemic. Now the current challenging market conditions have brought their own unique challenges, we've come through a high inflation period, which has given rise now to a higher interest rate environment. And as the chart show, we've seen levels of labor demand fall relative to peak and also seeing candidates' inclination to move jobs, as shown through indicators like the quick rate reduced relative to the great resignation of the peak. With hiring processes that do get off the ground, we have seen, as you know, an uptick of candidates being counter-offered by their existing employer, and they're not moving as a result. That context of lower, but stabilizing client demand and candidate inclination informs our working assumption that any material improvement in confidence levels will be gradual and likely not occur before 2025. But that being said, we are not looking at 2024 as a last year, where we simply hunker down. To make the most of the available job flow, our team are focused on doing the basics brilliantly. So let me just bring this to life for you in the form of our specialist professional recruitment offering. Firstly, job qualification remains key. Ascertaining as far as possible, the clients who start to process are indeed motivated to actually bring new talent into their business. This is a key skill of our consultants. Doing so helps them be as efficient as possible in how they devote their time. Secondly, on the other side of the equation, thorough candidate assessment and gauging commitment to want to move is also hugely important. For example, many are recognizing the additional complexities bought by matching client and candidate expectations regarding time spent in the office versus working remotely. Increasing visibility on this earlier on in the process is something our specialist consultants are ideally placed to do. Thirdly, staying close to our clients and candidates. The quality of service our consultants deliver is most significantly influenced by 2 things: the quality of relationships they have with clients and candidates; and their level of industry knowledge. To continue enhancing both our consultants are focused on spending time face-to-face wherever possible with their clients and candidates. And our regional MD to be making the point well to me in saying that they're enjoying seeing our offices emptying out, not because consultants are working from home or on vacation, but because they're out spending time with clients and candidates. And fourthly, remaining agile, staying close to our markets enables us to pivot as and when we see opportunities developing in adjacent verticals. For example, in some financial hubs in Southeast Asia, while certain pockets of financial services remain subdued, others are showing more signs of activity, and we are pivoting in response. You can see the fruits of this in Thailand, where our teams have been actively diversifying their client focus. As a result, they recently pitched and won a mandate for a client looking to strengthen their senior ranks ahead of bidding for a digital banking license. Similarly, in New Zealand, where we remain as a market leader, we're building capability in private sector verticals such as energy and telcos to hedge the continued tough conditions we see in the public sector. So conditions do remain challenging. However, we know very clearly what is in our control, and we know the key levers to ensure operational excellence. This approach is why we've historically exited market troughs in a stronger position than we entered them, and I'm confident we will do so again in the current cycle. I now want to spend a bit of time looking at our plans to further strengthen the business over the medium term. Having been Chief Executive for over a year now and been with Robert Walters for 25 years, I know what a fantastic business this is. However, I also know we have an opportunity to be even better for our clients, candidates and wider stakeholders. We are evolving from a historically federalized business to one, where there is greater global consistency centered on what I call disciplined entrepreneurialism, and we look forward to sharing further details on our activities at our Capital Markets event in September. For today, though, I want to give some flavor of what has already happened and what excites us about the opportunity ahead. There are 4 areas that I'd like to touch on, as set out on the slide. So firstly, let's look at people. A key element of harnessing people leadership to underpin our performance over the medium term has been having the right people in the right roles within my immediate team. From the slide, you can see that within the executive team, there is now a great combination of decades worth of experience in talent solutions, alongside some recent hires, who have brought a fresh perspective and complementary business experience, as well as my immediate team, our regional MDs across our specialist recruitment and recruitment outsourcing offerings will be at our Capital Markets event next month, and I look forward to introducing them then. People leadership is, of course, something we must get right at all levels of our organization. This includes creating an environment, which allows all of our people, whatever their background to perform to the best of their ability. Something of vital importance in a business like ours, where over 70 different nationalities are represented. Let me briefly mention 2 