Tobey Sommer: If I could have sneak one last one, I want to react to something you said earlier. You said perhaps general deflation. How could that manifest itself in wages, and how does that representation of wages impact your growth in a year or two? Thanks.
Gary Burnison: Well, there’s going to — I think there’s going to continue to be some wage pressure, but you’ve seen that really moderate big time over the last few months. I mean, the quit rate has gone down substantially. And that’s what happens in cycles. It goes from an employer market to an employee market and back and forth. But I do think overall that, that deflationary impact will ultimately result in central banks revisiting the levels of rates. And I think that could create freedom for companies in terms of investment. So, I would view that as a good thing. I mean, it’s clear the central banks and this unprecedented move that they’ve made over many months here, it has had a big impact on the economy. There’s just no question about it.
In the United States, going from 600,000 jobs a month to now, this month, probably 100,000, I mean, that’s incredible. That’s unbelievable. So, it’s had its impact, and I have to believe that, say, five months, six months down the road, there has to be a relook at that.
Tobey Sommer: Thank you for being so generous with my question.
Operator: Next question comes from line of Trevor Romeo. Please begin.
Trevor Romeo: Hi. Thanks so much for taking the questions. First one just on the revenue guidance. Just wondering if you could talk about your expectations for each segment. I think in total, it’s maybe a mid- to high-single-digit decline sequentially that’s embedded kind of on a consolidated basis. Just wondering if you could kind of talk about the various factors for each of the businesses.
Gary Burnison: The — first, overall, when we historically look at our results, you would tend to think that the third quarter, based on historical averages, would be down about 5% from the second quarter. And basically, our guide is in line with that. And I would expect that the results in the third quarter are going to mirror what we’ve talked about here in terms of new business trends. So, I would probably expect the search business to be down 10% or so. I would expect the consulting business to be strong in a relative term in this kind of economy, for sure. And so, that’s how I would think about it. On the interim side, I would expect that the technology area would improve slightly over what it’s been. And so, that’s kind of broad-based how I would look at the components of the business.
On a geographic basis, I would expect EMEA to continue to perform well. And again, that’s relative to the economy that we’re dealing with. But that could be moderate growth, it could be flat. Asia, historically, Asia over the last several quarters has been off. China has been a drag on our results of about — to the tune of about $50 million a year. The good news in the last two months, three months is we’ve seen some improvement in Asia, which would be great for us. We have a great team there. So, that’s how I would think about it. The RPO business, the level of new business, this new wins this quarter was — it’s about almost $150 million, $141 million. So, $600 million, that’s kind of what it was excluding last year. After the pandemic, it was kind of $600 million a year.
So, that’s how I kind of think about it.
Trevor Romeo: Okay. Thanks, Gary. That’s helpful. On the leadership development outsourcing or the coaching at scale business you’ve been talking more about lately, just kind of wondering if you could talk about how you progressed toward that opportunity in the past several months and how significant that could be to the company in the future?
Gary Burnison: Well, it comes back to Tobey’s question around investment in capital. I mean, part of that investment in capital is around some of our training businesses, and we have to continue to invest in that. So, that training business is roughly, call it, 10% of the overall company’s revenue footing. It’s an enormous market. It’s probably $100 billion. I mean, it’s massive in terms of the market opportunity there. We continue to win mandates of not just teams, but thousands of people within an organization, particularly, at a time like this when companies have to really adapt and adjust and innovate and optimize and think about AI and think about their talent strategies. So, it does present an incredible opportunity for us. But the key is around the IP. And we have to make sure that we’re making the investments to enable the development to create real learning journeys for companies and their employees.
Bob Rozek: And Trevor, this is Bob. The one thing we are seeing right now on leadership development outsourcing, on the journey to stand that up, is clients are coming to us now. We have a leadership development outsourcing diagnostic. So, we’re helping clients to understand — most clients, their spend is so dispersed across your organization. And in these times we’re trying to optimize costs, we started to get mandates around the cost optimization of their leadership development spend through our diagnostic tool.
Trevor Romeo: Great. Thanks. And then if I could maybe sneak one more in just to follow up on the restructuring, I think the annual cost savings, I think, is about 4% of the current revenue run rate. I mean, just simplistically, would you expect that to have about a 4% positive impact on margins on an ongoing basis, or would there be some offsets there? And then on kind of the phasing or the timing, will all of that benefit be captured by the end of Q3, or would there be some lagging impact beyond that? Thanks.
Bob Rozek: I’ll jump on that one, Gary. So, I’ll answer the second part first. The majority of the saves we would expect to see in Q3, there are some situations in foreign countries where, for example, people are in garden leave and so on. And so, getting the costs out of the business takes a bit longer. But I would say for the most part, we’ll realize the savings in the third quarter. You heard Gary talk about sort of breaking before the turn and then accelerating through it. And so, part of the reason why we took the actions is to give us the ability to make investments as we go through this cycle. And so, the 400 basis points that you’re referring to, you should be thinking about this business from a, I would say, for the near term, kind of a 14.5% to 15.5% margin, adjusted EBITDA margin. And then obviously, once the fog lifts and world gets back to more normal environment, we would expect to be in the kind of the 16% to 18% range that we previously talked about.
