Paychex, however, is not a direct competitor to Robert Half International in the direct placement segment or in its core business. The recruits that Robert Half seeks are employees looking for contract positions or long-term permanent jobs. These are not independent contractors, so the two firms certainly are not competing for the same type of customers. Additionally, a company that wants to hire Paychex is most likely not looking for an employee, as it has decided to outsource the activity. Saving on employee benefit costs and length of time needed for the service are key factors that enable a company to make this kind of decision.
While outsourcing is competition for having in-house employees, many of the recruits for Robert Half International Inc. (NYSE:RHI) are qualified in areas that Paychex does not outsource. For degreed and certified professionals, payroll is a more mundane and simple level of work that can be performed and Robert Half finds candidates that can do those higher level tasks.
Manpowergroup Inc (NYSE:MAN) is trading towards the high end of its 52-week range. Again, I do not feel that this company is strong competition for Robert Half. Manpower has more of a general focus in different types of employees, while Robert Half focuses on the field of finance.
In browsing listings for jobs over the years, particularly in my area of focus, there are not a lot of Manpower listings while there are many from Robert Half. This further solidifies the strong niche focus that Robert Half has.
Manpower also focuses on temporary staffing. The growth of Robert Half in the last quarter has come from direct placement. This is a different type of recruiting situation, which proves to me that the competition Robert Half really has is less widespread than it appears.
Robert Half receives most of its competition from Randstad’s finance department, as it bought out the former strong finance recruiting firm of Accountants International. Other companies such as Adecco provide competition, although the other companies’ employees do not have that intricate knowledge of the field they are placing the jobs for, which puts them at a disadvantage in negotiating.
Conclusion
In conclusion, I feel that Robert Half International Inc. (NYSE:RHI) is in a good position to be able to continue its strong direct placement growth in the United States. Furthermore, I believe this stock is definitely worth taking a look at because it does not have much competition for what it does and because I believe it has a significant competitive advantage.
Anthony Parsons has no position in any stocks mentioned. The Motley Fool recommends Paychex and Robert Half International. Anthony is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Robert Half International – Behind the Numbers originally appeared on Fool.com and is written by Anthony Parsons.
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