2007 Trends in Staffing and Recruiting
Barry Asin, EVP & Chief Analyst at Staffing Industry Analysts discusses 2007 trends.
For the fifth consecutive year, the staffing and recruiting industry has seen year over year increases in growth in virtually every segment. Will that continue in 2007? What challenges and opportunities lie ahead? We recently had the opportunity to talk with Barry Asin, Executive Vice President & Chief Analyst at Staffing Industry Analysts to discuss some trends you need to be aware of.
What are the key business trends you see affecting businesses in 2007 and how should staffing firms prepare for it?
Asin: The economy, of course, will always have a large impact on the staffing industry. 2006 saw growth, though at a somewhat lower rate than the past couple of years.
Based our forecasting, the economy will stay in a 'slow and steady' growth rate during 2007. The current growth rate is a good climate for the staffing industry because we are not in a volatile economy, business owners can focus on growing their business. We are projecting growth of around 7% overall in staffing revenue for 2007. Thats a little slower than 2006, but it should be a pretty good year.
Another important trend is the growing shortage of skilled workers. With an expanding economy and historically low unemployment rates, 2007 is going to be a year when staffing firms will really need to focus more on recruiting. Right now unemployment for college graduates is under two percent. In many areas the ability to recruit successfully will be the key to growth for staffing firms.
One other big macro trend worth mentioning is globalization. Technology is increasingly making it easier to move work from one location to another and labor is more and more a global commodity. Those businesses focused on skills that are less subject to the pressures of globalization are likely to do better in the years ahead.
What segment of the industry will see the highest growth in 2007?
Asin: Theres been no hotter place to be over the past year or so than the place and search business. We estimate that contingency search grew by 25% in 2006 and project that it will grow at a still very strong 20% in 2007. This is fairly typical later in an economic cycle, as companies scramble to fill traditional jobs. The growth in place and search has been a big boost for staffing firm margins and should continue to have a positive impact throughout the year.
What skills do you think will be in the highest demand and how should staffing firms seek out the candidates that have them?
Asin: Our forecasting shows most IT positions will continue to be in strong demand in 2007. At the same time, one of the fastest growing markets will be in certain healthcare areas, particularly temporary physicians or locum-tenans. Though this is a small market niche it is an area with extreme shortages and the ability to find and place physicians is highly valued by clients. The healthcare staffing field overall is more of a mixed bag. There should be strong growth in allied health positions in 2007, but the growth in nurse staffing is more sedate, as hospitals have focused on reducing their reliance on outside staffing agencies.
Other professional skills that will be in demand include IT and finance/accounting skills. The IT growth is in part a rebound from the slowdown that came after Y2K and the dotcom bust, while finance and accounting growth is thanks in part to the need for continued regulatory compliance oversight driven by Sarbanes Oxley. It also appears that many companies who used staffing for their finance and accounting needs during the initial Sarbanes Oxley crunch, found it to be a good way to manage other fluctuations in workload.
What should staffing firms focus on in 2007?
Asin: More than ever, focusing on business fundamentals that translate into profitable customer relationships will be key to success in 2007. For example, in the immediate future, industrial staffing will have a slower rate of growth than in the past. Of course, the long term prospects for industrial staffing are still quite good. In this scenario, finding a way to manage your business for productivity and efficiency during times of slower growth, while being positioned for the next big boom, is a critical skill for long term success.
Further, if you currently don't have the resources or desire to grow your business in one of the hotter areas of the business, most staffing markets can and will bring continued success if you stick to the basic fundamentals of staffing and recruiting: superior customer service for both your clients and your employees and candidates. It is often wise to stick with what your firm is historically good at and not jump in headfirst into a hot-growth area without the appropriate resources and skills.
Our research shows that the most important reason clients chose one staffing firm over another is the ability to provide workers with the right skills and qualifications. With very low unemployment, the need for recruiting and retaining of qualified temporary staff is critical to success, Clients are more aware than ever of the bottom line impact that a lack of skills or a poorly fitting candidate has on their overall business performance.
It's up to the staffing firms to do a better job of recruiting and pre-qualifying candidates and employees while helping their clients solve their business challenges and need for having the right skills at the right time. It is in this way that staffing and recruiting firms can develop real business relationships that -- through a deeper understanding of their clients -- solve business challenges for their clients.