Navigating the Changing Staffing Industry Landscape: Threats and Opportunities

1. Navigating the Changing Staffing
Industry Landscape: Threats and
Opportunities
Barry Asin, Staffing Industry Analysts
BAsin@staffingindustry.com
@BarryAsin

2. Staffing Industry Analysts: What We Do

3. The US Staffing Market
To Exceed $150B in 2019
Historical US Staffing Industry Revenue ($B)
Source: Staffing Industry Analysts September 2018 US Forecast
160
140
120
100
80
60
40
20
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018P
0

4. Professional Skills a Majority of US Spend
2018 US Temp Staffing Spend by Skill (%)
Source: SIA US Staffing Industry Forecast, September 2018
IT
24%
Industrial
27%
Office
13%
Healthcare
13%
Finance
7%
7%
Engineering
Life Sciences – 2% Other
Education – 1%Marketing – 1%
5%
Industrial is the
single largest
segment

5. SIA 2019 US Forecast
Calls for Moderate Growth
Staffing Industry Forecast Revenue Growth 2019
Source: Staffing Industry Analysts April 2019 US Forecast
Total
Staffing
Office Industrial IT Health-
care
Finance Engineering Life
Sciences
Marketing Education Place/
Search

6. Staffing and GDP Growth Highly Correlated
Sources: Staffing Industry Analysts, US Staffing Industry Forecast September 2018

7. JP Morgan Chase Sees Recession Coming…But
When?
▪ October 2018 Projection of Recession Risk
– 2019 28%
– 2020 60%
– 2021 81%
▪ February 2019
“If the Fed is less spooked by full employment, more tolerant of an inflation
overshoot and less anxious to reach restrictive policy, then 2020 might not
be a year to think about recession”
Sources: Money and Markets October 18, 2018, Bloomberg February 3, 2019

8. Developing Trends

9. M&A Deals at Highest Level Since 2007
Announced N. American M&A Transactions
Source: SIA Staffing Mergers and Acquisitions Report, January 2019
Announced N. American M&A Transactions

10. M&A Deals 2016
to 2018
Dominated by
Professional
Staffing
Percent of N. America deals by focus of acquired firm 2016-18
Source: SIA M&A Database Tool, 2019

11. Top 5 US Staffing Firms Market Share Actually
Declined
2012
19.0%
2017
18.1%

12. Top 15 US Staffing Firms Market Share About
the Same
2012
34.1%
2017
34.2%

13. Number of Temp Staffing Firms Back at 2008
Level
Source: SIA and US Census Bureau

14. Skills Shortages!

15. Non-Traditional Sources of Talent
Increasingly Important
▪ Retirees
▪ Students/apprentices/interns/recent graduates
▪ Veterans/newly discharged
▪ Stay-at-home parents/part-time workers
▪ Lacking car/transportation
▪ Disability
▪ Criminal history
▪ Remote workers

16. Staffing Firms Growing Their Own Talent

17. A Majority of Staffing Firms Offer Training
Source: SIA NAM Staffing Supplier Survey, 2018
Other
5%
How Much Organized Paid Training
Does Your Firm Offer?
13%
Full Day or
more
5%
Full Week or
more
57%
Yes
43%
No
Does Your Staffing Firm Offer Temp
Training (% of firms)

18. Training Models Bridging the “Last Mile” Skills Gap

19. Strategies Being Used to Manage
Contingent Work
Source: SIA Workforce Solutions Buyers Survey, 2018

20. A More Strategic Future for
Contingent Work?
Source: SIA Workforce Solutions Buyers Survey, 2018

21. Outsourced Recruitment Services & Software
MSPRPO
VMSATS
Managed Services ProvisionRecruitment Process Outsourcing
Vendor Management SystemApplicant Tracking System
TTA
Total Talent
Acquisition

22. Hiring Managers
???
Traditional
Employees
Freelancers
SOW
Consultants
Outsourced
Services
Human Cloud
Platforms
Temporary
Agency
Workers
Remote
Workers
Private
Talent Pool
What is the Best Worker Source for
the Work?
Robots/RPA

23. Workforce
Solutions
Ecosystem
and Talent
Acquisition
Technology
Applicant Tracking Systems (ATS)
Vendor Management Systems (VMS)
Software Integrators
Workforce Analytics
Psychometric Assessments
Skills Tests
Interviewing Platforms
Online Job Advertising
Job boards
Job aggregators
Social media job sites
Community sites
Online classifieds
Programmatic job ads/job distributors
Job post optimizers
Human Cloud
Online staffing
Crowdsourcing
Online work services
Sourcing Automation
Resume Parsing/Search-Match Tools
People aggregators
Sourcing process automation platforms
Intelligent sourcing management systems
Employee Referrals
Recruitment Aggregators
Texting/Email Technology
Recruitment Chatbots
Engagement Platforms
Background Check Verification
Social Media Screening
Source: Staffing Industry Analysts

