Financial Times  Sep 20  Comment 
Unexpectedly weak trading statement highlights risks of economic slowdown in Europe
Financial Times  Sep 19  Comment 
SSE’s dividend looks safe even after a profit warning, says Deutsche Bank
Motley Fool  Aug 14  Comment 
Hint: It could help your career in a very big way.
SeekingAlpha  Jun 26  Comment 
TechCrunch  Apr 16  Comment 
The European human resources services company Adecco Group said that is acquiring the New York-based, programming, design, and management training startup General Assembly for $413 million. With the acquisition, Adecco adds to its ability to...


Adecco SA (VTX:ADEN) is the largest staffing company in the world by revenue-- $33B in 2007.[1] Adecco provides temporary and permanent staffing for industrial, office, financial, engineering, and information technology positions. Adecco charges its clients for finding, evaluating, training, and placing employees into the client company.

The staffing industry is highly influenced by economic cycles due to its reliance on hiring. However, Adecco is less prone to economic cycles of individual countries due to the geographic diversity of the company. Adecco operates in 60 countries. With the exception of France (33%) and the USA and Canada (15%), each of these countries accounts for less than 10% of the company's total revenues.[2] Adecco's diversity also means that it is vulnerable to changes in foreign exchange rates. Adecco states revenues in euros and about 44% of the company's revenues comes from outside the European Union.[3]

Although Adecco is the largest staffing company, its net income margins are also among the lowest in the industry at just 3% of revenue. Adecco primarily places low skilled labor and as a result, makes less per placement than some of its more specialized peers. The company depends on quantity over quality and has to place large numbers of workers in order to operate profitably. Adecco says it had over 700,000 workers placed each day during 2007. [4] Several of Adecco's core markets, such Europe and Japan, have been experiencing decreasing birth rates over the last decade. Some even have birth rates below replacement rates, making aging populations a concern in the short term and decreasing populations a concern in the long term. Both of these trends can negatively affect Adecco because aging and decreasing populations make it more difficult to replace retiring workers. The majority of the European population will be over 40 by 2020.[5]

Company Breakdown

Error creating thumbnail

Adecco is the largest staffing company in the world with revenues of $33B in 2007. It has 37,000 employees in 60 countries and places 700,000 people into jobs at Adecco's 150,000 client companies everyday.[7]

Adecco Staffing offers permanent and temporary jobs in mostly industrial and office positions. Industrial and Office position revenues combined accounted for 76% of Adecco's revenue in 2007. Since then, the company have shown growth in capital and net income earnings.

Ajilon Professional provides specialized professional staffing and consulting for IT, finance, accounting, and engineering positions.

Lee Hecht Harrison career services deals with outplacement, leadership development, coaching, and career development. Outplacement services mostly includes counseling for fired employees.

Error creating thumbnail

Trends and Forces

Error creating thumbnail

Decreasing Birth Rates in Adecco's Core Markets

Adecco is so large that social and macroeconomic trends in its core markets can impact it - in particular, staffing companies do better when a country's population is younger, as a younger population means more consumers and workers. But in Adecco's core markets, populations are getting older and birthrates are low. A birth rate of 2.1 is what is needed to maintain a population,[10] anything below that means that the population is below replacement and is shrinking. Several of Adecco's major markets have this problem: France = 1.6, Italy and Spain = 1.2, Western Europe = 1.5, and Japan = 1.3[11]. A birthrate of 1.2 means that in 20 years the working age population will shrink 30%.[12] Many European countries are importing labor, in particular muslims, to make up for these low birthrates. Over 50% of all births in the Netherlands will be non-European in 12 years.[13] However, there are countries like Japan, that will not import workers. As a result, by 2020 about 20% of the Japanese population will be over 70 years old.[14]

Temporary Workers Demanded More than Ever

The American Staffing Association (ASA) took a survey in 2006 which found that 91% of managers wanted flexible staffing and 66% of workers said that flexible work time was important.[15] From 1970 to 2000, daily temporary employment has increased from less than 250,000 to 2.7 million.[16] Also, as of January 2008, over 33% of workers in Japan are considered temporary workers, this compares to 23% in 1997.[17] However, temporary employment is still succeptible to economic conditions. Temporary employment is usually a leading indicator of overall employment: in a down economy temps are let go first and in a booming economy temps are first to be hired. Since June 2007, temporary employment is down 5.7% in the US.[18] Labor productivity is another important indicator for staffing companies because when labor productivity increases, labor demand falls and vice versa.

