George Tong: That’s very helpful. Thank you. And then to follow up, every cycle, as you know, has its own unique characteristics in terms of the way down and the way up. How do you expect the current macro slowdown and subsequent recovery to compare with prior cycles in terms of depth and also in terms of duration?
Jonas Prising: Well, George, I think if I knew the depth, then it’d be easy, but we don’t. So, we manage through the uncertainty like everybody else. But I would say largely, this — the way this economic slowdown is playing out in our industry is roughly what we have seen in prior economic cycles with the difference being some delays and some sequencing. We talked about the step down of perm in the second quarter coming into the third quarter, where that is normally something we would see a little bit earlier. We would see maybe commercial staffing start to decline a little bit earlier and that IT staffing and professional staffing would hold on a little bit longer due to the length of the projects and the higher skill sets.
And that’s been a little bit reversed. But a lot of these differences in timings, we think, can be largely explained by pandemic and post-pandemic anomalies, frankly, that are as we go through this economic cycle, seem to be coming back towards trend. So, overall, we would expect this to play out in a recovery in the same way that we’ve seen in the past. Companies will get some confidence into the future, but not enough to really start their permanent hiring in a significant way. That means, we’ll see commercial staffing start to pick up. IT projects and others for Experis pick up. RPO and perm start to pick up, because a lot of the talent acquisition activities have been changed in the client companies, and then we would see it start like that.
The one thing, George, that I think we will have to get used to, which in our terms is a positive effect in terms of demand is more structurally constrained labor markets overall in many, many skillsets and not just the highest skillsets. But also broadly due to the changing demographics and aging population, we think access to human capital is going to become more difficult, which means, customers and companies will rely more on us and all of our brands to attract and retain the talent both on a contingent, as well as on a permanent basis. And we look at our staffing margins that we have today across the board and how well they’re holding up and that is different from what we’ve seen in other cycles, and we would hope that based on the structural trends that we’re seeing demographically, and the demand for new skillsets driven by technological changes at all skill levels, frankly, but that will give us further support for some good margin evolution, staffing margin and total margin as a whole.
George Tong: Very helpful. Thank you.
Jonas Prising: Thanks, George.
Operator: Thank you. Our next question comes from Kartik Mehta with Northcoast Research. Your line is open. Kartik Mehta, your line is open.
Jonas Prising: You are on mute, Kartik.
Jack McGinnis: Maybe we’ll come back to Kartik. He might be having difficulty.
Operator: Our next question comes from Manav Patnaik with Barclays. Your line is open.
Princy Thomas: Hi, Jack. Hi, Jonas. This is Princy Thomas on for Manav. Last quarter, you mentioned some mix-related changes around rebalancing your client mix, specifically in India and Australia, and that you were seeing good profitability levels in those markets. Can you give us an update and expand on your progress there? And how this impacts your exposures and revenue margin impact from these mix changes?
Jack McGinnis: Sure, Princy. I think the main takeaway is there wasn’t really a lot of dramatic changes in Q3. I think you’re right. That’s been an ongoing adjustment we’ve been making in certain key markets. India certainly is a very important market for us, but it’s a tough margin market. So, as a result of that, we want to make sure we’re taking on the right business that’s accretive to the organization overall. And we’re making really good progress in that regard. So, the business has been doing a really nice job repositioning the business this year, and we feel good about that. And I’d say that continued on in Q3 as expected. I’d say, the other country that we’ve talked a lot about in the past has been the UK and another tough margin market on an overall basis.
We have a lot of tremendous experience operating in that market, and we’ve done a really nice job repositioning the margin profile of that business as well. So, despite the very difficult conditions and you saw the trends for the UK, so definitely on the higher side of pressure that we’ve seen, they’re actually operating quite well in that environment and doing a really nice job preserving operating unit profit margin. So, I’d say those are two examples that we probably have talked a little bit more about and, I’d say, continued on good progress into the third quarter on both of those. Thanks.
Princy Thomas: Got it. Thank you. And as my follow-up, you mentioned in your prepared remarks that you expect significant reduction of activity in your Israel business. Can you quantify your Israel exposure for us?
Jonas Prising: Yes, thanks for that question. And as I mentioned in my prepared remarks just this morning, I’ve spoken to our Israeli colleagues. And the Israel business is a business that has been in the — is the market leader, and we’ve been in Israel for over 60 years. We have about — we have more than 10,000 employees and associates in Israel, and it’s roughly a $400 million operation. And as you can imagine, in this war time in Israel, many of our employees are being called off to serve. Unfortunately, we have had families — members missing, as also impacted fatally. So, it is a tough time for our operation in Israel. We are providing them all the support we can, of course, as ManpowerGroup, and I am in awe at their resilience and their ability to manage a very uncertain and volatile and difficult environment, both professionally and personally, and still support our thousands and thousands of associates, as well as client companies in Israel.
So, I am very impressed, and I’m sad by the terrorist attacks and all the resulting difficulties in the region, but it is going to be tough to estimate the impact medium-term for Israel. But from what we can tell, at least in the short-term, this is having a significant operational impact to us in Israel.
Princy Thomas: Appreciate the color. Thank you.
Operator: Thank you. Our next question comes from Tobey Sommer with Truist Securities. Your line is open.
Jasper Bibb: Hey, good morning. This is Jasper Bibb on for Tobey. Just wanted to follow up on the restructuring actions and what that might mean for your branch network. Like I know total branches have come down quite a bit over the past decade, but curious how you see the future of the branch footprint with the recent portfolio changes.
Jonas Prising: We’ve been very cautious. As you pointed out, we’ve really leveraged our digital platforms to bring down our physical branch footprint very significantly over the last decade, which, of course, helps us because it becomes less fixed cost, more variable. But at this point, I think, at least for now, we are going to remain relatively stable in our branch network. We had some slight adjustments sequentially here, but nothing strategic and not really in reaction to the slowdowns that we’re seeing. So, we largely intend to keep our physical footprint exactly where it is today in all of our brands and manage the demand decline through other ways, centralizing delivery in low-cost areas and things like that so that we have more flexibility.
