Can you believe that it’s already the second quarter of the year? As 2014 continues to speed by, the staff at TrendLine is hard at work to provide you with key insights into the temporary staffing industry. Our up-to-date research and analysis of industry trends ensure that you have a clear reading of what’s happening in the world of contingent worker supply and demand.
DCR TrendLine April 2014 - Temporary Workforce Insight
1.
2. NOTE FROM THE EDITOR
INSIDE THIS ISSUE
“
Can you believe that it’s already the second quarter of the year? As 2014 continues to speed by, the staff atTrendLine is hard at work to provide you with key insights
into the temporary staffing industry. Our up-to-date research and analysis of industry trends ensure that you have a clear reading of what’s happening in the world
of contingent worker supply and demand.
The DCR National Temp Wage Index focuses on wage trends over the year and analyzes the usage of temp workers and related developments in the economy
and job market. This month, we look at the latest employment numbers from the U.S. Bureau of Labor Standards (BLS), and check in on global temp employment
numbers.
As we promised last month, we conducted an in-depth analysis of the minimum wage increase on federal contract workers. In this article, we focus on the impact
that the wage increment would have at both options ($9.00/hour and $10.10/hour) on employment and family income.
Our next topic focuses on trends and predictions for HR technology over the rest of the year. As HR strategy is becoming a larger part of the corporate agenda,
managers everywhere are interested in what’s up and coming in talent management technology. In this TrendLine article, we strive to keep you updated on what’s
buzzing in the market.
Everyone’s been talking about crowdsourcing for the past few years. Technology is rapidly transforming hiring practices in the temporary staffing market, and we
take a thorough look at how crowdsourcing for talent is playing a part.
Last month, we talked about the opportunities for temporary workers in the healthcare sector.This month, we turn our attention to the Information technology job
market to look at how and where demand for IT professionals is growing.
Many of those involved in the management of contingent workers often wonder how happy temp workers are with their positions. In our next article, we answer
this question by examining how satisfied contract workers are with their staffing firms and client companies.
The TrendLine staff is always focused on what’s trending in anything to do with contingent worker supply and demand. And while TrendLine articles always offer
deep analysis of trends, we’re really excited to unveil a new quarterly topic –‘What’s Trending in the Temp Market?’– that consolidates our research into a short list
of critical trends in key talent sectors of the staffing industry. Take a look and let us know what you think!
So far 2014 is shaping up to be a great year for contingent staffing! In our next article, we’re looking into our crystal ball to give you insight into what the staffing
landscape will look like in 2022! Keep an eye out for the chart of the jobs that will be experiencing the most growth over the next decade.
Our final article is the culmination of our series on the BRIC countries, as we take a glance at India and its potential for temporary work development. India is rapidly
becoming a hot spot for temp workers, and we look at the economics and employment factors that support the emergence of a growing workforce population
Ammu Warrier
Ammu Warrier, President
“I’m a massive fan of the staffing industry. Organizations have
been looking to optimize every part of the business for a very
long time, and the last bastion of that was human capital.
Staffing firms present a very unique solution opportunity for
companies to make sure they’re being as effective as possible
with not just who they resource with, but how they resource
on a talent perspective.”~Peter Sheahan, CEO of ChangeLabs
1
Note from the Editor.....................................................................................................................page 1
DCR National Temp Wage Index...............................................................................................page 2
The Impact of the Minimum Wage Increment......................................................................page 4
HR Tech in 2014.............................................................................................................................page 8
Crowdsourcing: An Innovative Temp Paradigm...................................................................page 10
IT Temp Work on the Rise...........................................................................................................page13
How Happy are Temp Workers?...............................................................................................page 14
What’s Trending in the Temp Market?...................................................................................page 17
What the Staffing Landscape Will Look Like in 2022.......................................................page 18
India: An Emerging Temp WorkforceHot Spot.....................................................................page 20
Methodology....................................................................................................................page 27
References........................................................................................................................page 28
About DCR.........................................................................................................................page 29
3. DCR NATIONAL TEMP WAGE INDEX
“
Temporary hourly wages are projected to rise in the latter half of 2014, especially in jobs that require specialized skills and experience. This forecast is
attributed to a continued increase in demand combined with a tightening supply of contingent workers, due to a decreasing workforce participation rate
and an aging U.S. population. This combination of these factors will quickly reduce the current surplus of available workers and drive up wages.
According to the U.S. Bureau of Labor Statistics (BLS) monthly employment report, the United States added 175,000 jobs in February 2014. Of these, 24,400
were temporary help services jobs. The U.S. temporary penetration rate is currently 2.03 percent. Temporary help employment is up 8.8% year-over-year,
which is nearly six times higher than the rate of job creation for the overall economy. Monthly gains in the sector have averaged 19,000 over the past twelve
months.
The ADP National Employment Report for February showed that private payroll added 139,000 jobs in February 2014. Industries adding employment
included business services with 33,000 jobs, trade/transportation/utilities with 31,000 jobs, and construction with 14,000 jobs. The hiring rate for
service-providing businesses was substantially higher than goods-producing businesses with 120,000 jobs added.
2
ECONOMIC SITUATION IN FEBRUARY 2014
“February was another soft month for the job market. Employment was weak across a number of industries. Bad winter weather, especially in mid-month,
weighed on payrolls. Job growth is expected to improve with warmer temperature.”~Mark Zandi, Chief Economist at Moody’s Analytics
4. DCR NATIONAL TEMP WAGE INDEX
“The international staffing association, Ciett, released its annual report on global private employment agencies in February 2014. Global temporary
employment revenues were US $411.1 billion, up from US $359.7 billion in 2012. The total number of agency workers in 2012 was almost 36 million. The
United States had the largest number with 11.5 million workers, and Brazil is at second place with 7.1 million workers.
