While other members who are into the business of recruitment will give their valuable opinions, as a outsider I can say that the market of recruitment industry has been saturated long. Industrial slump has impacted it further.
Tomorrow even if industrial slump were to go away and boom time is to return back then also competition in this industry will remain cut throat. Market is over-overcrowded.
The another "weakness" of this industry is that there is nothing "newness" in the market. Scope for innovation is quite limited. You cannot roll out new products or services. There is nothing much to differentiate. Due to monotonous work, it becomes difficult to attract the talented employees. Recruitment is often seen as stop-gap arrangement. Recruiters always vie to get into HR generalist role.
From 1995 to 2008, there was boom time for recruitment with minor exception from 2001 to 2003. But then those who entered during those times, have recovered their investments. Now they have to just continue with their business.
My views are based on the study of the "Strategic" aspects of the recruitment industry. As written above, other members, who could be insiders can give their valued comments.
Dinesh V Divekar
1st April 2013 From India, Bangalore