I might have a very big blog coming your way about a global recruitment firm which may have a similar name to me, but that will have to wait. Like lamb shanks, Guinness, and used panties, some blogs need just a little longer to simmer, settle, and ripen. Until then, lets revisit another global: our friends at Hudson. A few weeks ago I told you that Hudson Australia’s CEO had described the morale of a business in administration as “strong“, and that the Australian Financial Review had subsequently revealed the business had been “unprofitable for some time“. I also said I didn’t see how Hudson Australia exists in any recognisable form in 12 months. I’d love to say I was wrong, but instead, I may have been optimistic about the timeline. An industry contact who spoke to Hudson staff this week tells me the rescue plan, championed by the remaining Hudson leadership, has collapsed. I can’t independently verify this, but the silence since the 18 May deadline for binding offers tells its own story. Like a round of golf, when a restructure is working, every f*cker hears about it. When it isn’t (or you’ve spent a day hacking away), it’s deafening silence.
There is also a more structural problem that hasn’t been widely reported. Unlike Aotearoa, most Australian states require recruitment companies that supply workers to other businesses to hold some weird-ass labour hire licence. It is mandatory, and the fitness requirements to hold one include being solvent and meeting your obligations to workers. A company in administration, with over five million dollars in unpaid superannuation owed to contractors, has a big problem on both counts. I am hearing Hudson may have lost, or be in the process of losing, its licence. Given that supplying workers to Australian government agencies is the core of what Hudson does – and has done since the Morgan and Banks days – this is not something you recover from. Now you could use charm and guile to retain your licence I guess, but in the meantime, every competing recruitment firm is calling your contractors and telling them that unless they switch recruiters, they ain’t getting paid. Can you imagine a recruiter working against that??
There was also a legal fight that got almost no coverage outside of Australian legal circles. Before administration was even announced, the tax authority had issued a notice to Hudson’s invoice finance provider (a company called ScotPac) requiring it to hand over 20% of all drawdowns directly to the tax office. When the administrators tried to get that notice withdrawn so they could access the full facility and keep the business trading, the tax authority said “nah mate“. That ended up in the New South Wales Supreme Court. The administrators’ argument was straightforward: without full access to the invoice facility, they couldn’t fund operations. The tax authority’s position was equally straightforward: we want our money, and we were in the queue before you were appointed. It is a measure of how far gone things were that keeping the lights on required a court case against the government that Hudson had spent a decade billing nearly a billion dollars to.
The timing is brutal regardless. June 30 is the end of the Australian financial year. At that date, contracts worth over $54 million expire simultaneously, as government agencies decide whether to renew. Agencies don’t renew with businesses in administration if they have an alternative, and on a whole-of-government panel with multiple suppliers, they always have an alternative. Simply put, Hudson is just too risky. Too risky to be a supplier. Too risky to contract for. And far too f*cking risky to stick around if you’re a recruiter.
I said in May that the only way to make this industry work now is to be small, agile, and technology-led. Hudson Australia is none of those things and never was. It is a business built entirely on government dependency – a recruitment wrapper around a single client type, at scale, with debt. When the Australian government started cutting contractor spend after 2022, there was no pivot available. You can’t turn an oil tanker in the Sydney harbour. And now Hudson haven’t just screwed up by being overly reliant on government. They’ve also served to piss off several of the government departments which kept them so well fed for so long. There is no coming back from this.
For anyone at Hudson reading this: good recruiters land on their feet. The business model failing doesn’t mean you do. And New Zealand really is a great place to raise a family.
^SW