According to a report by The Conference Board, U.S. online job ads rose by 268,100
to a total of 5.2 million in February 2014. Simply Hired reported that the industries
with the largest increases in ads were legal jobs (up 29.1 percent) and travel (up 20.3
percent).
Source: Ciett, 2014 Economic Report
“After a very lackluster 2013, the large February increase is
the first signal in many months of possible renewed strength
in demand for labor.” ~June Shelp, Vice President of The
Conference Board
3
CHECKING IN ON GLOBAL TEMP EMPLOYMENT NUMBERS
ONLINE JOB ADS GROWTH
Total Number of Individuals
Employed in Agency Work, 2012
5. THE IMPACT OF THE MINIMUM WAGE
INCREMENT
4
A BACKGROUND ON THE WAGE INCREASE
In last month’s edition of TrendLine (March 2014), we promised
you an in-depth analysis of the minimum wage increase for federal
contract workers. In this article, we delve into the impact that the
wage increment will have at each option ($10.10 per hour and $9.00
per hour) on employment and family income.
On February 12th, 2014, U.S. President Barack Obama signed an
executive order to increase minimum wages for federal contract
workers to $10.10 per hour starting in 2015. The President also urged
employers nationwide to increase wages for their workers.
A report by the nonpartisan Congressional Budget Office (CBO) says
the federal minimum wage would cause the loss of approximately
500,000 jobs but would boost earnings for about 16.5 million
low-wage workers.
The CBO further examined the effects of two options for increasing
the federal wage:
$10.10 Option: This would increase the federal minimum
wage from the current rate of $7.25 per hour in three
steps – in 2014, 2015, and 2016. After reaching $10.10 in
2016, the minimum wage would be adjusted annually for
inflation.
$9.00 Option: This option would increase the federal
minimum wage from the current rate to $9.00 per hour in
two steps – in 2015 and 2016. After reaching $9.00 in 2016,
the minimum wage would not be adjusted for inflation.
6. The $10.10 option would have a considerably greater effect on employment and income, as more workers would see their wages rise, and the change in
their wages would be greater. At the $10.10 option, The CBO estimates that we will see a loss in employment by 500,000 workers. In terms of income, the
increased earnings for low-wage workers under the $10.10 option would total $31 billion.
However, since many low-wage workers are not members of low-income families, only 19 percent of this $31 billion would contribute to families with
earnings below the poverty threshold, while, at the top, 29 percent would go to families earning more than three times the poverty threshold. Additionally,
some workers will become jobless as businesses cut costs to accommodate the minimum wage increase. Taking into account the increases and decreases
in income for all workers, overall real income would increase by $2 billion.
For families below the poverty threshold under current law, real income would increase by a net of $5 billion, boosting average family income by 3 percent,
and moving 900,000 people above the poverty threshold.
At the $9.00 option, the CBO estimates that there will be a loss of employment by 100,000 workers. As far as income, the increased earnings for low-wage
workers would total $9 billion.
Of this $9 billion, 22 percent would contribute to families with income below the poverty threshold, whereas 33 percent would accrue to families earning
more than three times the poverty threshold. Considering the increases and decreases in income for all workers, overall real income would grow by $1
billion. Real income for families whose incomes are below the poverty threshold would increase by a net of $1 billion, boosting average family income by
about 1 percent and moving 300,000 people above the poverty threshold.
5
THE IMPACT OF THE MINIMUM WAGE INCREMENT
THE $10.10 OPTION
THE $9.00 OPTION
Impact on Poverty Threshold
7. THE IMPACT OF THE MINIMUM WAGE INCREMENT
At either option, besides affecting employment and family income, increasing the federal minimum wage would have an impact on the federal budget
directly by increasing the wages that the federal government pays to hourly workers, and indirectly due to increasing prices on some goods and services
purchased by the government. Most of these costs would be covered by discretionary appropriations.
Indirectly, federal spending and taxes would be impacted as workers with increased earnings pay more in taxes and receive less in federal benefits.
However, people who become unemployed due to minimum wage increases will see a reduction in real income and pay less in taxes and receive more
federal benefits. The CBO concludes that the net effect will probably be a small decrease in budget deficits for several years, but a small increase in budget
deficits after that. Long-term impact of the federal wage increase is uncertain.
With the White House urging employers to increase minimum wages for their workers, it becomes important to evaluate the impact of the wage increase
on small employers. Additionally, employers will also have to contend with the costs associated with insuring their full-time workforce, under the ACA
regulations coming into effect.
Let’s look at a quick example to examine the impact of the $10.10 option:
Over the course of three years, Employer A would pay $102,960 more in minimum wages than current, with no changes to staff or hours or days worked.
And every year after 2016, the employer would pay over $50,000 extra as the minimum wage is subsequently adjusted for inflation per the Consumer Price
Index. Additionally, that since employer contribution to employment taxes are based on a percentage of income, employers will also incur additional costs
on top of actual wage paid.
Wages Paid Now
$127,600
Extra Wages Paid by
Employer After Wage
Increment in 2014
$17,600
Extra Wages Paid by
Employer After Wage
Increment in 2015
$35,200
Extra Wages Paid by
Employer After Wage
Increment in 2016
$50,160
Company A has 100 employees; all working at minimum wage.
Each employee works 8 hours per day. There are 22 working days in the month.
The current hourly rate is $7.25.
The proposed hourly rate is $10.10.
The incremental change ($10.10 - $7.25) is $2.85.
Considering that the increment takes place in three steps, we assume that the $2.85 is separated as $1 in 2014, $1 in 2015, and $.85 in 2016.
