SI Review: January 2011

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2020: Customers, Technology, Forecast

What's Your Customer Going to Be Like in 2020?

As staffing evolves, so do your clients. We asked Dana Shaw, Staffing Industry Analysts' SVP of Strategy and Solutions, to give her view of where your clients are going to be in the next decade. As the head of SIA's Contingent Work-force Strategies Council, Shaw works closely with major buyers of contingent workers, and is the perfect person to describe the staffing customer of tomorrow. The Council is made up of huge buyers of staffing services, but the changes represented here should reverberate through the entire industry.

The Rise of the Workforce Mix

"We are on an evolutionary track that has been going for 60 years," says Shaw. "And now, if we flash forward, we will see that regardless of position or class, customers will be using contingent workers in a more strategic way, which is where they should be headed."

Shaw sees the contingent world moving beyond "gap filling," as buyers become more strategic. "It will go beyond, 'Should I hire a temp or hire a permanent worker,'" Shaw envisions. "It should be: what type of work should be temp or perm."

Shaw has a fantasy, she says, that companies will use workforce mix modeling to get them to the right ratio of temp vs. perm. She says that only about 5% of Council members are having these types of discussions right now, but that it's going to be a wave of the future.

She points to IT as a pioneering example. IT has never been about gap filling, but rather about hot skills and bringing in gurus, and also of course led the way with project-based assignments. "IT has always had it right," she says. "This is where innovation happens." She points out that Microsoft, even after being burned by the permatemp scandal, has about a one-to-one temp/perm mix.

Seeing Talent Through the Proper Lens

Shaw also contends that due to contingent management residing in HR or procurement, some distortion has occurred, and she sees that changing as well. "You'll see more sophisticated customers viewing all of this through a talent lens," she says.

"When this happens you start to see across the span of your company. But if you only have a singular lens, where you are cutting costs, or, for example with HR, focused on governance, you don't see the talent perspective."

As an example, Shaw says, retention is not an FTE issue, but it's a 
talent issue. That's what people will be thinking about.

In the four years of working with the Council since its inception, Shaw has seen the seeds of this evolution. "Contingent talent strategy was really in the weeds back then," she recalls, "very tactical, not strategic. That's changing."

An Emerging Function

By 2020, Shaw speculates that the industry will see a Contingent Workforce Officer (CWO).

What's more, says Shaw, "You are going to see the CWO in the C-Suite. The CWO will be in the boardroom as a key advisor, asking and answering the right type of questions about the optimal workforce mix."

She thinks this will in part be driven by the rise in contingent labor. Currently, says Shaw, the average mix of contingents in the Fortune 100 is 20-30% of the workforce, but she 
can see it evolving to 50-50%. At that point, it makes sense for companies to establish the role of the CWO.

These three customer-related trends all appear to hearken good news for staffing firms, as their workers will be more valued and important than ever before. Shaw's advice to staffing firms: Start a consulting practice!  

MSP and VMS Here to Stay

Many staffing companies — especially large ones — are using managed service providers and vendor management systems now, and MSP and VMS usage is expected to only continue to grow by 2020.

Staffing Industry Analysts' Dana Shaw, SVP of Strategy and Solutions, says VMS is the hottest trend she is tracking on the staffing client side. "By 2020, everyone in the Fortune 2000 will have one," she predicts. She also speculates that VMS could get into direct hire, as well.

Shaw says Managed Service Providers (MSPs) are not as hot, but they are getting more sophisticated. "You're seeing continuous process improvement," says Shaw.

SFN Group's SourceRight division, which does RPO and vendor management, grew 100% in the second quarter of 2010, and "We expect that rate to continue," Krause explains. "It has really bounced back."

Yoh's Schultz says: "We'll continue to see growth in MSP and VMS. I think that's a trend that is here to stay. I see it becoming a much more predominant business." Smaller companies are starting to become interested in MSP and a little in VMS as well, on the IT side, Schultz says.