things we're focused on. Firstly, we have distilled our leadership behaviors framework, the DNA of what it means to be a leader at Robert Walters. This places a real emphasis on authenticity, care and entrepreneurial mindset. Our ACE framework is geared to enable our leaders to get the most of their teams and to do it in the right way. Secondly, we're embedding a culture, where all our people are doing the very best for their customers, be that our fee owners with clients and candidates or non-fee earners and their interactions with other Robert Walters colleagues. A great example of how we're driving this has been our move to skills-based hiring for our fee earned population. We have defined what being a great consultant at Robert Walters looks like, and we've done that consistently across all of our global markets. That helps us at the talent acquisition stage by enabling us to more successfully bringing to our organization, those most likely to succeed. And as you can see from the chart, on average, our fee earner population is more experienced now than at the peak. We want that to remain strong, being laser-focused on what good looks like and supporting our people to consistently meet and exceed will help us achieve that. So having considered people, let's turn now to geographical penetration. At Robert Waters, we have well scaled businesses with leading positions in some of the largest and most exciting hiring markets in the world. However, we also have businesses, where we are not yet a top 3 competitor in that market. We want to move more of our businesses from the second category to the first. In terms of what we can achieve when we get this right, Japan is perhaps the standout example. We launched in Tokyo in 1999. And today, we have over 70 teams covering not just Tokyo, but now also Osaka. Those 70-plus teams are highly specialist, serving increasingly focused sub-verticals, allowing us to go an inch wide, but are mile deep. Now not all of the hiring markets in which we're present are as large as Japan. But we still see the opportunity to build further scale, getting to a level of around 50 fee earners in a market with teams that have specialized verticals on which they're focused, at which point the flywheel really begins to turn. At present, we're at or above that level of 50 fee earners in just 1/3 of our markets, demonstrating the opportunity we still have ahead of us. Now getting to scale in country markets isn't rocket science. We know that the essential ingredients are about having the right leaders, who can instill the right performance culture. It's then about making sure that performance is sustained over the long term with good succession planning, helping us to win in both favorable and tough end markets. Our focus on replicating this in each of the markets has historically been too easily lost. We are fixing that by pursuing geographical penetration with more confidence in our know-how and more rigor in our evaluation. Thirdly, let's look at tech-enabled fee earner productivity and wider people efficiency. Fee earner productivity is critical for us. It gives rise to higher organic growth in fees when end markets are supported. It also helps drive the operating leverage in our model for growth in fees to drop through appreciably to operating profit. Taking a step back then and looking at where we are now relative to the recent peak in hiring markets in the second quarter of 2022, our regions are at different levels today relative to peak productivity, as you can see from the chart on the left-hand side. We are being more robust on incorporating fee earner productivity into our decisions to make sure we're well matched with demand in our local markets. Looking at our non-fee earner population, we are striving for people efficiency here, too. In particular, we are reviewing the best operating model for our central support or business partner functions, such as finance, HR, legal and marketing. In some cases, we need certain support capabilities onshore in many of our trading markets. However, often, it can make more sense for those roles to be based remotely to the markets they're serving in global service centers, and we are reviewing our operating model to drive further efficiencies for our business. Now I said fee earner productivity would be tech-enabled. So let me tell you what I mean by that. Productivity is underpinned by our technology. Our fee earners are seeing the biggest benefit of this, as we continue the rollout of Zenith, our custom-built CRM. During the first half, Zenith went live with our teams in the U.K., Ireland and South Africa, meaning that our people in over 60% of our markets are now benefiting from a more improved and intuitive user experience, more sophisticated functionality, global visibility and greater capacity for collaboration. One of our senior accounting and finance fee earners in London put it more succinctly still when you remarked today at the other day that he wished he had Zenith the week before the launch, as he then would have made an extra GBP 15,000 in fees. Why? For the extra layer of visibility that he's getting. One of the great benefits we see from having built our own CRM is to allow for ease of integration with other applications, as these become relevant for our business over time. Now we've already done this, for example, for job advert stats. Rather than having to go to a separate third-party application, consultants are able to view key