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  • January US Jobs Report

    Event: On a seasonally adjusted basis, total nonfarm employment increased by 156,000 and the unemployment rate rose slightly by 7 basis points to 4.72% in December, according to the U.S. Bureau of Labor Statistics (BLS) in its monthly jobs report. Temporary help services employment declined 0.52% in December, losing 15,500 jobs. The temporary penetration rate fell one basis point, to 2.04%, remaining below its all-time high of 2.06% reached in December 2015.Background and Analysis: On a year-over-year (y/y) basis (December 2016 over December 2015), total nonfarm employment was up 1.5%, and monthly job gains have averaged approximately 180,000 over the past 12 months. Temporary help employment was up 0.8% y/y, with monthly job gains averaging approximately 1,900 over the past 12 months. The economic sectors that most drove total nonfarm employment growth in December included healthcare & social assistance (+63,300), professional services (excluding temporary help, +30,500), and leisure & hospitality (+24,000). In addition to the losses in temporary help, declines for the month were seen in other services (-8,000), information (-6,000), and construction (-3,000).BLS Revisions: The change in total nonfarm payroll employment for October was revised from +142,000 to +135,000, and the change for November was revised from +178,000 to +204,000. With these revisions, total nonfarm employment gains during the two-month period were 19,000 greater than previously reported.The change in temporary help services employment for October was revised from +7,300 to +5,200, and the change for November was revised from +14,300 to +23,800. With these revisions, temporary help employment growth was 7,400 greater than previously reported.Staffing Industry Analysts’ Perspective: The year in employment didn’t end on a particularly strong note, as the total nonfarm job additions of +156K came up short of the median forecast of economists surveyed by Bloomberg of +175K, and the y/y trend continued to decelerate. The mild rise in the unemployment rate was also driven by a 10 basis point sequential increase in labor force participation, to 62.7%. Healthcare led in job creation for December as it did throughout 2016, driven by ambulatory healthcare services (+30K) and hospitals (+11K). Factoring in the decline in temp, professional services had its weakest month of jobs growth since January 2016, with y/y growth falling to 2.6%. Manufacturing boosted employment by +17K, ending a four-month string of losses, along with a solid increase for the transportation & warehousing sector (+14.7K). Having gained +57K jobs over the prior three months, however, construction swung back to a slight decline (-3K), accompanied by marked deceleration in y/y growth, to 1.5%. Temporary help was a drag on overall employment growth in December, with the y/y increase slowing to 0.8% from 2.2% in November. This deceleration was in part due to a notable upward revision to temp employment in November, which made it the second-best month of 2016 for the industry, at +23.8K. We note that the prevailing trend for temporary help jobs over the second half of 2016 has been fairly positive. Combined with wage growth, which showed some acceleration in December to 2.9% y/y, conditions on the whole appear constructive for expansion in the temporary staffing market heading into the new year.Corporate Member subscribers may download employment figures in greater detail from a link that will appear below:   Monthly Employment Situation January 2017 - You do not have permission to view this object. […]

