Staffing and Human Resources Consulting
The coronavirus pandemic caused a decline in the staffing and human resources industry in 2020. Business closures and stay-at-home orders triggered a drop in corporate profit and staffing cuts. The research group IBISWorld predicted an annual 2.2 percent drop in revenue for employment and recruiting agencies in the U.S. from 2015 through 2020. The outlook is brighter for the coming years, though. The rollout of the COVID-19 vaccine in 2021 will bolster the economy as businesses reopen and the employment rate increases. As the pandemic becomes contained, social distancing requirements will ease and companies will gain confidence in hiring employees for permanent positions. According to an article in MarketWatch, the human resources consulting services market is expected to have considerable growth through 2026.
Moving forward, demand will grow for temporary and permanent workers, which will create good opportunities at staffing and personnel management firms. Many companies continue to turn away from the traditional employment model by adding more temporary and contract workers in order to increase competitiveness and flexibility—and to reduce their personnel expenses, including benefits, payroll taxes, and other costs associated with hiring permanent employees. The U.S. Department of Labor (DOL) reports that the employment services industry will have steady growth in the coming years. For example, human resources managers will have 7 percent employment growth, faster than the average for all other occupations, through 2028. And human resources specialists are expected to have 5 percent employment growth through 2028, adding about 33,000 new jobs in that time frame.
There are more than 3 million contract and temporary workers in the United States, and the number of these workers continues to grow. As businesses strive to reduce costs and compete globally, the number of contract and temporary workers will continue to grow. Some staffing industry experts predict that contingent workers at Fortune 500 companies will comprise more than 50 percent of the workforce in the near future (up from 20 to 30 percent in the past). These developments translate into good prospects for staffing firms, recruiters, and other employment services firms.
According to a study by TrueBlue and Emsi, temporary employment has been growing steadily over the last few years, adding nearly 480,000 jobs from 2012 to 2019, "with companies seeking more flexibility in how they staff, and workers seeking greater control over when and where they work." TrueBlue and Emsi predict that the temporary employment services sector will grow by nearly 9 percent from 2019 through 2025. This is a faster rate than the predicted 6 percent growth for all U.S. jobs in that same time period.
The fastest growth is expected for staffing and recruiting firms that work with professional and technical occupations, according to the American Staffing Association (ASA). Some companies have also begun to diversify their services and are offering vendor management systems, recruitment process outsourcing, payroll processing, and other human-resources-related services to clients.
Some experts believe that the Affordable Care Act, introduced in 2010, is a contributing factor to companies deciding to outsource jobs, so that they can avoid having to meet employee medical insurance requirements. Others believe that this law is just a small bump in temp/contract hiring and there are other reasons for the increase in contract/temp jobs, such as more people wanting to work outside of the 9-to-5 template.
The executive search industry has been slowly growing since the recession, according to the Association of Executive Search and Leadership Consultants. In 2015, global revenues had reached $12 billion, the fourth straight year in a row of steady growth, and this growth has continued in the years since. The AESC reported that 2018 had the best growth in the executive search industry since the recession, reaching more than $15.6 billion. As described in an IBISWorld report, the outlook for executive search recruiters in the U.S. is good for the coming years. The industry is expected to perform well due to the increase in corporate profit levels, strong business sentiment, and an increase in the number of new businesses that are creating new jobs for senior managers and other experienced professionals.
Executive recruiting firms receive up to 40 percent of a new hires' first-year compensation, which is why many large corporations cut costs by having in-house recruitment departments. This can limit some of the growth in the executive search industry, but companies still rely on executive search firms that are dedicated to interviewing and vetting potential candidates for mid- to high-level positions. Competition for clients will continue to be keen in this sector and executive search firms may be forced to lower fees and eliminate administrative charges in order to attract business. Others are diversifying their services, purchasing or launching leadership consulting departments, or expanding into other countries.
Executive search firms are also still in demand to conduct searches for top-level positions such as CEOs and board members and for workers in highly specialized positions. The Association of Executive Search Consultants reports that the following sectors continue to be strong for executive recruiters: industrial, energy, life sciences, and technology.
Technology is changing the staffing and personnel management industry. Staffing agencies and recruiting firms have launched Web and social-media sites for clients and workers, and Internet-based staffing companies such as Upwork.com, Guru.com, and Freelancer.com continue to be popular.
Salaries for permanent workers in the staffing and personnel management industry are good. The Department of Labor reported that human resources specialists who worked in employment services in May 2018 earned an average of $60,880 annually, and compensation, benefits, and job analysis specialists earned $63,000.
The average temporary or contract employee makes about $17 an hour, according to the ASA. Some earn higher pay than their permanent counterparts. Many staffing firms provide vacation and holiday pay and health insurance to their temporary/contract employees.