Finite’s Purchase of 920 Coincides with OCG Exodus

One of the more persistent rumours within the New Zealand recruitment sector became reality this week.  I first heard mutterings that Australian privately-owned “top three” IT recruitment provider Finite were close to making an acquisition back in October last year.  After what must have been some protracted wranglings and negotiations the news finally broke this week that Finite had acquired well-known NZ IT recruitment firm NineTwenty.

The move makes plenty of sense.  Finite first made a play for NZ market share at the end of 2014 riding in on the back of their IBM contract and taking over a contractor base here.  Whilst this is high volume business, it is also low margin, so an IT recruitment leader was needed to organically grow the Finite offering up and beyond their IBM flower bed.  They quickly discovered what many overseas recruitment firms encounter in our small NZ recruitment market, the right level of talent just wasn’t there, or wasn’t interested in joining, stunting their expected growth plans.

So they either faced a similarly long and winding road to organic growth pursued by others in recent years, or they could speed things up by making a strategic acquisition.  920 was an obvious target although, as one of the more entrenched and established brands in the NZ IT sector, a bold one.  With high-performing teams in Auckland and Wellington and a strong portfolio of PSA agreements (including All Of Government since their Talent Point purchase) a premium was always going to be demanded and was probably why negotiations took so long.

Finite claimed in a press release last September that their NZ revenues were in excess of $12 million.  With this latest release suggesting their NZ revenues will now exceed $50 million they have immediately established themselves as a leading new player in the NZ IT recruitment sector.

That is, of course, if 920’s (assumed) revenues of $38 million+ continue to grow.  And this is the major challenge that lies ahead for Finite.  As it stands right now, nothing has really changed.  The article suggests that the 920 brand will be retained which means the same recruiters will be doing the same thing, with the same business cards and email addresses, the same embossed compendiums tucked under the same suit jackets.  It’s just that the client’s money will be sent into a different bank account.

This follows a similar and well-trodden path of making acquisitions work in the somewhat cliquey New Zealand market.  The Madison brand was retained by AWF back in 2013.  The Global Attract brand was afforded the same status by Manpower a year later.  However, this isn’t always enough to make an acquisition a success.

When Japanese behemoth Recruit Holdings purchased Chandler Macleod last year, it heralded a sudden change of temperature at long-established NZ firm OCG, who were owned by Chandler Macleod but had also retained their brand. Long-time OCG Chief Executive George Brooks decided to end his 24 year involvement, leaving in June.  Three months later Bureau Limited was incorporated, which must have heralded a number of covert conversations, as this week at least eight OCG consultants and managers (based on a perfunctory search of LinkedIn) performed a synchronised LinkedIn update changing their role titles to “Partner” at “Bureau Ltd”.

Clearly George wasn’t the only one who felt that his recruitment revenues would be best off kept in New Zealand rather than filling overseas bank accounts.

Something that Finite will no doubt be acutely aware of.