Umbrella companies in Europe - a study on their growth behavior and job-creation

Umbrella Companies offer Employment Services for individuals who would like to invoice a customer but who currently do not have their own company. The service has been in commercial practice for more than twenty years in UK, France, Sweden and Holland but is still relatively unknown.

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Umbrella Companies offer Employment Services for individuals who would like to invoice a customer but who currently do not have their own company. The service has been in commercial practice for more than twenty years in UK, France, Sweden and Holland but is still relatively unknown.

This report aims to describe and quantify these companies in terms of growth and their impact on job-creation, primarily for unemployed people. A research stand point is taken from the Corporate Growth literature to investigate the different growth related behaviors practiced by different companies. The aim with this perspective is to find meaningful behaviors that can be copied by other companies. Hopefully the industry can grow and thereby create more jobs and simpler ways to run micro companies.

The result from the study lists the current 294 Umbrella Companies for the first time (appendix 10). UK has more, older and larger Umbrella Companies followed by France and then Sweden.

The persons who work through Umbrella companies can be divided into two groups: Agency-workers (who have been hired by a Contracting agency and are collectively employed through an Umbrella Company) and Consultants (who individually invoice their own client through the Umbrella Company) see section 1.1 for terminology.

The dissertation has tested a framework for Exponential Growth developed by David Thomson in the USA. The framework lists 7 Essentials for Exponential growth. It is based on the behaviors of the 400 fastest growing companies in USA, as they exhibit high scores on five out of seven of these Essentials. Questions regarding ambition and outcome of growth and scoring on the 7 Essentials have been analyzed. Significant correlations have been found between the intention to grow and the ability to grow measured with these 7 Essentials. Significant lower scores on growth behavior have been found for the Umbrella groups and the Reference group compared with the US companies at the 95% alpha-level. Both groups are also growing slower than the US group.