March 01, 2014

Contingent Staffing Growth Continues

2013 was a record-breaking year for contract staffing as employers increasingly turned to temporary workers to support their workforces. With 2.7 million active contractors in June 2013, contingent staffing reached its highest point since 2006. Recent statistics show that staffing was strong in healthcare, business professionals and support staff, and engineering and manufacturing.

This growth is expected to continue in 2014. A recent CareerBuilder survey revealed that 42 percent of companies plan to hire temporary workers in 2014, while only 24 percent planned on direct hiring.

Temporary help employment numbers from BLS continue to rise, corroborating the growing use of contingent workers. Temporary employment increased by 40,000 jobs in December 2013 from the previous month, accounting for 9.6 percent growth from the previous year. The percent of total U.S. workers sourced via staffing firms also hit an all-time high of 2.06 percent in December 2013. And it just accounts for contingent workers engaged through staffing firm relationships, not those outside of it such as independent contractors.

In 2012, the contingent workforce at an average large company comprised of 16 percent of the overall workforce. The growth in vendor management systems (VMS) and managed service provider (MSP) usage and spend also indicates increased managerial attention to this workforce population. Staffing Industry Analysts surveys show that 73 percent of large companies use a VMS while 57 percent have an MSP in place.

The State of Contingent Workforce Management research study by Ardent Partners predicts that the average contingent workforce will grow by almost 30 percent over the next three years. It is expected that the composition of the contingent workforce will blur talent lines, including SOW-based labor, traditional temporary labor, independent contractors, and professional and non-professional services. New categories such as enterprise-workforce-as-a-service and online labor marketplaces will continue to evolve and grow in popularity.

A new report by Staffing Industry Analysts on long-term U.S. staffing industry forecasts projects that temporary help services employment will grow to 3,387,000 jobs by 2022, a compound annual growth rate (CAGR) of 3.1 percent. The annual revenue growth projection for the temporary staffing market is higher at 4.6 percent CAGR to reach $155.8 billion in 2022, with drivers of growth being inflation, growth in total employment, a growing number of higher-paying professional jobs, and deeper adoption of temp workers in multiple markets. The largest growth is expected in healthcare staffing and information technology staffing, both forecasted to expand by 5.6% CAGR.

Additionally, online staffing, currently at about $1 billion globally, continues to grow. While its market share is small now, at less than 1 percent of the temp market, it is projected to grow to $15 to $20 billion by 2020.

The VMS and MSP Competitive Scene

A recent study by Staffing Industry Analysts’ CWS Council looked closely at the competitive landscape of VMS and MSP providers. The data revealed that the preferred primary model for managing contingent workforce programs is the use of Managed Services Providers (MSPs), even if in conjunction with a VMS.

Models to Manage Contingent Workforce Programs

Source: Staffing Industry Analysts

The study also broke down the usage of each model by industry or major skill. The highest usage of MSPs was in Pharma/Biotech/Med and the highest usage of external VMS was in Engineering/Design.

Primary Model Used, by Industry

Global VMS spend by work arrangement was also analyzed, where temp/contract saw a growth of 18% from 2011 to 2012, while SOW grew 21% and outsourced services experienced a 4% growth rate.