Bill Stoller, one of the founders of Express Employment Professionals, says: "Staffing companies will become more vertically integrated. Staffing companies will develop and are developing today. Everybody will have a VMS system. Everyone is going to have the technology to do VMS (in nine years)." Stoller believes that: "VMS is going to transition as a standalone business and be a staffing product rather than a separate product."

Says ettain group's Jon Olin: "Staffing partners/suppliers will play a growing role in client talent strategies by being able to provide direct hires, contractors and even SOW personnel while working under or through the VMS and/or MSP partners. While all client companies will maintain their own programs, the majority will have VMS or MSP partners in place. Therefore, by 2020, many of the relationships as we know [them] will shift between suppliers and end-clients towards suppliers and VMS/MSP partners." Concludes Olin: "I think it is safe to say that VMS [is] here to stay. I also believe that larger client programs will continue to employ an MSP partner."

Art Papas of Bullhorn, tongue in cheek, predicts another trend in 2020: "Staffing firms will hate VMS."

Technology and Staffing

Staffing has leveraged technology for years, and increasingly depends on it for efficiencies and success. What's it going to look like in 2020? We looked at some trends that are likely to affect the way you do business.

Intelligent Systems

Dave Reiss, CEO and Founder of Applied Systems Technology (AST), says, "The staffing industry tends to lag somewhat with technology, so in 2020 we will see staffing companies embrace technology in ways that many industries and larger corporations are already using." He continues, "One example is intelligent systems. A few years ago Tom Peters spoke at the Executive Forum and told staffing executives that it was stupid to have their white collar managers watching the behavior and managing their employees – he suggested that microprocessors should be doing that. The reality is that in many companies business rules are embedded in software systems that monitor key business drivers and conditions and proactively guide and direct the employees to successful behaviors. We have seen a number of our clients in the staffing industry successfully apply this technology and believe that in the next 10 years it will become a much more popular way to optimize the performance of a staffing business. Two major advantages of leveraging intelligent systems: (1) Intelligent systems have the ability to watch, correct and prompt best practices in real time vs. a human manager who cannot be seeing everything that is going on at the same time. … [And (2)], it frees managers to be concentrating their energies on higher, hopefully more revenue-generating, activities."

Cloud Computing to Catch On

Cloud computing will be more popular, and staffing companies will need to learn how to do it if they want to be successful, believes Ritu Mangla, CEO of Beta Soft Systems, a Fremont CA-based information technology staffing and solutions firm. "Staffing companies will have to keep up with it and understand it more," she says. "It has bridged the gap between companies and individuals. If staffing companies want to keep up the pace, they definitely need to learn it."

More Companies to Use Video Conferencing

StaffingU's Wintrip believes more staffing companies will be taking advantage of video conferences and video interviewing in 2020. "We're introducing Skype-based interviewing as a best practice across the globe," he says. "By 2020, it will become a preference over the phone. It actually will speed up the process if staffing firms employ this one correctly."

Apps to Be the Norm

Right now few staffing companies have phone Apps on portable technology devices (such as smart phones, iPads and PC devices), but by 2020 that's going to change, Wintrip predicts. He believes Apps will be the norm and that staffing companies of all sizes will be using them in 2020. "App development is cheap, easy, and getting cheaper and easier," he says. "Apps will reign."

Clients and staffing firms will be able to place orders and review talent and even do Skype interviews by phone using Apps, Wintrip predicts. "By 2020 mobile media applications will dominate the way individuals send and receive information. I would imagine that we will see a lot of hot trends that fall into that category by 2020," says ettain group's Olin.

Telecommuting to Become More Popular

Telecommuting has become popular in recent years and will be even more prevalent in the staffing industry in 2020, SOS' Joann Wagner believes. By working at home, parents of young children can offset the rising cost of day care. Telecommuting also is better for the environment and enables workers to save money on gasoline, Wagner points out.

"I think it's going to be very popular [in 2020]," says Yoh's Lori Schultz. "Even more so [than it currently is]. You'll start to see telecommuting on more of a global scale. You'll really start to see leveraging of that become more popular than it is now."