stats on live jobs like open rates within Zenith itself. This ease of integration has also supported our efforts in the second key area we're seeking to harness technology, that is artificial intelligence. I'm often asked what AI will mean for a business like ours in the future. And in response, I say that human relationships have always been the currency of the future. And our approach to AI and indeed all technology is framed by that where it helps us invest even more in the relationships that drive our business, it's got a real role to play. And our AI job advert writer is a great example of that. We enhanced it further during the first half, now as well as a compelling initial first draft of the job advert, it also enables consultants to drive social media posts, outreach e-mails and complete language translation, all at the click of a button. This is enabling our consultants to prepare the ads and communications they require for each new role in under just 5 minutes compared to around 30 minutes that it would otherwise usually take. In the first 3 months of launching our AI ad writer in ANZ and Southeast Asia, our consultants use the tool to write over 4,000 job ads, saving around 2,000 hours in the process. The AI ad writer functionality is integrated into Zenith and the initial feedback from our fee earners has been extremely positive, and it's easy to see why? All those minutes saved getting a new job live is more time to spend investing in client and candidate relationships. Finally, let's turn to look at winning as one. Just after the end of the first half, we launched our new brand identity externally, bringing the multiple brands through which we have traded historically under the single banner of Robert Waters. We did this in response to what we see from clients and candidates. The talent requirements and hiring processes of clients have evolved rapidly over the last 4 years, arguably than more so during the 2 decades prior. And similarly, the needs and expectations of today's professionals are changing just as quickly. Therefore, we have combined all of our expertise across specialist recruitment, recruitment outsourcing and talent advisory to go to market as One Robert Walters. This means clients can much more easily access from us, the full suite of talent solutions they need to help address their hiring challenges. As a quick reminder, our specialist recruitment offering is where we have played since the business has started almost 40 years ago and it encompasses permanent and temporary recruitment, executive search and interim management. Our recruitment outsourcing offering enables organizations to transfer all or part of their recruitment needs to us either through recruitment process outsourcing, RPO, or contingent workforce solutions like MSP or workforce consultancy. In talent advisory, the most recently developed of our service offerings, we are supporting the growth of organizations through market intelligence, talent development and future of work consultancy. Historically, our multiple brands made telling our story to clients and candidates far too confusing for them and sometimes even for our own people. We know Robert Walters is, if you like, our power brand. So focusing here was compelling, as we pursue our vision to be the world's most trusted talent solutions business. So what are we aiming to achieve in doing this? Well, right now, if I look at somewhere like our U.K. business, where fee income is broadly balanced between recruitment and outsourcing, our specialist professional recruitment teams are already focused on helping their outsourcing colleagues in hiring on mandates where volumes are at the lower end of the typical spectrum that our outsourcing offering would service. Longer term, as our clients benefit from the solutions that we offer as One Robert Walters, we see a clear opportunity to introduce them to the full range of our service offerings, where we currently only partner with them in one area. To take an example of this amongst our existing clients. Their awareness that our recruitment process outsourcing, or RPO offering, is modest at just 11% compared to much higher levels of awareness for professional recruitment. So this opportunity to grow our share of wallet amongst existing clients is sizable and going to market as one and then winning as one will help us convert it. So in conclusion then, while market conditions continue to be challenging, which has impacted our fee income in the first half, 2024 is not a last year. I'm very proud of how we took actions to tightly manage our cost base and pursue operational excellence to the best for our clients, candidates and wider stakeholders. We have high conviction in the actions that we're taking to further strengthen this business over the medium term, as we pursue disciplined entrepreneurialism. And I hope we've given you a sense of where the opportunity lies and how we're already starting to go about capturing it. Our fee earner base is even more experienced now than it was 2 years ago with increasing global consistency on what good looks like. We're using our know-how and evaluating ourselves more rigorously to drive higher penetration in our existing markets. We're giving our people the tools they need to be as productive as possible, and we're going to market as one Robert Walters to help convert the sizable market opportunity. So with that said, David and I would be very happy to take your questions.