  • IT Staffing Growth Assessment 2016

    IntroductionAs we enter 2017, the outlook for the IT staffing industry includes a fairly balanced mix of countervailing positive and negative indicators. Important demand drivers remain intact in the form of technologies with significant runway for enterprise adoption still ahead, including cloud computing, data analytics, mobile connectivity, digital marketing and cybersecurity. High-level IT talent is in short supply, creating recruiting challenges but simultaneously enhancing the value of staffing services, both in the form of direct hire recruiting and in providing contract labor to fill the gap in interim hiring needs. That said, there was a slight rise in unemployment rates for IT occupations in the US over the past four quarters—the first time we have seen this occur in the current cycle—though tech unemployment rates are still at historically low levels.Economic expansion, both in the US and the rest of the developed world, plods along at an uninspiring pace, with no clear signs of significant acceleration ahead. The outsized growth that the IT staffing industry enjoyed in the early phase of the recovery from the global financial crisis was driven by the pendulum swinging back after several years of frozen corporate investment, combined with an overabundance of caution toward perm hiring on the heels of a historic wave of layoffs. Growth since 2013 has settled into a more normalized pace of mid-to-upper single digits as business spending has been constrained due to economic and—particularly in the US and Europe over the past year—political uncertainty. Resolution of those circumstances along with the potential stimulative impact of an ostensibly pro-business agenda with the incoming administration in the US could create a more conducive environment for IT services. The decelerating revenue growth reported by public companies since mid-2015 is backed up by other measures including our monthly Pulse survey, which has shown sales difficulty for IT staffing firms rising while recruiting difficulty and sales growth decline. This owes in part to challenges in some of the segment’s primary vertical markets, such as stagnation afflicting the large tech integrators and compressed profitability for the banking sector, the latter of which may find some relief as market interest rates finally begin to move higher. Meanwhile, as with most other measures of inflation, wage increases have been muted in recent years relative to what might be expected based on the market’s steady growth and short supply of talent. We saw the most tangible signs of movement in this area through the second half of 2016, however, and more of the same in 2017 would be a tailwind for revenue.The high proportion of IT staffing spend passing through VMS and MSP has had a deleterious impact on the closeness of the supplier-client relationship, ratcheting up competitive pressure and constraining gross margins. Even in accounts where a staffing supplier may be fortunate enough to retain direct contact, IT budgets are becoming more dispersed within the organization, meaning those contacts may have diminishing control over spend. Encroachment into IT staff augmentation by consulting, outsourcing, tech integrator and human cloud firms have likewise complicated the competitive landscape. Specialization has become a critical determinant of competitive advantage in the IT staffing world, evidenced by the above-market growth of large firms such as On Assignment and Insight Global, as well as many of the mid-tier firms on our fastest-growing list. We see this differentiation among the large-scale suppliers in the relative success of firms that have a dedicated focus on technical occupations taking market share from generalist staffing suppliers. Among smaller firms, this may take the form of a concentration on certain IT skillsets and/or technology platforms, in some cases further aligned with the unique applications of those technologies in specific industry verticals. The development of such subject matter expertise may provide the foundation for a push up the value curve into the provision of projects and managed services under statement of work (SOW), which can offer more stable and higher-margin revenue.As the field of IT services was early and eager to embrace the use of contingent labor, its temporary agency penetration rate is high relative to other occupational segments, suggesting that potential further secular growth in utilization may prove incremental at best. Nonetheless, the high penetration serves as a lever for demand as long-term growth in overall IT employment is projected to exceed all areas of the economy aside from healthcare. Moreover, regulatory developments in the US and Europe may favor working with staffing agencies over the direct engagement of independent contractors, a form of contingent labor that has historically figured prominently in the IT field.Taking all of these factors into consideration, we still expect the IT space will remain conducive to staffing growth in the years ahead. Market activity seems to reinforce this generally positive outlook, with IT leading the pack in staffing M&A activity year-to-date, and indicated in our survey results as the top segment of interest for acquirers looking ahead. However, the signs also tell us that conditions are growing incrementally more challenging, which will require IT staffing leaders to think creatively about how their firms can enhance the value proposition they offer clients. This report aims to provide the information and tools necessary to support the planning and implementation of strategic initiatives that will position you for success as the IT staffing segment moves into its next phase of evolution.To download the complete report, please click the link below: IT Staffing Growth Assessment 20161230 - You do not have permission to view this object. […]

