The talent shortage has morphed into a talent crisis. Add a new openness to flexible work and rapid digital transformation continuing to bring change to the mix and we have exciting possibilities.

The future looks bright for the staffing industry, said Barry Asin, president of Staffing Industry Analysts, during his opening keynote today at the Executive Forum conference today in Austin, Texas.

“The good news is that I believe that — despite all the growth and success that staffing has had — it’s day one, it’s a new day for the industry,” Asin said.

• Staffing industry revenue exceeded $150 billion in 2021 with growth of 16% from the previous year. Healthcare staffing alone rose 24%.
• The M&A market for staffing is strong with 112 mergers and acquisitions in 2021, up from 69 in the previous year.
• Large client firms plan to increase the percentage of their workforces that are contingent to 27% in 10 years from 20% today.
• Public company results as of late have also been strong.

On the other hand, challenges remain.

“Despite the optimism in the room, the coronavirus is still in charge,” Asin said.

In addition, Russia’s invasion of Ukraine is an example of the bigger geopolitical world that is out of the industry’s control.

“We are at an inflection point, I believe,” Asin said. “Is it Cold War 2.0, or is it something different?” In the larger picture, it was the peace dividends from the defeat of Nazism and the end of the Cold War that helped drive the world forward.

Looking at industry-specific concerns, they include potential negative perceptions of staffing, legal and compliance issues, cybersecurity and direct sourcing.

But it was the positive message that dominated Asin’s keynote.

He noted the labor force participation rate is back to May 1977 lows, with 4.2 million people having left the labor force between December 2019 and the second quarter of 2021 alone. Job openings now far exceed new hires.

“Talent is increasingly in the driver’s seat,” Asin said, adding that staffing firms that can get that talent are also in the driver’s seat.

In addition, the talent shortage provides opportunities for staffing firms to offer last-mile training for workers, helping bridge the gap between education and work. It also provides a chance for great focus on diversity, equity and inclusion by sourcing workers from communities that may not have been represented in the past.

Asin also cited the new openness for flexible work, such as remote work, changing the landscape.

An SIA survey found that a majority of internal workers at staffing firms want to work remotely at least part of the time with 48% preferring to work remotely five days a week. Only 9% want to go into the office every day. And 31% would consider a pay cut to work remotely from anywhere.

More contingent workers are also working remotely. In 2019 before the pandemic, only 2% did, but that changed with 35% doing so in 2021.

Remote work is a growth opportunity for staffing firms, Asin said. It puts more focus on skills, can reduce real estate costs, and enables staffing firms to source labor from anywhere, not just within commuting distance of clients’ offices.

Technology also continues to drive change. Asin cited “talent platforms” as the next wave of digital disruption. Of large firms that use staffing, 22% used a talent platform in 2021, up from 14% in the previous year. And publicly traded talent platforms such as Upwork and Fiverr have had faster revenue growth rates than the staffing industry as a whole, although talent platforms still represent a relatively small portion of the industry in total.

In addition, 37% of staffing firms either have their own talent platform or plan to put one in place within the next two years.

Overall, while revenue growth is expected to moderate this year, the industry’s future is still bright.

The Executive Forum continues this week in Austin.