Back in 2002 and 2003, financial services headhunters cut staff to the bone. Is history about to repeat itself?

Not according to so-called ‘search to search’ firms who headhunters use to fill their own vacancies and whose business it is to know such things.

“I don’t think we are going to see mass redundancies in the way we did in 2001 and 2002,” says John Matheson at Strata Search. “Firms will cut poor performers and move people working on areas like debt across to the Far East, but it’s not going to be wholesale cutting.”

“There’s less overcapacity now than there was six years ago,” confirms Ed Bathgate at Longbottom. “Search firms now are much leaner than they were – hiring over the past few years has not been particularly aggressive.”

Some of the biggest cuts in 2001 came at Heidrick & Struggles, which sliced 50 financial services staff including 15 consultants from its London, New York and Hong Kong offices. Heidrick has since merged with Highland Partners, adding to its consultant numbers.

Search to search types say the hottest headhunters in 2008 will be those specializing in M&A, equity derivatives, emerging markets and commodities, and that some people in these areas are already receiving multiple job offers.

By comparison, structured credit specialists are predictably unappealing, but the headhunters of headhunters insist earning power in that area isn’t about to bomb. “Good structured credit billers who brought in more than £1m this year are looking at billing £400-500k next year,” says Matheson. “There is going to be a slowing in that area, but the feeling is banks will still be hiring.”

Matheson adds that a partner-level consultant in a top search firm can expect a salary of £150k, with bonuses typically allocated according to revenues – once a consultant has billed to two three times his/her base salary, bonuses rise from 30% to 70% of subsequent production.