[Operator Instructions] And we'll now take our first question from Tom Callan from Investec.

Good morning, chaps. I've got 3, please. So firstly, just on the Capital Markets event, not sure what granularity you're able to give at this stage. But maybe if you could perhaps expand a little bit on sort of what's in the announcement this morning in terms of what you might like and look to cover off in September. And second one is on Japan, clearly, an outstanding market for you. From memory, though, there's a sort of very high fee rate dynamic there with comparably lower consultant sort of placement levels. So given that dynamic long run, do you sort of foresee a scenario, whereby fee rates remain elevated but following a focus on driving improved productivity, placement activity levels could also tick up pretty meaningfully. And consequently, if that is the case, what might that do to P&L for Asia Pacific? And then just on Mainland China as well, I noticed a pretty strong result there with double-digit fee growth for H1. Can you give us a bit more color on what was behind that? And also, what the market dynamic looks like on the Mainland more broadly at the moment?

Thanks, Tom. Let me try and answer those 3 questions. So let -- maybe let me start with the Capital Markets Day. I mean, look, I've talked a bit about the key areas of disciplined entrepreneurialism. So our intention is we want to get into a bit more about what we mean by geographic penetration and the opportunity we see there, as well as our service line diversification. I've obviously referenced interim and workforce consultancy, just 2 examples. So we're going to look to broaden that out a little bit more, as well, of course, of giving investors, analysts an opportunity to come and meet the executive team and the regional MDs, who will be over in London because I think it's really important they get the opportunity to meet the leaders, the global leaders across our organization. In terms of Japan, you're right, fee rates there are group leading, largely borne out by very low levels of churn. So it takes a bit more to get someone to move jobs. On the perm side, our sort of perm placements for fee earners per month, you're also right comparative to some of our -- certainly our European markets. Japan is a bit lower. So that is absolutely -- probably the key opportunity actually in Japan, particularly when you think about the fee rates as well. And I think the key thing is when you look at 2023, we were around GBP 150,000 net fee income per fee earner. So when you look at even a marginal 10% increase in a market like Japan at scale with those fee rates, you're driving millions more in terms of fee income and obviously drop down. And then I think the final one was on Mainland China. So we invested in the leadership of Mainland China last year, and we've really certainly invested heavily in Shanghai in health care, and that's starting to show some rewards for us. If I look at someone like Shenzhen, so we're in Shenzhen, we're in Shanghai, and we're in Suzhou. Shenzhen leaders, they have structured that business differently to be much more focused on the domestic Chinese employees. And as you know, sort of our China plus 1 strategy has meant some of the international enterprise businesses, we're picking up the benefit of that, particularly in places like Southeast Asia. So as I say, look, it's a relatively low base. It's still a relatively small market for us, and we're focused on continued growth, certainly over the foreseeable future.

We will now go to our next question from Sanjay Vidyarthi from Panmure Liberum.

Interested in the chart in terms of the number of fee earners by country. I just wanted to understand a little bit better what that implies in terms of the pace of head count growth when markets start to recover if there are semi markets, where fee earners are less than 50. And then also related to that, what that means in terms of relative level of profitability, with the 32% of markets with more than 50 fee earners or be kind of double-digit margin markets, I guess, except for the U.K. maybe? And how should we think about the mix within the smaller scale markets as well? That's the first question.

Sanjay, it's David. So yes, I think in terms of fee earners of the country, obviously, we've been very carefully managing fee earner numbers with activity levels. I think if we look at productivity, it's off the peak of '21, '22. It's probably more in line with what we saw in 2019 or so. So I think as markets start to recover, I would like to think that we can close that gap between COVID productivity, and the peak probably won't get back to the peak productivity when people were running really fast in '21, '22. So I think as markets recover, we will be able to see the operating leverage of the model work really effectively. Yes, heads will start to tick up, as we see the growth come back, but we will be carefully managing it and looking at really around productivity piece. In terms of the margins and number of heads, it does vary market by market, sector by sector. So there isn't a standard rule of thumb that says if we get to x number of heads, we suddenly become single digit to double-digit margin. What we do know is when you start to get to having tens of fee earners, I would say, 30, 40, [ 50 ] fee earners, then we do know that the flywheel turns very rapidly. That's when we can be genuinely profitable month in, month out through in those businesses, and that's why we're looking to try and move that. As I say, but it's not one size fits all and there certainly are some smaller offices, smaller countries, where we have a lot less than 50 fee earners and they're still profitable. So it's a rule of thumb, not a hard and fast metric we follow.

So for example, with Johannesburg office been an example of that where it's double-digit profitable be a less than 50 fee earners.

Quite possible. Yes. We don't talk about individual office profitability per se. But yes, there certainly are pockets, where we've got small level of fee earners, and we can still be very, very profitable based on the local dynamics of the market.