  • 2016 Staffing Company Survey

    Key Findings:This report – 445 pages in all – represents the aggregation and distillation of staffing industry knowledge derived from eight separate surveys of North American staffing firms, conducted over 2009-2016. It includes a wide variety of best practices, benchmark data and industry trends. A few examples of the questions you will find answered herein: Which is better, traditional purchased health insurance or self-insurance? While staffing firms as a whole overwhelmingly (by a 3:1 margin) choose to provide healthcare benefits for their temporary workers via conventional fully-outsourced healthcare insurance, vs. using self-insurance, the popularity of self-insurance increases markedly as a function of firm size. Self-insurance usage rates rise from 5% among firms of $10 million or less in annual revenue, to 27% among firms of $11 million to $100 million, to 51% among firms of greater than $100 million in annual revenue. That said, staffing firms aren’t particularly happy with either insurance arrangement, rating conventional insurance (on a scale of 0-10) at a 5.3, on average, and self-insurance a 5.8. How common is it for staffing firms to use the “bench model?” Twenty-five percent of staffing firms reported using the bench model (temps employed by the staffing firm on a salaried permanent basis but placed outside on temporary assignments) to at least some degree in 2016. Looking forward, nearly twice as many staffing firms – 45% – expect to use it over the next ten years. Of those reporting using it, the median percent of temporary workers on bench is 10%. What’s the current acquisition multiple for staffing firms? Median reported price multiples for acquisitions in 2015-2016 were 0.6x revenue, and 3.5x EBITDA. Both of these values were identical to those reported in 2014. While the two largest professional segments – IT temp and healthcare temp – together are the preferred acquisition target for about half of potential staffing firm acquirers, intensity of acquisition interest (ratio of buyers vs. available targets) varied markedly by segment. At the high end of intensity of interest, there were nearly four staffing firms seeking to acquire in the clinical/scientific temp segment for every one staffing firm saying clinical/scientific temp was their primary segment offered. What’s the trend in direct hire and temp-to-hire fees? Across all surveyed staffing firms, the median direct hire fee reported was 20% of salary, the same rate charged since at least 2011. However, temp-to-hire fees appear to have declined. The median reported temp-to-hire conversion fee was 10% of salary, notably lower than in 2009, when the median fee was 16%-20%. How common is it for staffing firms to pay temporary workers with 1099s? Staffing firms primarily selling commercial skill segments (industrial and/or office/clerical) nearly universally pay their temporary workers via W-2. On average, only 1% of workers were reported to be compensated via 1099 and only 15% of commercial staffing firms used 1099s at all. By contrast, on average across professional staffing firms, while 79% of temporary workers were paid via W-2, the remaining 21% were paid via 1099. The majority of professional staffing firms – 74% – reported paying at least some of their temps via 1099. To access the complete report, please select the link below: 2016 North America Staffing Company Survey XX024 20161229 - You do not have permission to view this object. […]

  • Offshore Recruitment Services Overview

    We believe that this report is the first research analysis of Offshore Recruitment Services (ORS) providers. It includes those firms who are specialists in the provision of these niche services for staffing firms as well as a number of generalist Recruitment Process Outsourcing providers who target staffing firms as a part of their wider business focus. The report does not include offshore providers whose main focus is call-center provision or technology support, although ORS providers could potentially provide such services as a complementary add-on to their broader service portfolioTo download the full report, please click below: Offshore Recruitment Services Overview 20161209 (1) - You do not have permission to view this object. […]

  • Worker Profile Tracking

    Sponsored by: Current dynamics in the market, such as aging population, economic changes, skills shortages, the need for a flexible workforce and increased regulatory scrutiny, are forcing companies to transform and re-think their external workforce structures. This is a strategic and logistical task, with up to 50% of an organisation’s workforce now consisting of external resources.Companies are faced with the challenge of keeping track of their non-employee workers in terms of ‘Who and where are they?’ and ‘what do they actually do?’ Are they contingent, Statement of Work or some other engagement type that is hard to classify?In this interactive webinar, Peter Reagan, Staffing Industry Analysts Director, Contingent Workforce Strategies and Research (Europe & Asia) was joined by Fieldglass, Abbott and SAP, to discuss how these companies have achieved visibility into their entire workforce. They shared how they went about tracking their non-employees, together with an overview of their future strategies for Total Talent Management. Speakers: Peter Reagan - Director, Contingent Workforce Strategies & Research, Europe and Asia Pacific, Staffing Industry Analysts Mikael Lindmark - SVP EMEA, Fieldglass Amy Gordon - Global Head of SAP External Workforce Center, SAPShyrl Hoover - Senior Manager, Talent Acquisition, Flexible Recruiting Solutions, AbbottTo view the video below, select the play button to begin viewing. Double click the 2 arrows to view full screen. To download a full copy of the slides, click below. 151028_EUBuyer-WorkerProfileTracking_Fieldglass.pdf 3.99 MB […]

