Staffing Industry Transitions in 2015

In 2008 many staffing businesses began to feel the pressure of the economic down turn that started with the collapse of the subprime mortgage industry in 2007. Some agencies may have even been working with these types of companies and felt the effects immediately. Over the last 7 years, the economy has improved and staffing, as always, has been at the forefront of that change. 

Staffing, as we all know, is an indicator industry. When staffing picks up, other businesses can expect growth as well. It makes sense. Companies are less confident about their hiring options since many had to go through several rounds of layoffs as the recession hit. Staffing becomes the perfect answer.

While the economy has been slow to recover this time, the important take away is that it is recovering and temporary staffing, of all varieties, is riding the crest of that wave. 

Let's take a look at some of the numbers from 2014. 

• Unemployment at 5.8%: as of November, the unemployment rate was holding steady at 5.8%, the lowest since May, 2008.
•  Payroll increases: According to the same Department of Labor report, wages have increased by 9 cents in November. This is a difficult stat to track since wages are so reliant on location, production, and experience. 
•  Increased staffing index: In 2006, the American Staffing Association launched an index to track the growth of the staffing industry. It was set at 100 when it was released and during the recession dipped as low as 66 in 2009. In 2014 it remains comfortably above 100.
• 11 million temporary employees: Back in 2013, the staffing industry reported that it had hired over 11 million temporary and contract employees across all specializations.
• Sales at $122 billion: In the same report, the ASA indicated that staffing sales had also reached an all-time high.

So, what's in store for 2015? 

The staffing industry is continuing to experience growth and at the same time technologies are changing the game to allow for more opportunities including online staffing. What can you do to keep the momentum for the New Year? 

1. Consider online staffing: Offering the ability for your pool of candidates to connect directly with hiring managers can bring in more revenue this year.
2.  Streamline technology: Automating processes, connecting current systems, and allowing candidates and clients to have access to self-directed portals can also increase your company's ability to source and place talent.
3. Improve on-boarding procedures: It is currently believed that up to 20% of new employees will quit before their first 90 days is complete. This is a horrifying statistic and many businesses are turning to staffing and temp-to-hire options to help with the onboarding process. Your business can become a bridge to success for both clients and candidates.

Take your staffing business to the next level today! 

NextCrew can help you customize online staffing solutions and better technology integration for your specific business needs. Contact us today!  

Image by wackystuff via Flickr

Staffing firms, don’t be confused -- NOW IS THE TIME to begin your Online Staffing journey!

Guest Blogger, Andrew Karpie, is Principal Analyst at The Research Platform and a recognized expert on emerging online work intermediation platforms as well as their impact on the staffing industry.  Over the past three years, he has produced and published numerous research reports and articles on these subjects with Staffing Industry Analysts.  He has also produced research and published content for a number of major staffing firms and online staffing platform businesses, and he serves on the Advisory Board of The Rise of the Platform Economy research program, a joint initiative of Stanford University Business School and The Center for the Global Enterprise.  Andrew holds an MS in Policy Analysis from Carnegie Mellon University, and he lives with his family in the San Francisco Bay Area.

The trend toward the use of “contingent workforce” is clearly on the rise.  In 2012, per Staffing Industry Analysts, the worldwide staffing industry supported spend of about $350B on just “temporary staffing” contingent workforce, and the total global contingent workforce spend numbers (including SOW, ICs, freelancers) was several multiples larger.  There are now numerous forecasts that point to on-going growth in contingent workforce in future years, and it is not uncommon to find growth rates of 10% or more.  Certainly, this continuing growth is being driven by a number of factors, including the development of new ways of procuring and providing contingent workforce in different forms (i.e., not just continuing to do things only in the same way as was done before).

Over the past three years, my research and analysis has been highly focused on the emergence of so called “online staffing” and other “human cloud” platforms--and their development alongside and within the established staffing industry.  While many in the staffing industry have reacted to online platforms with concerns about “disruption,” I have tended to expect the impact and change to more of a “transformation” of the industry, as more and more staffing firms adopt “digital platform models” in some way and use them to innovate their staffing business models. 

In the past year, I developed the Staffing Industry Analysts 2020 forecast of the aggregate worldwide contingent workforce spend that would be enabled by “online staffing” types of platforms (whether they were platforms of new, free-standing platform-based businesses like Elance-oDesk, Field Nation, etc. or they were “digital platforms” that staffing firms adopted to innovate and evolve in different directions from the traditional staffing business model). 

