CWS 3.0: April 24, 2013

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Demand for Staffing Drives Cost Up

As a contingent workforce manager, your company relies on you to understand the staffing marketplace so that you can deliver the right talent at the right price at the right time. Here, we profile the $131 billion U.S. staffing marketand highlight those areas where demand is high and low from a historical perspective, to to help you assess the costs and challenges faced by your company’s specific staffing needs. In particular, we examine the market size estimates in Staffing Industry Analysts’ biannual forecast report, and highlight the market segments that are at highs and lows from a historical standard, adjusting for inflation.

Strong Demand. Demand appears strong in a number of staffing markets in 2013. For agency temps, demand is strong for workers in the following skill categories: industrial, locum tenens (physician), engineering, clinical/scientific, and marketing/creative. In all of these temp skill segments, the projected 2013 market size is 95 percent or higher than the historical peak market size on record (adjusted for inflation), indicating that demand has fully recovered from the recession and business activity is at unprecedented levels.

Implications for your Program. There are several takeaways. First, unless the supply of temp workers has increased to keep pace, the high demand in these markets could lead to higher bill rates and greater competition for top talent. Second, a larger market implies more staffing suppliers are in the game, or at the very least, existing suppliers are operating at higher volume. Third, as demand increases, the market becomes more of a seller’s market, so be sure to build a strong relationship with your staffing suppliers — they have more customers to choose from.

Weak Demand. On the flip side, demand appears weaker by historical context in some other markets in 2013. For agency temps, demand is down from past peaks in the following skills: office/clerical, travel and per diem nurse, finance/accounting, and legal. These markets are projected to be less than 80 percent of their peak. The direct hire (perm placement), retained search, and outplacement markets are also well below 80 percent of their past peak.  

Implications. Lower demand may reduce pressure on bill rates both now and into the near future. To the extent that supply is more abundant, these markets may be more of a buyer’s market, which may enable your firm to be more choosey with suppliers and requirements.

Taken as a whole, the U.S. staffing services industry in 2013 is projected to be 90 percent of its historical peak year (which was 2007), and grow further to 94 percent in 2014. While some segments are down, staffing suppliers are generally doing business at a brisk clip, bringing prices up, and making your job as a buyer as important this year as it has been in a while.

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Source: Staffing Industry Analysts

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