24. VMS/MSP The Disruption
Story of the Last Decade
Percent of Large
US Companies with
VMS or MSP in Place
Source: SIA Workforce Solutions Buyers Survey, 2018
VMS MSP
+63%
+45%

25. Human Cloud Platforms the
Next Disruptive Change?
Online Staffing
Short-term work with
known individual
worker in a labor
relationship
Examples: Upwork or
Freelancer
Online Services
Short-term work bundled
with a service component
– workers may be known
or unknown
Example: Uber
Crowdsourcing
Microtasks and contests
performed by often
unknown/multiple workers
Examples: Amazon
Mechanical Turk or
99 Designs

26. Growth Ahead for Enterprise
Use of Online Staffing
North America Percent of Buyers Using Online Staffing
Source: Staffing Industry Analysts September 2018 US Forecast
2014 2015 2016 2018 Upwork
F500
2017

27. What’s the Right Analogy for Staffing?
Travel Agents Real Estate Agents
OR

28. Upwork IPO a Coming-of-Age Sign
▪ IPO: October 2018
▪ Current Market Capitalization:
4/30/19 = $2.1 Billion
▪ Q1 2019 Results:
– Gross Services Volume +21% YoY to
$487M
– Revenue +16% YoY to $69M
(14.2% of GSV)
– Net Loss = $4.7M

29. The War for Talent is Over and Uber Won!
▪ IPO: May 2019
▪ Market Capitalization:
5/20/19 = ~$70B
Self-Employment – NAICS 4853 – Taxi and Limousine Drivers
Source: Bureau of Labor Statistics, May 2018; Tech Crunch, January 2019
Launched 2011
in San Francisco

31. The Great Convergence?
proTM
enterpriseTM
ONLINE
MARKETPLACE/
TECHNOLOGY
HYBRID MODEL/OFFERINGS TECHNOLOGY STAFFING/
PURE SERVICE PROVIDER

32. Convergence Example:
TrueBlue JobStack
“Associate adoption rates climbed to 77% during the third quarter of
2018… In addition, the percentage of jobs being filled via the
JobStack app came in at 30% for the quarter… JobStack is helping us
boost both worker and client loyalty, and we continue to see better
overall performance from branches that have more aggressively
adopted JobStack. Looking forward, our focus for 2019 is squarely
on enhancing the JobStack experience for associates and clients and
leveraging JobStack to drive incremental revenue.”
Patrick Beharelle, CEO, TrueBlue, Inc.
Q3 2018 Earnings Call

33. Online Staffing Enabling Technology
Assists in Convergence
proTM
enterpriseTM
ONLINE
MARKETPLACE/
TECHNOLOGY
HYBRID MODEL/OFFERINGS
ONLINE STAFFING
ENABLING TECHNOLOGY
TECHNOLOGY STAFFING/
PURE SERVICE PROVIDER

34. Process
Automation
Artificial
Intelligence
Robotics Blockchain
Staffing Technology Impacts

35. AI and the
Staffing Lifecycle
Need
Identification
Sourcing
Screening
Matching/
Selection
Hiring and
Onboarding
Pay and
Management
1
2
3
4
5
6
Prediction/
Optimization

36. What is the Role of the Recruiter
in an AI Driven World?

37. Branches &
Recruiters
Connecting
People & Work
What is
Staffing?
A B
OR

38. Running with the Machines
Human Intelligence
AI/robotics harnessed to develop
broader and better staffing services?
Artificial Intelligence Enhanced Human
Intelligence

39. Large Firms Driving More Revenue
Through Fewer Offices
Aggregate for largest publicly traded
staffing firms in the US that disclosed
data:
Source: SIA and Company Annual Reports
Change from 2007 to 2017
Revenue Gross
Margin $
Internal
Employees
Office
Locations
Revenue/
Office

40. © Crain Communications Inc. All rights reserved.
The Only Bad Option?
DENIAL

41. Register Now for San Diego!
Collaboration in the Gig Economy is the fastest-growing, collaborative, and leading-edge
conference of its kind. Join staffing suppliers, workforce solutions buyers, VMS, MSP
& RPO providers, suppliers to staffing, gig economy/human cloud companies and others
for an intensive look at maximizing value and optimizing the talent supply chain.
Register now at www.collaborationgigeconomy.com
September 11-12, 2019
Manchester Grand Hyatt | San Diego, CA
@SIAGigE #GigE2019

42. Source: www.rocrastination.com
Our View of the Future

43. Threats to the Industry
▪ Automation leads to fewer jobs to fill
▪ New entrants/disruption
▪ Economic downturn
▪ Negative public perception
▪ Negative legal/legislative developments
▪ Complacency

44. Opportunities for the Industry
▪ Growing acceptance
▪ Escalating skills shortages/upskilling
▪ Solving market failures
▪ Growing markets
▪ Leveraging new technology for efficiencies
▪ Growing client sophistication/increasingly strategic

45. Opportunity: Growing Appetite
for Contingent Work
Median Contingent Share of Workforce
Source: SIA Workforce Solutions Buyers Survey, 2018