In one article about that 2020 forecast (which ranged as high $46B in “online staffing-based spend”), I shared my perspective on how “online staffing” and the established staffing industry might “co-evolve:”

“To forecast to 2020 and create a few plausible scenarios, we considered a range of potential drivers and constraints,” …“It’s hard to build anything other than expansive scenarios. The big questions seem to be how fast, in what forms and to what extent. I think two of the big wildcards here are the pace of larger enterprise adoption and to what degree staffing firms (and managed service providers/vendor management systems) start to adopt and leverage these models. By 2020, my guess is that the staffing business will be much more hybridized, similar in some ways to what happened with retail and online shopping.”

What I say in the last sentence about “hybridization” means two things (and refers to the retail industry as an analogy).  First, I mean the staffing industry will become more of a (hybridized) mix of different types of firms (so just as in retail today you find Amazon and Walmart, in staffing you will find something like an Elance-oDesk and a Manpower).  Second, I also mean that established staffing firms will adopt and adapt online staffing platforms into their own businesses (so just as today, Walmart and most retailers are also online, in the future most staffing firms--that are successful—will also have leveraged and integrated online staffing platforms into their business models). 

So in the future, many of the successful staffing firms will likely be “hybrid” staffing firms.  That does not mean that they will stop being staffing firms (doing some part of their staffing in the way they did before) or that they will start offering “wild west” open marketplaces that leave clients and themselves open to compliance and other risks.  What it really means is that staffing firms will appropriate and leverage digital online platforms to expand and innovate their businesses in many directions. 

Certainly, it is conceivable that a staffing firm in the future will offer its clients access to “online workers,” but those workers will be vetted and classified and paid properly just as they would be today.  By adopting and starting to leverage digital platforms, staffing firms will gradually discover that such models open up all kinds of innovative opportunities for serving their clients’ changing needs, improving staffing firm cost structure and service performance, attracting new worker populations in different ways, and most likely creating new revenue-generating lines of staffing services, etc. 

For the purposes of this blog post, it is important to make the point that successful staffing firms of the future are likely to be “hybridized” firms that have managed to leverage digital platforms to innovate their business models and services in a variety of ways, depending upon the staffing segment, the firm strategy, etc. 

At the beginning of this post I said that claims of “online staffing” suddenly “disrupting” the established staffing industry seem to me to be over-blown, and I have discussed what I foresee as an evolutionary process of “transformation” and “hybridization in the years to come. However, “transformation” and “hybridization” are not just buzzwords, they describe real, active developments and changes that have already started in some staffing firms today and will continue to develop in more and more staffing firms in future years. 

It is critical for staffing firm owners/executives, therefore, not to just think, “Ok, no disruption, just transformation…  I can relax, I’ll just sit tight and wait out the storm.”  That attitude could underpin a superlative strategy for “being left behind,” while other staffing firm competitors innovate and outflank you. 

I can assure you: “the time is now” to get started, to begin learning, and to put the investment of time into figuring out how to best innovate your business using a digital platform and keep your business at the front of the competitive pack. 

A recent report by research and advisory firm, Ardent Partners, (“The State of Contingent Workforce Management: The 2014-15 Guide for Managing Non-Traditional Talent”) reveals some eye-popping data from its survey of contingent workforce buyers.  Ardent asked those surveyed about what would be a source of contingent talent now in 2014 versus what would be a source in 2016.

• 88% said Traditional Staffing Suppliers/Agencies for 2014, but for 2016 that % was only 78%! The way I interpret this is that fewer survey respondents (78%) will regard Traditional Staffing Suppliers as a source of contingent talent in 2016 than in 2014 (when 88% of the respondents consider Traditional Staffing Suppliers as a source).
• Alternatively, it seems the use various “non-traditional” sources of contingent talent would be increasing -- for example, “Private talent pools/“known” networks [2014 45% versus 2016 61%] and Online labor marketplaces/freelancer networks [2014 23% versus 2016 46%].

Clearly, as the use of contingent workforce by businesses increases, change and innovation in procuring and providing contingent workforce “is happening now.”  Online staffing platforms are already beginning to transform the established staffing industry, and savvy innovative staffing firms are already taking actions to respond to these changes (figuring out how to innovate their businesses and compete and grow using digital platform-based capabilities).  These are the firms that are on their way to becoming the “hybridized” firms in what will be an increasingly “hybridized” staffing industry. 

To make this shift and not be left behind, it is important to start right now by adopting and starting to use an online staffing platform and beginning the learning process to eventually understand the best ways for your own staffing business to leverage this high-potential tool set with your target clients and workforce and find better, innovative ways to serve them both and stay competitive in the staffing game.