I think just I'd add to that, as well, Johannesburg is a good example. We obviously cover quite a wide part of Africa from Johannesburg. And over the last 2 years, coming out of the pandemic, we have probably 7 or 8 offices. We have moved away from those premises and redeployed good people into a bigger office within that city. So I think the reality is we used to have cities, where we have 2 or 3 offices within that. Our view is this that we're probably better with one. You've got flexible working to build into that and actually have concentrated effort with critical mass in one office and people not sort of driving around cities and real -- again, real-time focus spent with clients and candidates.

Okay. That's great. Second, very quick question, just on the tax rate. You talked about it being higher than last year's rate around 37% or are we looking at higher than that?

We haven't -- yes, it's probably not wanting to get into a precise point. It will -- we've got a lot to do in the second half. Obviously, with the current year we've been breakeven at the half year, a slight loss before tax. And you can imagine that that means we've got profits and losses around the world in various jurisdictions. So it's not something I want to sort of precisely guide to in terms of rate. But yes, other than it is almost certainly going to be slightly higher than last year, given the trading that we're seeing in the first half.

[Operator Instructions] Our next question comes from Steve Woolf from Deutsche Bank.

Just a couple from me. Just the -- any changes in any of the fee rates you're seeing in any of the countries, particularly those where you've got a high counter offer area? Secondly, the investment in head count, you're likely to put in the second half of the year. I appreciate selective, but should we have those countries with less than 50 heads in them in mind? And then, sort of additive on to that of the scale of the Rule of 50 in the loosest sense of that, what timescale are you targeting to get that head count up in some of those other regions. And I'm thinking in particular of like you said, the losses we've seen in the rest of the world sort of a path to overall profitability in those -- some of those markets?

Steve, Toby here. So I'll take the first question, and I'll pass to David for the second question. So we obviously, we don't break out sort of individual countries and fee rates. But broadly, fee rates have remained stable, actually very marginally up. Obviously, the situation really is a little bit of a paradox in terms of low supply. But obviously, there is a confidence challenge as well. But we feel there is opportunity in certain markets to increase that fee rate over time. So that's absolutely a focus point for us over the immediate to longer term.

In terms of headcount through the second half, we'll continue to be incredibly data-led looking at the job flow and productivity. So I imagine, we will see some offices, some markets, where we'll increase heads, as we are already, where we're seeing some good job flow, good productivity levels. We're not targeting -- we will not be targeting getting a particular market to 50 heads. It will be -- unless, of course, the productivity and the job flow wants it. So it will be -- it will be data led to get to those numbers. And in terms of the time line to target, again, each market has its own strategy, as to how long we think it will take to get to 10 heads, 20 heads, 50 heads. I think what I'll say is what we are doing, consistent with the overarching view of holding the muscle from the fee earner perspective, we continue to hold our muscle from our office perspective. So we are looking very carefully at all our offices, and we'll continue to invest in those businesses. So that's -- we've got a strong balance sheet, and we want to use it and that's to continue to make the investments for the future, whether it be the technology, the people or our geographical footprint.

That's great. I've got one follow-up as well. In terms of the RPO business, what are you seeing now in terms of the outsourcing tenders? Have they slowed completely at this point? And is there any sort of more evidence we've seen elsewhere of contracts being effectively taken back in-house? Just any thoughts there?

Yes, certainly. So I mean, that we've obviously done some work on the outsourcing business. We like the business. I've said before, the product range was too exhaustive. So we've been quite disciplined in reducing that. You're right, certainly within the RPO, MSP, which is largely volume driven. Those volumes are clearly not where they have been historically. So that has been a challenge. And we look very carefully at the client contracts that we are committed to in terms of what we believe are sort of long-term profitable outcomes. So obviously, we've addressed some of the cost areas, as well within the outsourcing business. So that's across the industry. I mean, that's not just us. We're seeing that with competitors. I think what is helpful and certainly, where we are seeing real traction is at workforce consultancy business, and it's sort of more in line with what we experienced in the market, clients [ want ] flexibility, and that business has really shown some significant growth over the last 12 months. So we are going to be absolutely investing in that business in time to come.

Thank you. It appears there are currently no further questions at this time. With this, I would like to hand the call back over to Toby for closing remarks. Over to you, sir.

Thank you very much, everybody, for attending the meeting this morning, and we look forward to seeing you all soon. Thanks for your time.

Thank you. This concludes today's conference call. Thank you for your participation. Ladies and gentlemen, you may now disconnect.