The Forecast for 2020:

The staffing industry will continue to grow.There will be more awareness and acceptance of the industry. Employers will need to cater to Millennials. Social media will still be popular. MSP and VMS usage will grow. More staffing companies will be taking advantage of video conferencing and video interviewing. Staffing companies of all sizes will be using Apps. The workforce will become more and more remote. Business travel will be down. But people will still be traveling for pleasure. There will be an increase in mergers and acquisitions. More staffing firms will operate on a global level. Offshoring will make a comeback. More companies will be outsourcing. There will be more 1099 compliance. Staffing firms will take on a service bureau role. Background checks and drug screening will be done in-house. The worker shortage will continue. By 2020, many Baby Boomers, realizing they didn’t save enough money for retirement, will be heading back to work, presenting an opportunity for staffing firms. Increased regulation will be a challenge. Creating or adding value for clients, shrinking margins and commoditization also will be challenges. Hot in 2020: Staffing in technology, healthcare/pharma, government, accounting and finance, engineering, senior care, part-time. Not hot in 2020: Staffing in admin functions.

Robots

Finally, Robots! A company called Anybots has developed a robot that allows a remote worker to be "onsite" without being there in person.

The robot, called QB, allows a remote worker to control the robot from his or her computer and interact verbally with colleagues as well as see them in person. Because the robot is mobile, it can follow others around the office and engage in communication that might not be possible with just a speaker phone in a conference room.

But what does this mean for the staffing industry? Will it allow staffing firms to build up fleets of robots that can be dispatched to staffing buyer locations to be operated by remote workers?

Perhaps a staffing firm seeking a worker with hard-to-find skills could find that worker in Missouri and have him or her work on a project in Florida using a remote robot. Maybe several workers from different areas could work on a single project in another area using remote robots.

Technological change has always been a significant driver for change in the staffing industry, but robots, when they come, may take change to a whole new level.

Tom's Top 10 Trends

Here are consultant Tom Kosnik's top ten trends for 2020: The staffing industry will continue to grow. New low-cost staffing business models will continue to emerge. Population and ethnic group growth rates will change the makeup of the workforce, and the staffing industry will have to respond fittingly. Outsourcing and off-shoring will continue; multinationals will have to import and train human capital or set up shop in developing nations. National staffing firms will take more of the staffing revenue pie. Independents will find it more and more difficult to make money in their business. Technology and the Internet will support telecommuting, outsourcing, work from home, work from another country, a dispersed workforce. The values of people entering the workforce in the United States will continue to shift and become less "work" orientated and more "quality" orientated. More companies, small and larger, will employ the aging population and will alter the workplace to do so. Work tasks will continue to be dissected and redesigned.

A Shift in the White-Collar Mind

Workforce consultant and futurist Dan Pink is predicting a white-collar brain change.
One of the biggest trends in the white-collar workforce is a shift in the very skills that matter most. In the past, the most important abilities were what we might think of as metaphorically "left brain" abilities — the logical, linear, analytical, spreadsheet, SAT sorts of abilities we generally associate with accountants, engineers and lawyers. Today, those abilities are still necessary. Absolutely. But they're no longer sufficient. Why? Those sorts of abilities are relatively easy to outsource or automate. Take accountants … somebody preparing relatively straightforward individual tax returns now faces competition from, say, a chartered accountant in Manila, who makes about $450 per month. But that American accountant also must contend with TurboTax, tax preparation software you can download for $40. (Last year, more than 20 million Americans did their taxes on TurboTax.) It's the same for every function that's routine — which we can reduce to a script, a spec sheet, a formula, or an algorithm. Today, people have to be able to do things that are hard to ship to India, that are difficult to reduce to lines of code in a computer, and that iterate something new — that creates a category rather than enhances it. (Think iPad.) That means the left-brain, reductive abilities still matter. But the right-brain — artistic, empathic, big picture abilities — matter more.

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