The table below shows the extra wages paid by employer due to the wage increment each year.
6
IMPACT ON FEDERAL BUDGET
AN EXAMPLE: IMPACT OF WAGE INCREASE ON EMPLOYERS
8. “A survey by Towers Watson & Co. in 2013 showed that 29 percent of companies plan to adopt a new HR software system in 2014. And of these, 25 percent
will only consider a software-as-a-service (SaaS) product.
Another key factor in the software decision is the level of simplicity. HR departments are pacing a higher focus on simplification and easy user adaption. Part
of this simplification focuses on improved user interfaces, and the drive to mirror the user experience of popular sites such as Amazon or Google. The goal
for 2014 is not to just implement new technology, but to also make it simple and easy to use.
“2013 was a big year for HR technology. When you consider
such realities as companies still trying to fully understand
how to best leverage workforce analytics, the continued
use of HR in the cloud, and a growing popularity of Social
Media HR practices, 2014 is looking to be a pivotal year in the
industry.” ~Lynne Mealy, President of The International
Association for Human Resource Management (IHRIM)
“Buying is still viewed as more expeditious than building.
So if a startup has an interesting product, good code and a
handful of clients, they could be a target for acquisition this
year.”~Katherine Jones, Analyst with Bersin by Deloitte
7
HR TECH IN 2014
In 2013, big data and social media helped to shift the landscape of HR technology by creating new challenges and opportunities for organizations in
managing their blended workforces. This year, with global economic growth creating a new level of competition for talent, HR organizations are
transferring their focus from cost reduction to retention and engagement.
Many of the large enterprise software providers, including Salesforce.com, have spent the last two years acquiring midsize and startup providers of HR
software tools in the marketplace. This tech-buying spree is driven by a desire to offer a full suite that caters to every HR software need, from recruiting to
performance management to payroll.
Particularly sought after are startups with“one-trick”technology point solutions that focus on recruiting and talent management.
In 2014, hot targets for purchase will be gamification vendors that offer inventive ways to apply rewards and promote competition within an organization.
Companies offering payroll options are expected to add finance-focused features, such as payment cards that act as ID cards, as this is a natural extension
of the general business model.
Another sub-trend is going to be the focus on integration. With all these acquisitions, vendors will now face the difficult task of integrating all these
offerings into a single, seamless solution. Integrated and consolidated suite solutions will increase operability of systems, databases and tools, and also
serve to integrate information and processes throughout the entire HR organization.
BUY RATHER THAN BUILD!
HR SYSTEM UPGRADES
9. ““Once you sort through the heaps of data and find what’s
relevant,leadershipandHRcanseewhat’sgoingonthroughout
the organization and make more informed decisions.This shift
towards data-driven decision-making is what can separate
a good HR department from a great HR department.” ~Pat
Greer, Academic Director of the Strategic Human Resource
Management Program at University College, University of
Denver
HR TECH IN 2014
Everyone has been talking about big data, but many companies are confused as to what it means or what to do with it. Last year, the HR industry spent a
great deal of time evaluating the benefits that workforce intelligence could bring to companies when used to their best advantage. According to Gartner
research, business intelligence and analytics are expected to become the top focus for CIOs until 2017.
Bersin by Deloitte says that more than 60 percent of companies are investing in big data and analytics to make their HR departments more data-driven.
According to Bersin, companies using data to their full potential are twice as likely to deliver high impact recruiting solutions, widen their leadership
pipeline, and improve their financial performance.
HR departments are increasingly looking for technology to help them spot trends and patterns
in their data, so that they can better understand the impact of their HR approaches and use this
intelligence to make strategic talent decisions.
An increasing number of vendors are recognizing this need, and are developing tools and
systems to make analytics easier for companies. Their goal is to provide HR users with solutions
that are more than a data dump, that include user-friendly analytic tools which show data in
easy-to-understand graphical format to provide workforce insights. Many HR vendors are
starting to compile benchmark data from the mass volume of customer information they
manage, so that they can deliver information that employers can examine and evaluate their
own data against.
With the emphasis on big data and workforce intelligence, predictive analytics will emerge as
one of the must-have technologies in 2014.
8
WORKFORCE INTELLIGENCE
10. HR TECH IN 2014
The concept of SoMoClo, initiated by the Aberdeen Group, is a union of three technological trends that provide new opportunities for companies:
Social + Mobile + Cloud.
Social
Many talent management solutions added collaboration features in recent years in response to demand for social media in all areas of business. HR de-
partments, in particular, are asking for more social media in their business practices. A study by WANTED Analytics in September 2013 found a 43 percent
year-over-year increase in demand for HR professionals with social media skills and experience.
According to Josh Bersin of Bersin by Deloitte, HR departments have been dealing with social software tools as add-ons to HR technologies, but now want
social systems that open employee communication, incorporate candidate relationship management, create talent networks, and more.
Mobile & Device-Independence
In years past, mobile has always been an extra feature. This year though, developers are designing with mobile in mind by choosing interfaces and
functionality that is specific to a mobile environment. Industry vendors are embedding mobile capabilities in their core solution, rather than offering them
as separate applications.
With a large majority of the workforce using mobile devices, companies face the challenge of providing access to HR information in the same seamless
user experience across every device. It goes beyond responsive design to understanding what functions users need to do when they access HR systems via
tablet, smartphone, terminal, or PC, and designing the user experience to simplify that.
New devices are continuously entering the market and‘bring your own device’(BYOD) is becoming more popular in many companies. HR departments that
offer self-service functionality are looking for solutions that can easily be deployed to any device.
Cloud
Back in 2012, Paul Hamerman, VP and Principal Analyst at Forrester Research, said that cloud had already become a pre-requisite for companies choosing
HR software.
While the benefits of cloud computing have been discussed at length, many cloud solutions have only focused on a single application or function. In 2014,
as vendors build their HCM suites, having all of it, not just pieces, available on the cloud, will be a key focus.
9
SOMOCLO
““In 2014, HR has to take ‘social’ as the ‘standard’ in every HR
solution you deliver.”~Josh Bersin, Bersin by Deloitte
“Mobile-enabled HR process adoption jumped 67 percent
since 2012, with the biggest uses coming in payroll, recruiting,
performance management, and learning and development
processes.”~2013-2014 CedarCrestone HR Systems Survey
11. CROWDSOURCING: AN INNOVATIVE TEMP PARADIGM
In a recent report on global workforce trends by the Society for Human Resource Professional Foundation (SHRM), an interesting topic was how technology
is transforming temporary hiring practices. An example of this is the growing model of crowdsourcing talent.
Globally, temporary employment models are becoming a normal and permanent method of talent acquisition and workforce management.
As Work-as-a-Service (WaaS) becomes the norm, talent exchanges like oDesk, Amazon Mechanical Turk, Create.it, TaskRabbit, Gigwalk and more are
gaining importance as an alternative staffing model. Crowdsourcing platforms are giving employers the opportunity to access an on-demand and scalable
workforce at a cost savings to traditional recruiting channels.This ability to discover untapped talent often provides companies the ability to control project
costs and hours, while uncovering highly skilled talent outside of geographic boundaries and standard demographics. Additionally, having the flexibility to
split large transactional workloads across remote workforces not only lowers costs but also speeds up the task.
Product R&D, in particular, has seen much activity in crowdsourcing, with open inventive campaigns by large companies such as BMS, General Mills, and
3M. For example, Lego is embracing the idea of open innovation – the idea that companies benefit by bringing in external stimuli – by using crowdsourcing
campaigns to co-create with their customers.
Platforms for crowdsourcing temporary talent for specialized tasks also exist, such as Gaggle, crowdSPRING, or Tongal. The ‘crowd’ for these projects is
typically comprised of diverse, qualified workers, including software engineers, artists, designers, management consultants, and individuals with advanced
academic degrees or industry experience. And more companies are reframing their organizational structures to enable sourcing from within their own
existing talent pool.
Crowdsourcing and online talent exchanges are being used outside of the traditional business world as well. The U.S. ski team used a crowdsourcing
platform to find members for its Olympic aerial skiing team, even encouraging those outside its normal demographic, like gymnasts and tumblers, to apply.
Many top companies are embracing crowdsourcing as a solution to reach temporary talent capable of executing tasks faster and more cost effectively than
employees.
Many top companies are embracing crowdsourcing as a solution to reach temporary talent capable of executing tasks faster and more cost effectively than
employees.
10
Who is the Crowd?
12. CROWDSOURCING: AN INNOVATIVE TEMP PARADIGM
As crowdsourcing picks up steam, more and more providers are entering the market promising to deliver high-quality work more efficiently and
affordably than full-time workers. Each uses different approaches to recruiting workers, distributing the tasks, conducting work, verifying results, and
ensuring quality. While industry standards remain largely undefined, three primary models of crowdsourcing are emerging:
Platforms: These crowdsourcing providers provide an online platform that gives companies access to an unvetted pool of talent. They have limited
customization, and the company has to design their own crowd-based workflow and monitor project quality.
Managed Service Partners: These providers differentiate themselves by partnering with the company to design and adapt task workflow for a crowd.
Most provide a qualified, vetted crowd to deliver results. While this approach is closer to Business Process Outsourcing, it does offer more flexibility and less
overhead costs.
Freelance Matching: These providers offer to match companies with a handful or single individuals with specialized skills, rather than bringing the power
of a huge crowd of workers. This model is particularly useful for complex or specialized tasks and creative-based projects.
Crowdsourcing.org, a group that tracks financials and trends in the crowdsourcing market, said that by 2012, venture capital firms had invested more than
$300 million in crowdsourcing companies. And in January 2013, the organization’s research found that there were more than 6.3 million workers in the
crowdsourcing market.
11
SEGMENTATION IN CROWDSOURCING
13. CROWDSOURCING: AN INNOVATIVE TEMP PARADIGM
Crowdsourcing is blurring the line between employees and independent contractors. Employment regulations have not been defined or established yet
to guide the employer-worker relationship through crowdsourcing. In fact, how to define the ‘worker’ is still a question. For example, in crowdsourcing
platforms with an open innovation campaign, where the crowd is asked to submit ideas towards a product/service, under what conditions are the
participants considered‘workers’? And while minimum wage is being debated on a federal level (see the article in this edition of TrendLine on the impact
of a minimum wage increase), the average pay for a worker on Amazon MechanicalTurk in the United States is $2.30 per hour, way below minimum wage.
The question of intellectual property risk also arises, where a crowd worker might be able to obtain knowledge of a piece of intellectual property by
completing even a small task. And in the open innovation campaign platform when ideas are crowdsourced, ownership is often unclear.
Legal intervention in crowdsourcing is starting to emerge, and recent lawsuits should help set precedent on how labor laws apply to crowdsourcing
activities. In 2012, CrowdFlower, Inc., a crowdsourcing provider, was sued by a worker for violating U.S. Fair Labor Standards Act by paying less than the
federal minimum wage. The company was also sued by workers who claimed that they were improperly classified as independent contractors. And in
October 2013, a group of Yelp reviewers filed a class-action lawsuit against the site, claiming that they were unpaid writers whose contributions created
the database necessary to the company’s commercialized services.
Since most crowdsourcing is conducted over the Internet, it’s unclear how rules, when they’re developed, would be enforced. While crowdsourcing temp
talent is becoming a key strategy in talent acquisition, employers should be aware of the complexities and risks associated with the model.
12
REGULATING CROWDSOURCING
Crowdsourcing Revenue Growth
Source: MassSolutions
14. IT TEMP WORK ON THE RISE
According to DiscoverOrg, a provider of IT sales and marketing intelligence tools, healthcare ranks as the top industry for information technology job
growth in 2014. The survey additionally found that the top three IT titles for this year were:
• Mobile Developer/Mobile App Developer • Business Intelligence Developer • Big Data Engineers/Architects
After many years of slow growth, the information technology and engineering job markets are starting to expand. According to the TechServe Alliance’s IT
employment index, the number of U.S. IT jobs in February 2014 rose by 0.38 percent from the previous month, to a total of approximately 4.6 million. And
engineering jobs rose by .20 percent in the same period, to approximately 2.5 million jobs. According to U.S. Bureau of Labor Statistics (BLS) employment numbers,
the IT labor market added almost 75,000 jobs in 2013.
In line with the growth of the industry, companies are turning to temporary workers to fulfill their open positions. Computer Economics, an IT research firm,
recently said that the use of temp labor in large IT organizations (companies with IT budgets of over $20 million) has grown to 15 percent, its highest since 1998.
According to the BLS employment projections, employment in all computer occupations is expected to increase by 22 percent from 2012 to 2020. Within that,
demand for software developers will be the strongest with increases ranging from 28 percent to 32 percent.
The Staffing Industry Pulse Survey showed that IT staffing experienced a median year-over-year growth of 13 percent, the highest of any staffing segment. It
also had the strongest bill rate trend of all segments. The industry also had a higher level of difficulty in recruiting, implying a tight talent market for candidates,
especially in categories where the unemployment rate is very low, such as network and computer systems administrators and database administrators.
There is a large demand for temporary workers with skills in mobile, social, big data and analytics, and IT security. Additionally, the traditionally popular skills of
JAVA programming and SAP are also being actively sought after.
Compared to the overall unemployment rate at 6.7 percent, the IT job market is faring better, with an unemployment rate of only 3.3 percent. InfoWorld,
a leading source of information on emerging enterprise technologies, revealed it’s top 10 states for IT jobs, with median salaries total number of IT firms.
Ranking
1
2
3
4
5
6
7
8
9
10
State
California
Texas
Florida
Illinois
New York
Virginia
Georgia
New Jersey
Pennsylvania
North Carolina
Median Salary in Metro Area
$109,000
$77,900
$70,930
$79,800
$80,700
$82,100
$76,060
$79,700
$75,660
$76,100
Number of IT Firms
34,000
24,121
21,517
19,856
18,645
15,851
12,995
12,677
11,057
10,980
Source: InfoWorld
13
Janco Associates, which tracks the IT job market, in January 2014 released results from a survey of 102 CIOS, which revealed that hiring plans for 2014
remain either stagnant or headed downwards. According to Janco, the continued decline of participation in the labor market is a sign of trouble.
Contractions in the PC market are also expected to impact IT jobs. Gartner tracked a 10 percent decline for PC shipments globally from last year, as the
market increases its demand for mobile technology.
NOT EVERYONE IS POSITIVE ABOUT THE DEMAND FOR IT WORKERS
TOP STATES FOR IT JOBS IN 2014
15. A few recent studies have been focusing on the satisfaction levels and happiness of temporary workers. Overall, it appears that temporary workers in the
United States are happy!
A 2014 Survey by Staffing Industry Analysts of 7,000 temp workers looked at how satisfied temporary workers are with both their staffing agencies and
their placements at client companies. The reports used Net Promoter Scores as their tool to measure happiness.
The Net Promoter Score (NPS) is a management metric designed to measure the loyalty that exists between a provider and a consumer. The provider can
be a company or employer, while a consumer can be a customer or employee. The NPS is based on a direct question: How likely are you to recommend
our company/product/service to your friends and colleagues? Scoring is based on a scale of 1 to 10, with 10 being the highest. Responses are sifted into
three groups:
1) Promoters (score of 9-10): loyal enthusiasts
2) Passives (score of 7-8): satisfied but unenthusiastic
3) Detractors (score of 0-6): unhappy
Calculating the NPS requires taking the percentage of Promoters and subtracting the percentage of Detractors.
The overall NPS was 42%, which is a number comparable to the NPS of companies such as Johnson & Johnson or BMW. Sixty-one percent (61%) of
respondents were in Promoter category while nineteen percent (19%)were considered Detractors. And 49 percent of all respondents reported that they
were“extremely likely”(with a score of 10) to recommend their staffing firm to a friend or colleague.
HOW HAPPY ARE TEMP WORKERS?
14
NPS FOR TEMP WORKERS AT STAFFING FIRMS
“
“Following impressive numbers in January, I am pleased
to see that IT and engineering job growth continued on
a strong trajectory in February. I am very bullish on the
future. Absent a geopolitical or macroeconomic shock, we
should see strong demand for IT and engineering talent
throughout 2014.”~Mark Roberts, CEO ofTechServe Alliance
“The number of independent IT professionals [is now] at
about 1 million and growing, and contract workers as a
portion of the internal IT workforce at many medium to
large size organizations has been rising, often between
10 percent and 25 percent.” ~David Foote, Chief Analyst at
Foote Partners
16. HOW HAPPY ARE TEMP WORKERS?
15
The score of 42% serves as a clear indicator that temp workers engaged with a staffing firm are generally happy
with their experience. NPS scores in 2012 and 2013 were steady at 45%, so this small drop in 2014 indicates there
is room for improvement.