EU Directive Makes Effort to Reduce Labor Laws

In June 2008, the EU made a directive that addressed the positive impact temporary staffing has on the labor market. The directive requires countries in the EU to make at least the minimum requirements specified by the directive. Some of these actions include banning all laws that discriminate in any way and adding a law against disability discrimination.[19] France has already lifted restrictions on permanent placement; however, restrictions are still prevalent in other countries. In Spain, temporary staffing is prohibited in the construction industry, as well as public services (Belgium does not allow temporary staffing in public services either).[20] A report by Eurociett, the European Confederation of Private Employment Agencies, stated that if only two of the recommended actions of the directive are adopted by six EU countries, then by 2012 about 570,000 more jobs could be created.[21]

85% of Revenues come from Outside North America

Only 15% of Adecco's revenue comes from the US and Canada. The rest is spread across the globe, but is mostly concentrated in Europe, particularly France (33% of revenues in 2007). Its only market in Asia is Japan with 6% of company revenues. The geographic diversity of Adecco's business lessens the impact of economic cycles in any one country. This is particularly important in the staffing industry given the high correlation between economic cycles and labor demand. However, France makes up a third of Adecco's business so the company is most prone to the country's economic conditions, as well as its strict labor laws. France's government is very involved with the labor laws and, as an example, even stepped in to stop Alcatel Lucent from cutting too many jobs at the French offices after the merger in 2006.

Foreign Exchange Rates Drag Down Revenue Growth

Adecco is based in Switzerland and reports revenue in Euros. About 56% of the company's revenue came in the form of Euros,[22]but the remaining 44% is subject to foreign exchange rates. If the Euro depreciates then the company's international revenues will be higher and vice versa. In 2007, Adecco's revenue growth was 3%, but it was 6% at constant currency.[23] This was because the value of the Euro increased against key currencies, such as the dollar, and the international revenues were lower because of it.


Adecco is the largest company by revenue in the $75B staffing industry. Adecco's primary competitor is Manpower (MAN). Adecoo and MAN are the two largest staffing companies in the world, they both get about a third of their revenues from France, and they both largely offer low skilled and unspecialized staffing. Parts of Adecco's business, particularly its Ajilon division, also competes with more specialized firms such as the highly profitable Robert Half International (RHI).

Company Comparison in 2007
Company Revenue (in millions) Net Income (in millions) Return on Equity Offices Number of Clients Number Employed in permanent, temporary, and contract positions Countries Occupied
Adecco[24] $33,000 $1,150 27.53% 7,000 150,000 60
Manpower[25] $20,500 $484.7 18.85% 4,498 400,000 5,000,000 80
Robert Half[26] $4,650 $296.2 29.23% 360 18
Spherion Corporation[27] $2,017 $25.3 6% 940 8,000 300,000 8
Kelly Services[28] $5,600 $61 6.95% 2,500 750,000 34
MPS Group Inc.[29] $2,100 $87.1 8.98% 230


  1. Adecco 2007 Annual Report pg.1 using exchange rate of 1.55 Dollars to 1 Euro
  2. Adecco 2007 Annual Report pg.1
  3. Adecco 2007 Annual Report pg.60
  4. About us, Adecco Website
  5. Adecco 2007 Annual Report pg.7
  6. Adecco 2007 Annual Report pg.1
  7. Adecco 2007 Annual Report pg.1
  8. Adecco 2007 Annual Report pg.1
  9. Adecco 2007 Annual Report pg.1
  10. What in the World is Going On? A Global Intelligence Briefing for CEOs by Herbert Meyer
  11. What in the World is Going On? A Global Intelligence Briefing for CEOs by Herbert Meyer
  12. What in the World is Going On? A Global Intelligence Briefing for CEOs by Herbert Meyer
  13. What in the World is Going On? A Global Intelligence Briefing for CEOs by Herbert Meyer
  14. What in the World is Going On? A Global Intelligence Briefing for CEOs by Herbert Meyer
  15. American Staffing Association
  16. Temporary Downturn?
  17. Temporary Employment in Japan
  18. Economic Egomaniacs
  19. EBU Newsletter #49
  20. Adecco Welcomes Compromise in EU Agency Work Directive
  21. More Work Opportunities for More People
  22. Adecco 2007 Annual Report pg.62
  23. Adecco 2007 Annual Report pg.62
  24. Adecco 2007 Annual Report
  25. MAN 2007 10-K
  26. RHI 2007 10-K
  27. SFN on Google Finance
  28. Kelly Services on Google Finance
  29. MPS Group on Google Finance
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki