The staffing industry is still growing – just slower than before.
According to a Staffing Industry Analysts (SIA) report, the staffing boom sparked by the COVID-19 pandemic is losing steam. High-interest rates, cautious clients, decreased government spending, geopolitical risks, and slower wage increases have leveled off a period of explosive growth reports the SIA . In a U.S. Staffing Industry Forecast, the analysts predict high attrition rates, demands for increased work flexibility, and gaps in soft skills and talent will slow growth to more normal levels.
Learn how industry growth is expected to change in 2023 and 2024 and how to manage business financing throughout harsh economic conditions to remain stable and able to grow.
Modest growth projected in 2023
The 17 percent growth of the staffing industry seen in 2022 – pushing revenues close to $219 billion – will likely fall to $211.8 billion in 2023, reports SIA.
“For 2023, we expect the trend of robust growth to pivot to a trend of much slower growth or even modest declines,” wrote SIA in its April industry forecast. While growth is slowing, demand for staffing services continues.
Analysts have forecasted that the U.S. staffing market in 2023 will experience a slight growth reduction compared to the record-breaking revenue experienced in 2021 and 2022.
In 2023, IT is expected to grow by 5%, finance/accounting by 6%, and engineering by 7%. All healthcare segments are expected to grow, except travel nursing (-25%) as volume and pay/bill decline from 2022 levels.
Here’s how each staffing segment grew in 2022:
- Commercial Staffing: +5%
- Professional Staffing: +23%
- Healthcare: +36%
- I.T.: +16%
- Engineering: +14%
- Marketing/Creative: +13%
- Education: +30%
- Life Sciences: 0%
Why the future of the staffing industry looks good
While the industry experiences a slight decline after a period of frothy growth, the staffing industry’s long-term future looks sound.
SIA points to three trends that show resilience to economic change and indicate future stability, even as the broader economy falters:
Expansion of the “contingent workforce”: Americans increasingly seek casual, contract, or gig-based roles. That’s a trend ideally suited to staffing company priorities.
Shift to remote work: Geographic boundaries don’t sway hiring decisions as they did before the boom of remote work. “We believe that this decoupling of work from geographic proximity gives staffing firms a competitive advantage in sourcing talent relative to the in-house capabilities of many employers,” wrote SIA in its report.
Technological adaption: “Staffing platforms’ speed, automation, and self-service advantages are attracting new candidates and clients to the industry,” reports SIA. “The platform model has found success in nurse and industrial staffing, with increasing use occurring in other segments.”
The advantages of the above-mentioned trends are expected to lead the staffing industry back to increased growth in 2024.
What trends will dominate in 2024?
SIA predicts the staffing industry will grow 2.4% in 2024 to reach an industry value of $216.9 billion.
Here are projections for specific sectors of the staffing industry in 2024:
- Industrial: +4%
- I.T. +7%
- Finance/accounting +5%
- Engineering +4%
- Travel nurses -10%
- Office/clerical 0%
Managing threat and opportunity
As harsh economic conditions persist, the staffing industry will fare much better than most other industries. However, a crowded reveals dangers and opportunities for staffing companies.
Staffing companies with stable business financing will be well-positioned to maintain profits and take advantage of growth opportunities as they arise.
The staffing industry’s mild revenue reduction in 2023 and expected 2.4% growth rate in 2024 show resilience to harsh economic conditions. While other industries battle failing profit levels, high job vacancy rates provide the market demand staffing companies need to meet goals and objectives.
However, revenue reduction and slow growth create both threats and opportunities. Staffing companies with restricted credit or unreliable funding will find it difficult to maintain operations, retain clients, or attract new talent. On the other hand, staffing companies with stable finances are better equipped to support quality services and have the agility to respond quickly to growth opportunities ahead of the competition.
As 2023 unfolds and 2024 appears, staffing companies must focus on efficient operations and financial stability.
eCapital is committed to accelerating access to capital for your business. With a team of over 700 experts and proprietary, industry-leading technology, eCapital is creating the future of business lending. With our cutting-edge technology and team of experts by your side, you can trust eCapital to provide you with the financing solutions you need to build a stronger and more profitable business. To learn more about our solutions for the Staffing industry, visit eCapital.com.