Business and operating environment

Business operations

VMP’s business is organized in three service areas: staffing services, recruitment and organizational development services, and self-employment services.

 

In the staffing services, VMP is an intermediate between temporary staff and corporate customers, and while employees are employed by VMP, they work for the client company for an agreed period of time. The recruitment and organisational development services comprise services related to the recruitment of permanent employees, as well as training and development services provided for employees of corporate customers. With the self employment services, private persons can operate as independent entrepreneurs without establishing a company of their own by invoicing their customers through VMP’s service.

VMP is amongst the largest operators in its sector, and is the only company providing self employment services and HR services based on digital solutions in addition to staffing services and recruitment and organisational development services. In addition to Finland, VMP operates also in the HR services market in Sweden. VMP staffing services directly through its own group companies and through its franchising chain.

In 2018, VMP’s staffing services accounted for approximately 56 percent of net sales, recruitment and organisational services accounted for approximately 7 percent of net sales, and self employment services accounted for approximately 37 percent of net sales.

Operating environment

Market review

The HR services market relevant to VMP’s business includes staffing services, recruitment and organizational development services and self-employment services. The size of the entire HR services market in Finland according to an estimate by VMP’s management was EUR 2.4 billion in 2018, growing by 9 percent year on year.

The share of staffing services of the entire market was EUR 2.1 billion in 2018, and it was thereby clearly the largest service area. Correspondingly, the market size of recruitment and organization development services was approximately EUR 130 million in 2018. The market size of self-employment services has been estimated as being approximately EUR 140 million.

According to The Private Employment Agencies Association (HPL), the staffing service market continued to grow during 2018. Total growth generated organically and through corporate acquisitions was 13 percent. The growth of staffing services in October-December was 8 percent (HPL). Growth expectations of HPL’s member companies have levelled out as Finland’s GDP growth estimates for the ongoing year have been lowered. The management estimates that the recruitment market in 2018 has remained at the level of the previous year. In the self-employment services market, the market leaders have continued strengthening their position. In addition to the Finnish market, VMP also operates in the Swedish market. The Swedish HR services market grew by approximately 3 percent in January–September 2018, with growth in staffing service at 5 percent and slightly slower in other services.

Recent positive economic development has resulted in labor shortages in some industries. Solutions are being sought through cooperation with educational institutions and by strengthening the recruitment of international labor. In addition, VMP increasingly produces more employment-promotion services through growth services pilot projects related to the health, social services and regional government reform across Finland. The company believes that the health, social services and regional government reform would grow the HR services industry in Finland and would open up demand for services offered by private HR service companies. In addition, market growth potential is seen in digital services such as in provision of software robot labor.

Looking at different industries, the manufacturing and construction sectors are more sensitive to economic fluctuations in comparison to service industries, where the demand for HR services grows more moderately during economic upturns. The relative proportion of staffing in the service industry has increased among the industries served by VMP, especially as a consequence of realized acquisitions.

In Finland, the share of flexible forms of working of all work remains significantly lower than in comparable European countries. The market will continue its structural growth as flexible forms of working become more prevalent.

The structural transformation of work affects the needs of both employers and employees. In our view, career paths will consist of several jobs in the future, and employment relationships enduring over an entire working career will decrease or disappear completely. Other market trends and growth drivers include:

  • Globalization and limited visibility in demand
  • Digitalisation, robotics, and technology
  • Demographic changes in Finland
  • Growth Services project as part of the social services, health care, and regional government reform
  • Development of the economy