Heidrick & Struggles International Inc., one of the world’s largest executive search firms, has closed its Wellesley office and consolidated operations at its Boston location as it grapples with a downturn in the executive search industry that has hit the high-tech-oriented Boston market especially hard.
After laying off roughly 40 of its nearly 60 staffers in Wellesley during two rounds of layoffs in 2001, Chicago-based Heidrick last month closed that office and reassigned its remaining Wellesley personnel to the company’s Federal Street offices in Boston, spokesman Eric Sodorff confirmed.
The downtown Boston office, which itself lost staff after the layoffs in June and October, now has about 35 employees total, he said.
In all, Heidrick laid off nearly 30 percent of its global work force, or more than 600 people in 2001 — a year widely considered the worst in nearly a decade for the executive recruitment industry.
“What we saw was a complete reversal of fortune,” said Joseph Daniel McCool, editor-in-chief of industry publication Executive Recruiter News, based in Fitzwilliam, N.H. Industry revenue on the whole was probably down about 30 percent, following consecutive years of double digits growth starting in 1992, he said.
“The year 2001 was most certainly the most difficult and challenging and defining year in the executive search business in its entire history,” McCool said.
Heidrick’s consolidated revenue figure for the fourth quarter of 2001 was $88.5 million, down 40 percent from the $148 million the company posted in the same quarter a year ago.
McCool said he believed Heidrick felt a little more pain than most, as the company had built up its Boston-area practice in recent years to capitalize on the region’s wealth of high-tech companies — a strong suit of Heidrick’s, he said.
When those companies became among the first victims of the economic downturn, the fortunes of their vendors suffered similar fates.
“It’s an ecological kind of thing, where one thing affects another,” said David Zell, president and CEO of Waltham-based Logix Inc., a 26-person search firm for the high-tech industry, who said his own company’s revenue fell by about 40 percent last year from the year before.
Nicholas Hurd, managing director of the Boston office of New York executive search firm Russell Reynolds Associates Inc., said he reallocated his high-tech recruiters in the last quarter of 2000 in recognition of that sector’s troubles. Hurd said high-tech and financial services are key targets for his office, and recruiters were reassigned out of Internet recruiting to other high-tech areas such as software and telecommunications, as well as non-tech areas.
While he said the tactic succeeded, and has spared his 10-person office from layoffs, Hurd said the Boston market for executive search continues to be difficult.
“My observation is that many of our clients have been trying to do things on their own,” he said.
Of course, any upswings are relative, coming as they do after a significant drop in demand, but most recruiters say things are picking up, if in some cases only marginally.
For example, said Zell, “February was certainly (better) than the last three months.
“January was OK,” Zell said. “It was better than December and November.”
However, Seth Harris, managing director of technology and venture practices in the Burlington office of Cleveland-based Christian & Timbers, said his firm has launched 12 new high-tech placement searches since January, putting it on par with 1999 performance.
Nonetheless, many local executive-search insiders say they don’t expect a substantial pickup in business before spring. But when the upturn does come, Boston recruiters should be among the first to feel it, says Executive Recruiter News’ McCool — mostly because of the area’s rich talent pool, wealth of emerging technology companies and geographic proximity to Europe.
“I think Boston will be among the first markets in executive search to break out of the recession,” McCool said.
Copyright 2002 American City Business Journals Inc.