  • Crowdsourcing Platforms

    Introduction Within the SIA Human Cloud platform lexicon, Crowdsourcing represents a group of platforms that, although sometimes having some shared characteristics, are fairly distinct from Online Staffing and Online Services platforms. They also seem to represent some of the most innovative models for organizing certain kinds of work and workers on a contingent basis, with technology continuing to press on the frontier of what can be done. “Crowdsourcing” has become a widely used term with a wide range of meanings. For our purposes, it refers to an online platform-based process of inviting and engaging numerous paid online workers from a dispersed, often massive, labor population to each perform a quite narrowly defined/scoped unit of work, which, when collected and processed further by the platform, will lead to an expected value added outcome for the client.  Depending upon the specific criteria applied, we estimate there are no more than 25-40 Crowdsourcing platform businesses, engaging millions of workers, in the world today. Many of these platforms have attracted substantial investment, though the aggregate spend processed annually across all platforms likely falls short of $500 million. While there has been some M&A activity (for example, Appirio recently acquired Topcoder), many of the businesses appear to be growing and evolving with their customers and even finding a receptive market among extremely large enterprises (something to be noted by staffing firms). Being on the edge of innovation, Crowdsourcing platforms exhibit considerable variation, but for now seem to separate into two main models which we have defined as Distributed Microtask Processing Platforms and Challenge/Contest Platforms. However, even within these two basic models, variation is still present. Still experimental and evolving, Crowdsourcing platforms represent extreme forms of innovation in how contingent workers can be engaged and work can be done.  There is definitely a place for these kinds of platforms in the globally networked, 21st Century, information-based/service economy, although it is difficult to predict the extent and form it might take. For the near term, we expect the Crowdsourcing segment to continue on a steady, but not explosive, path of investment, innovation, and growth. To download the full report, click below: Crowdsourcing Platforms - You do not have permission to view this object. […]

  • Trends in Labor Arbitrage

    Key Findings Organizations can take advantage of effective labor arbitrage via three separate means: Labor mobility initiatives Offshoring The Human Cloud    However, organizational demarcation is preventing companies from taking best advantage of labor arbitrage with different departments taking responsibility for different solutions. Talent distribution and migration creates opportunities for those able to access this talent. There are a number of different hubs where labor emigrates from and immigrates to. There are also three important patterns of ‘intra-zone’ migration; the US, Europe and China. Taking advantage of the full potential of labor mobility requires corporate competence in recruitment intelligence gathering, visa/immigration services, relocation services and the ability to payroll in multiple markets. All three ways of taking advantage of labor arbitrage will grow in future driven by a number of key trends, however, Human Cloud solutions as a technology disrupter has the potential to grow at the expense of the other two.  Using the Human Cloud does not require any up-front investment, the creation of an overseas infrastructure, the bureaucracy of visa applications or the administrative hassle of relocation. To download the full insight, click below: Labour Arbitrage Trends - You do not have permission to view this object. […]

  • Information Technology Issues

    Key Findings The CIO has a difficult balancing act to achieve, providing innovation and support to the business while, at the same time, coming up with initiatives to cut costs. Compared with other industries, IT spend in the staffing industry is below average both as a percentage of revenue and per full time equivalent employee. The key technology trends that staffing firms should be addressing today are: Greater efficiency and effectiveness through IT consolidation and improved infrastructure and services. Use of fibre-optic infrastructure for better telecommunications bandwidth. Outsourcing of infrastructure, platform services, and application services to the cloud, and transition to web browser delivery and away from thin client solutions. Mobile access and the use of mobile applications for anytime, anywhere connectivity. Ensuring social media channels are natively incorporated into the front office application and that various databases can be simultaneously searched. Staffing firms should attend to innovation as a means of creating competitive advantage and value. A systematic approach to ideas generation and innovation is possible, and the CEO must lead, sponsor, and challenge the status quo. To read the full report, click below: Information Technology Issues and Trends - You do not have permission to view this object. […]

  • Gulf Market

    Key Findings The Gulf Region refers to the six Arab monarchical states of Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Bahrain, and the sultanate of Oman, bordering the Persian Gulf. These six nations also comprise the Gulf Cooperation Council (GCC). All of the Gulf States have significant revenues from oil and gas and, with the exception of Saudi Arabia, have small local populations. This has raised their per capita incomes to higher than those of their neighbors. To meet severe labor shortages, they host large numbers of temporary non-citizen economic migrants from South Asia (mostly Indians) and Southeast Asia (mostly the Philippines and Indonesia). In the past there were also significant numbers of immigrants from Jordan, Syria, Lebanon, Yemen and Egypt. Skilled workers and managers from the West (and in particular the U.K.) also supplement the indigenous workforce. Gulf staffing markets are among the fastest growing in the world and staffing agencies play a major role in the placement of workers in a host of occupations. The region has very positive economic prospects in the short to medium term although there are certainly risks given the high dependence on oil production and recent political unrest that is destabilising markets like Bahrain. For the complete report, click the following link. Gulf Region Overview - You do not have permission to view this object. […]