The Net Promoter Scores were also categorized by occupation, where the highest loyalty was seen in
business and finance professions, and the lowest in healthcare practitioners/workers. With the increasing
demand for healthcare workers in the industry, staffing agencies will need to find strategies to improve this score.
When asked about various aspects of their staffing agencies, most workers“agreed”with the following statements, all of which are indicative of the quality
of the relationship:
• People at this agency are responsive and polite
• My relationship with my recruiter is productive
• This agency is trustworthy and honest
Calculation of NPS
Source: Staffing Industry Analysts
NPS by Occupation
17. HOW HAPPY ARE TEMP WORKERS?
The most“disagreed with statements are all related to factors of employment benefits:
• Agency provides quality training programs
• Satisfied with benefits provided
• I am satisfied with the rate of pay
16
TEMP WORKER’S THOUGHTS ON CLIENT COMPANIES
WHAT’S KEEPING TEMP WORKERS HAPPY?
Overall, temporary workers were happy with their placement at client companies, with approximately one-third of workers expressing praise or
appreciation. The most common requests among these workers were for increased and improved communication and feedback, increased pay, and
transitions to full-time positions.
Healthcare workers, as with their relationships with staffing agencies, were the least satisfied. Seven percent of healthcare workers complained about
inefficient or insufficient orientation or training programs, and six percent complained about bad treatment or exclusion. Five percent complained about
an unfair or excessively heavy workload.
An industry report by the International Freelancers Academy (IFA) found that 38 percent of survey respondents said they made more money as freelancers
than as a permanent employee. Additionally, most (46 percent) said they have more free time than they did as in-house workers, and over half (57 percent)
said they feel more secure as a freelancer than as a full-time employee. Over 70 percent said they are happier as temp workers, and 79 percent say they feel
more productive. And finally, 55 percent said that they would not want to go back to traditional work.
A survey by Elance asked respondents to list the best aspects of working as a temporary worker or freelancer:
• Controlling their own schedule
• Having more choices of work projects
• Following their passions
• Being their own boss
• Not commuting
Workers Expressing Unsolicited Praise or Appreciation
Source: Staffing Industry Analysts
18. WHAT’S TRENDING IN THE TEMP MARKET?
17
“Talent. Talent. Talent is the key. Finding a sufficient number of consultants in high-demand skill sets to meet client
demand represents one of the professional staffing industry’s greatest challenges.” ~Mark Roberts, CEO of TechServe
Alliance
“
Singulyarra / Shutterstock.com
#TALENT
Aggressive talent sourcing and cultivation
is going to be the focus of the staffing
industry over the coming months. Industry
practitioners will be busy dealing with
concerns that arise from skill gaps in the
market and H-1B limitations to sourcing
international talent, to focus on developing
effective recruiting teams and processes.
As we discussed in last month’s edition of
TrendLine (TrendLine – March 2014), the
demand for temp worker in the healthcare
industry is growing rapidly. Staffing agen-
cies are going to look for ways to increase
their speed and flexibility to meet this
need, while also dealing with increasing
healthcare worker loyalty and happiness
(see our article on temp worker happiness
in this issue).
Staffing Industry Analysts estimates that
the online staffing industry will grow to
$46 billion by 2020. Conventional staffing
industriesarelookingatwaystoincorporate
online staffing in their business models,
as more and more workers increase their
comfort with bidding for contingent work
online.
At TrendLine, we’re always focused on what’s trending in anything to do with contingent workers supply and demand. This month, we are introducing a
new quarterly section that focuses on consolidating our research into a list of critical trends in key talent sectors of the staffing industry.
#HEALTHCARE #ONLINESTAFFING
19. WHAT THE STAFFING LANDSCAPE WILL LOOK LIKE IN 2022
Within the temporary help industry, industrial staffing - the largest segment - is forecast to increase at 4.5 percent CAGR to have annual revenues of $43.2
billion in 2022. Information technology staffing and healthcare staffing have the highest CAGR at 5.6% to reach a market size of $39.0 billion and $16.4
billion respectively in 2022.
According to the U.S. Bureau of Labor Statistics (BLS), nationwide employment will rise 10.8 percent from 2012 to 2022, with jobs in healthcare,
construction, and educational services experiencing the largest job growth.
The Staffing Industry Analysts (SIA) forecasts that temporary help services employment will grow to 3,387,000 jobs by 2022 at a CAGR of 3.1 percent.
Annual revenue growth projection (at $155.8 billion in 2022) is higher at a CAGR of 4.6 percent, due to inflation and a growing share of higher-paying
professional jobs.
The SIA projection of 3,387,000 jobs in temporary services by 2022 yields a temporary penetration rate of 2.26 percent.
U.S. Temporary Services Employment, 1993-2022
U.S. Staffing Industry
Revenue Forecasts
for 2020 (in billions)
Source: Staffing Industry
Analysts
Source: Staffing Industry Analysts
18
U.S. TEMPORARY SERVICES EMPLOYMENTS
20. EMPLOYMENT PROJECTIONS FOR 2022
The BLS made employment projections for the 22 major occupational groups for 2022, enabling identification of the fastest-growing occupations in each
segment for temporary staffing.
