IT recruitment company Spring Group has acquired rival Best International in a deal worth £7.5m, creating the UK's largest IT staffing company.
Spring chief executive Richard Barfield warned that further consolidation in the IT recruitment industry is inevitable as customers look for higher value from a smaller number of suppliers.
"The industry needs to develop cost-efficient business models. Acquiring Best will stand us in good stead and position us as the major player by enabling growth if the market improves, and increased protection should the market contract," he said.
IT recruitment has been badly affected by a combination of the economic downturn and uncertainty in the market, and prospects for the sector are unlikely to improve significantly in the short term, Barfield told vnunet.com.
The company has also suggested that the Home Office's fast track visa scheme has had an impact on the UK's already troubled IT contracting market.
According to Home Office figures, 50,000 overseas IT workers have been brought over to the UK under the government's work permits scheme. This is approximately the same number as that of IT contractors currently off contract, according to industry body the Professional Contractors Group.
"We've noticed a slow-down in the permanent market in the past three or four months," Barfield said.
"The contract side has been doing quite well: it's up 20 per cent since the beginning of the year, to around 3,200 contractor placements since 1 January.
"Since the end of the war we're starting to see the shackles coming off a little bit and permanent recruitment is picking up, but I wouldn't like to say the boom times are here."
The deal will open up access to Best's high-margin permanent staffing business, which Barfield said generates two to three times as many placements as its new parent.
The acquisition will bring together Spring's hy-phen management recruitment services for temporary staff with Best's Zebra workforce management services for permanent recruitment.
Cotton seedling freezes to death as Chang'e-4 shuts down for the Moon's 14-day lunar night
Fortnite easily out-earns PUBG, Assassin's Creed Odyssey and Red Dead Redemption 2 in 2018
Meteor showers as a service will be visible for about 100 kilometres in all directions
Saturn's rings only formed in the past 100 million years, suggests analysis of Cassini space probe data
New findings contradict conventional belief that Saturn's rings were formed along with the planet about 4.5 billion years ago