By: John Rossheim
What staffing trends are likely to define the year ahead? A quick look back provides some clues.
Riding four years of economic progress, however halting, the staffing industry heads into 2014 with prospects of growth in profitable niches.
And what staffing trends are likely to lead the way? Staffing firms that provide just-in-time labor -- at an unprecedented level of service. More than ever, the key for providers of contingent workers is to carefully match the staffing model (or models) to the client.
"Temporary employment is near a historic high in terms of penetration of the labor market," says Sandy Mazur, division president of franchise and license at staffing firm Spherion Corp. in Fort Lauderdale, Fla.
Employment in temporary help services reached 2.7 million in July 2013, up by 170,000 from a year earlier and nearly a million higher than in 2009, according to a report from the Bureau of Labor Statistics.
Here are some of the factors that are fueling this ongoing staffing trend:
Temporary is a permanent corporate strategy. Given the volatile labor force, the staffing industry will likely continue with the predominant keep-all-options-open management style of the 2010s.
"We’ve moved into a mode where companies consistently use contingent workers to deal with ups and downs," says John Challenger, CEO of outplacement firm Challenger, Gray and Christmas in Chicago.
Client expectations rise as VMS and MSP models evolve. Given the integration of contingent staffing into the very structure of workforce planning and management, it's not surprising that clients are upping the ante for the VMS (vendor managed staffing) and MSP (managed service provider) models of contingent workforce procurement and management.
A 2012 report from Staffing Industry Analysts (SIA) says: “The very evolution and increasing sophistication of the contingent workforce management field … is separating the wheat from the chaff, particularly in the VMS market, as suppliers must meet higher standards and more complex requirements.”
MSPs climb the labor-market ladder. MSPs billed for a greater number of support workers than professionals in 2011, because professionals are more highly paid. Yet two-thirds of the dollars in MSP billings were for professionals, according to the SIA report. That employers are charging MSPs with higher-skilled jobs bodes well for the profitability of this staffing model.
Clients like SOW for well-defined projects -- and costs. Statement-of-work contracting is rapidly increasing. The model: contingent workers’ pay is tied to projects completed rather than hours worked. Its popularity stems from its use as a means of shifting cost risks away from employers.
“Companies are using statement-of-work contracts for greater opportunities for cost containment,” says Mazur. “SOW can do that, and I think we’ll see more of it.”
Specialized labor at commodity prices. Enterprising providers of contingent staffing are finding creative ways to source affordable labor with niche knowledge or specialized skills.
"We've got agents with diabetes to sell to diabetics," says John Meyer, CEO of Miramar, Fla.-based Arise Virtual Solutions. The company provides call-center services through its network of independent contractors who typically earning $12 to $14 an hour.
Arise is able to choose call-center representatives partially on the basis of their health status because, as long as they are deemed independent contractors, many anti-discrimination laws do not apply.
Tapping the market for instant labor. Technology continues to shrink time-to-fill in the on-demand labor market.
"We can ramp up almost instantaneously by sending out an email blast to our agents," says Meyer. Arise's contractors typically work 15 to 20 hours a week, and many are hungry for additional hours, he says.
Temp-to-perm: Agency or homegrown? "Contingent labor is now an audition ground," says Challenger. "Employers actually get to see them work, see what they’re about and how they fit in."
These temp-to-perm arrangements can be a profitable business for staffing firms, though smaller employers are also experimenting with homegrown temp-to-perm trial-employment arrangements.
Onshored contingents might be the new black. Many companies, faced with customers who have grown dissatisfied with a communications gap between themselves and offshore support workers, are turning to onshore contractors to staff up during their busy seasons.
"The lunch I want to eat is the offshore providers'," says Meyer. "We’re 'Buy American' in the U.S., 'Buy UK' in the UK, and so on."
Some markets should be written off. Some companies have tried contingent workers and found them unable to align with the business and company culture as well as full-timers do.
"There’s a time and a place for contingent," says Christine Stack, director of talent acquisition at media agency MEC in New York City. "But we don't use contract workers anymore."