Source: U.S. Bureau of Labor Statistics & Staffing Industry Analysts
Staffing Skill Segment
Clinical/Scientific
Education/Library
Engineering
Finance/Accounting
Healthcare
Industrial
Information Technology
Legal
Marketing/Creative & Other
Professional
Office/Clerical
Other Professional
Various Segments
BLS Major Occupational Group
Life, Physical, & Social Science Occupations
Education, Training & Library
Architectural & Engineering
Business & Financial Operations
Healthcare Practitioners/Technical
Healthcare Support
Food Preparation & Serving
Transportation & Material Moving
Production
Construction & Extraction Occupations
Personal Care & Service
Building/Grounds Cleaning & Maintenance
Installation, Maintenance, & Repair Occupations
Protective Service
Farming, Fishing, & Forestry
Computer & Mathematical
Legal
Arts, Design, Entertainment, Sports, & Media
Office & Administrative Support
Community & Social Service
Sales & Related
Management Occupations
FastestGrowingOccupation
EnvironmentalScience&ProtectionTechnicians
HealthSpecialtiesTeachers,Post-Secondary
BiomedicalEngineers
Meeting,Convention,andEventPlanners
DiagnosticMedicalSonographers
HomeHealthAides
FoodServers,Non-restaurant
AmbulanceDrivers&Attendants,ExceptEmergency
ComputerControlProgrammers&Operators
InsulationWorkers,Mechanical
PersonalCareAides
PestControlWorkers
MedicalEquipmentRepairers
SecurityGuards
Forest&ConservationWorkers
InformationSecurityAnalysts
Paralegals&LegalAssistants
Interpreters&Translators
MedicalSecretaries
SubstanceAbuse&BehavioralDisorderCounselors
Demonstrators&ProductPromoters
Medical&HealthServicesManagers
OccupationGrowthRate,
2012-2022
18.8%
36.1%
26.6%
12.5%
21.5%
28.1%
20.1%
31.1%
16.5%
46.7%
48.8%
19.7%
30.3%
12.1%
4.5%
18%
16.7%
46.1%
36.0%
31.4%
16.1%
23.2%
19
WHAT THE STAFFING LANDSCAPE WILL LOOK LIKE IN 2022
21. INDIA: AN EMERGING TEMP WORKFORCE
HOT SPOT
20
India is the second largest of the BRIC countries, not only by the size
of its economy but also by population. In 2012, after the country’s
economy expanded modestly by 3.2 percent, the International
Monetary Fund (IMF) in its annual report on the state of the Indian
economy estimated that India will expand by 4.6 percent in 2013, 5.4
percent in 2014, and 6.4 percent by 2015.
Recently, investors have been cautious on making overseas
investments in India. With the Indian rupee (INR) losing 13 percent
against the U.S. dollar in 2013, combined with a portfolio including
$500 billion in nonproductive infrastructure assets (such as
unfinished roads and businesses), and political dilemma with the
upcoming elections, it seems like the country is experiencing an
investment slowdown.
However, there are huge investment opportunities in niche areas.
India has always been a leader in innovation, often skipping the
traditional layered growth model. For example, the wireless revolution
in India happened before fixed line. E-commerce is growing and has
vast space for investment, currently at $2 billion, and comprising 0.25
percent of the overall retail industry. By comparison, e-commerce as a
percentage of retail is 6 percent in China, 4 percent in Latin America,
and 9 percent in the United States. Mobile banking also has been
experiencing rapid growth and some experts expect it to replace credit
and debit cards soon. And in healthcare, new opportunities exist in
hospital growth, doctor and nurse training, medical record keeping, and
ancillary businesses that support health care. India is considered a global
player in pharmaceuticals, where in generic medications the country
controls a significant portion of the world market.
So despite skepticism, it is expected to see investments and growth in
specialized sectors of the Indian economy. And with growth comes an
increasing demand for a specialized workforce.
GDP Growth Rates in BRIC Countries, %
Source: International Labour Organization, Global Employment Trends 2014
22. 21
INDIA: AN EMERGING TEMP WORKFORCE HOT SPOT
Countries with Large Temp Workforces, 2010
Source: Indian Staffing Federation
23. INDIA: AN EMERGING TEMP WORKFORCE HOT SPOT
Overall, growth in India has been heavily reliant on the services
sector and private consumption. However, the decline of GDP
growth for India in recent years suggests that sustaining high
rates of growth rests on strong output from industry and high
investment rates. The International Labour Organization, in
their Global Employment Trends 2014 Report, implies that poor
performance in the manufacturing sector and low levels of
investment might be responsible for the current economic
slowdown in India. While both factors are barriers for high and
sustainable growth, overcoming them will also lead to job creation.
22
GDP Growth in India
International Labour Organization, Global Employment Trends 2014
SUSTAINING GROWTH IN INDIA
24. INDIA: AN EMERGING TEMP WORKFORCE HOT SPOT
Distribution of Informal Employment, 2011
Source: Indian Staffing Industry Research, 2012
23
“
“There is nothing ominous in the temporary job market having the lion’s share of the staffing industry. This is similar to all the
largest staffing markets in the world and shows the sophistication of the Indian markets. Employers understand the importance of
temporary workers to aid them through the peaks and trough of the economy.” ~Adam Pode, Director of International Research at Staffing Industry
Analysts.
Recently, total employment in India expanded from 2010 to 2012 by a healthy 13.9 million.The working age group population estimate was 743.8 million in 2011, roughly
61 percent of the total population. Of this, the labor force was estimated at 418.4 million in 2011.
A study of the Indian labor market by Staffing Industry Analysts shows that the employment situation in the country is unique, where approximately 90 percent of Indians
work in the unorganized or‘informal’sector, which consists of jobs such as job-based-work, self-employment, household enterprises, agricultural work, construction work,
and other forms of casual or temporary employment.
THE TEMPORARY WORKFORCE OF INDIA
Recruiting Percentage of Temporary Workforce, by Country
25. India has a highly fragmented, organized employment structure based on formal, written employment contracts. This market has been stagnant for many
years, leaving room for unorganized employment, which as discussed above, provides jobs for 90 percent of the workforce.
