It’s not easy to time a recession, but the risk of a US recession appears quite low in the near term, according to the new report “Preparing for the Next Recession,” by Staffing Industry Analysts. Still, many economists have indicated a risk becomes more substantial in 2019 and 2020, and there are things staffing firms can do to prepare for when a recession hits.

Ways staffing firms can make themselves less vulnerable to a recession before or just as it hits include:

• Get internal staff expense right when a recession begins. It’s important to take costs out of the business early when a recession hits, but cutting too much can also be dangerous. Economic downturns can be seen as a way to win market share from less stable competitors, and staffing firms need to be positioned to take advantage of the upswing when the recession ends.
• Outsourcing can also help firms ramp up and down quickly. Those who outsource before a recession will be in the best position.
• Use flexible labor, for example having a certain share of recruiters that are contingent workers.
• Use technology to centralize functions or have more employees work remotely to reduce fixed office costs.
• Some staffing segments are less impacted by recessions than others. For example, the US locum tenens market was flat during the last recession when most other segments declined by double digits. And, generally, professional staffing segments are less sensitive to recessions than commercial staffing. However, it was the IT staffing sector that found itself on the front line during the dotcom bust of 2001.
• Diversification — both geographically and by segment — might also help as some segments or geographies may be less impacted than others.

More information and more in-depth view on how staffing firms can prepare for the recession is available to SIA corporate members in the report “Preparing for the Next Recession,” available online.