Spending on contingent labor through staffing firms is rising faster than expected, according to new research from Staffing Industry Analysts. Staffing industry revenue growth in some segments will soon exceed pre-recession levels.
“Although the overall economy has recovered tepidly, the staffing industry has recovered robustly,” said Tony Gregoire, senior research analyst at Staffing Industry Analysts.
U.S. staffing revenue rose 14 percent to $117.2 billion in 2011, according to the “Staffing Industry Forecast: April Update” from Staffing Industry Analysts. Temporary staffing revenue alone — excluding direct hire, PEO and outplacement — also rose 14 percent.
The growth in temporary staffing is more than expected for this point in the business cycle, according to the report.
“In a year marked by modest GDP growth of 1.7 percent, the strong growth in temporary staffing revenue in 2011 is further evidence of a secular shift in demand above the expansion predicted by GDP growth, based upon the trend of the past 16 years,” said Timothy Landhuis, research associate at Staffing Industry Analysts and author of the forecast.
Reasons for the shift in demand for temporary staffing include:
- A snap-back in demand from steep recession declines.
- A move away from the use of independent contractors because of government crackdowns on misclassification.
- Increased appreciation for agency temporaries among buyers as a result of the recession.
Overall, revenue growth above the trend-line for the past 16 years will continue in 2012, with some segments of staffing punching through pre-recession peaks.
“We project that U.S. staffing industry revenue will expand by 10 percent in 2012,” Landhuis said, “with the following industry segments reaching all-time high levels: industrial staffing, information technology staffing, locum tenens staffing, engineering staffing and PEO.”
Revenue growth will decelerate to 7 percent in 2013 with total staffing industry revenue estimated at $138.00 billion, according to the forecast.
Members of Staffing Industry Analysts can download the complete forecast by clicking here.