Recently, the temporary staffing industry has been playing a key role in reducing unemployment and undeclared work by creating new, formal job
opportunities every year. India currently has 1.3 million temporary workers in the organized sector. Experts predict that by 2025, 10 percent of the overall
workforce would be working as contingent workers through various staffing companies.
Companies in growing industries, such as e-commerce, retail, and healthcare, are increasingly looking to bolster their workforces with temporary staff for
a variety of projects.
The Indian Staffing Federation (ISF) attributes the growth of temp work in India to the changing economic scenario and the demand for talent optimization.
Firms in growth sectors are starting to recognize contingent staffing as a key HR management strategy. The ISF believes that temporary staffing helps to
create new jobs and boost employment by turning available work into jobs that otherwise would not exist.
Source: Indian Staffing Federation Indicus Survey, 2012
24
INDIA: AN EMERGING TEMP WORKFORCE HOT SPOT
“
“Companies across traditional sectors such as Retail, Telecom, Hospitality, Pharma, Manufacturing, and
Agriculture are increasingly shifting to the flexi staffing model. The size of India’s Retail sector, one of the
major sources of demand for flexi staff in India, is currently estimated at around US$ 450 billion and is expected
to grow at 10-12% per annum. Given this positive future outlook, the sector is expected to witness a strong
demand for flexi staff.”~Indian Staffing Industry Research 2012
Indian Companies Primary Reasons for Flexible Staffing
26. There are three main areas of staffing in India: professional, general (white collar), and general (blue collar). People with bachelor degrees,
approximately 54% of the total temp population, hold the largest share of contingent work.
Approximately 79 percent of temp workers are in the age group of 21-30. A study by the Government of India Ministry of Labour and
Employment for 2012-2013, found that in a group of 1000 people, 413 people are self-employed and 347 fall under the casual worker
classification. Within the urban sector (U), most workers are wage/salaried employees, whereas in the rural sector (R), self-employment and
casual work make up the majority.
WHO IS THIS TEMP WORKER?
INDIA: AN EMERGING TEMP WORKFORCE HOT SPOT
25
Distribution of Works by Different Age Groups, in thousands
Source: Government of India, Ministry of Labour & Employment
“
“Well run staffing companies can be a valuable institutional
innovation, much needed in India, to resolve the dilemma
between flexibility to adjust employee levels that companies
need and the commitment to their skill development and
employability that employees need.” ~Arun Maira, Member
Planning Commission.
27. As the temp staffing industry in India transitions from functioning solely in the capacity of replacing absentee workers with temporary ones
to a strategic resource and partner for clients by providing a range of employment solutions and services, multiple challenges arise.
The regulatory environment in India is ambiguous, where a multitude of labor laws on both national and state levels leads to a considerable
degree of overlap, especially as many are outdated and not frequently updated. Additionally, the lack of effective monitoring of labor laws
tends to decrease transparency and leads to unlawful practices and agreements. In the staffing industry, the rate of job creation is limited,
as staffing companies are not recognized as the primary employer, leading to the growth of the unorganized sector and to increases in
agreements that are full of risk and non-compliance.
The industry is highly fragmented, with low barriers to entry, making it easy for a wide range of providers to set up practice. The fragmented
market combined with vague laws creates room for abusive practices by staffing agencies and employers, affecting growth and reputation.
CHALLENGES FOR INDIA’S TEMP STAFFING INDUSTRY
26
““Indian industry is mired in archaic labour laws. The possible panacea for all sectors of the economy engaging human resource
is through legitimate engagement of manpower through temporary or flexi engagement; while guaranteeing not only a decent
wage but social security that is meaningful.”~Michael Dias, Secretary of The Employers Association
“Yes the temporary workforce in India’s formal sector can grow phenomenally, but only if the existing financial and legislative
roadblocks are removed. There are certain issues with regard to service tax, TDS deduction pertaining to staffing companies.
Besides, there has to be a proper and structured legal framework about what can be outsources and what cannot be. Once
these issues are sorted out, temporary workforce will automatically grow significantly because that makes more sense
from the employers’ point of view. Because that will take overhead costs from fixed cost to variable cost and the cost of
retrenchment or getting rid of people will be much lower.” ~T Muralidharan, Chairman of TMI Group
INDIA: AN EMERGING TEMP WORKFORCE HOT SPOT
28. METHODOLOGY
The DCR Wage Index is developed to assess the relative movements of temporary wage rates in the U.S. economy. The wage rates for
temporary workers or contingent workforce are based on payments made by staffing firms to these workers based upon hours worked.
Data collected from sources such as Bureau of Labor Standards (BLS) and other government sites as well as an internal pool of staffing
companies and consultants, is aggregated and classified based on regions and skill categories, to arrive at an aggregate index.
The baseline for the index is set at 100 for January 2007. Index value for a particular month indicates relative wages with the said baseline
and is representative in terms of direction and scale of change. Five years of data has been included to observe seasonal patterns and
distinguish seasonality from long-term wage movements. The data and the model has been further refined over last six months.
DCR Wage Index combines the exhaustive data from BLS with practical and more recent developments and data from on-field consultants
and clients, to provide timely near-term indications of trends and consistent long-term actionable and objective information.
DCR Work Index uses multiple economic variables to ensure the robustness of its forecasts and cross-validation of trends.
Key data sources and parameters of interest included and influencing the index are:
Unemployment data
Gross Domestic Product
Prime rate of interest
New and seasonal Job openings
Non Form employment
Job Opening
All Export
All Import
Average Hourly Earnings of All Employees Total Private
Aggregate consultant data on job market parameters
27
SOURCE DATA