In the ever-evolving job market landscape, staffing companies in USA play a pivotal role in bridging the gap between employers and job seekers. As we enter 2023, the U.S. staffing industry faces unprecedented challenges and exciting opportunities.

In this blog post, we delve into the forecast for the staffing industry in the USA for the fiscal year 2023-24, analyzing trends and developments that will shape the future of staffing agencies in the country.

Current Size of the US Staffing Industry.

For us to grasp the size of the US staffing industry, it is essential to analyze the broader economic context. In 2023, a modest growth of 0.5% was forecasted for the US GDP. But the fear of recession still looms over developed economies, making this year resemble a period of economic slowdown, contrasting with the trends seen in 2022. Despite this, optimism emerges as the economy is expected to rebound gradually, with the latter half of 2023 showing signs of substantial improvement.

The US staffing agency has grown by 28% yearly in 2021 to generate $186.9 billion in revenue. This figure is the combined staffing revenue size of the UK, Germany, France, Australia, Spain, India, Sweden, Turkey and Saudi Arabia. Because of the staffing company in the USA, a revenue of $218 billion in revenue was generated in 2021, as per SIA’s April 2023 US Staffing Industry update.

In 2023, however, a -2%y/y growth is expected by the Staffing Industry Analysts, and although there is not much structural growth projected for 2023, there still are opportunities for the US staffing agencies.

During COVID, the healthcare sector was on a gradual boost, making it the largest segment of the US staffing industry. The US staffing industry grew 14% in 2022, and the healthcare staffing market grew 18% from the previous year; it doubled.

Critical Trends for 2023-24

Technological Advancements:

In 2023-24, staffing agencies in the USA are expected to leverage advanced technologies such as artificial intelligence and machine learning for candidate sourcing, matching, and screening. A perfect example of this is chatbots, which did not even exist ten years ago but are now being used by companies to enhance their services and products.

AI enhances service delivery

Aya Healthcare is a US healthcare company that transitioned to a platform model and grew from $1.1 billion in 2018 to $11 billion in 2022, demonstrating this approach's incredible potential for growth.

Enhancement of products

AI is also impacting the staffing company in the USA by enhancing existing products and services, from job boards to the back office. This technology allows staffing firms to deliver more effective and efficient services, saving time and money.

The retention of a hybrid work culture

The hybrid work culture once practiced and now amplified due to COVID-19, is here to stay. Initially challenging, employees have adapted to flexible working, especially from home, which has become a key job seeker demand. Approximately 85% of recruiters acknowledge the permanence of hybrid work. In 2023, many organizations prioritize remote work to attract premier talents.

Upskilling and Reskilling

To meet the evolving demands of industries, staffing agencies in the USA will invest in upskilling and reskilling programs. These initiatives will not only enhance the employability of candidates but also provide businesses with a workforce with the latest skills and knowledge.

Marketing Recruitment

Based on weekly anonymized client data, SIA's recent analysis highlighted marketing as the leading segment in the 2023 US staffing industry forecast. This surge in demand is attributed to the evolution of traditional marketing roles in the digital era, expanding responsibilities and skills. Due to a shortage of these specialized skills, recruitment agencies stand to gain. The increasing reliance on staffing agencies in the US allows recruiters to charge higher fees for sourcing the necessary talent.

Diversity, Equity, and Inclusion:

Companies increasingly recognize the importance of workplace diversity, equity, and inclusion (DEI). Staffing agencies will promote diverse talent pools, ensure equal opportunities for all candidates, and partner with businesses that prioritize DEI initiatives.

Staffing agency in the US employs CRM

CRM, or Candidate Relationship Management, is a vital HR strategy for nurturing positive employee connections. It has emerged as a leading trend in recruitment, addressing contemporary talent challenges. In the upcoming year, emphasizing employee contentment and retention, CRM will be pivotal.

Employee retention and sustainable recruiting

The impact of the Great Resignation culture has made employee retention and loyalty paramount for US staffing agencies. In 2023, this focus on employee satisfaction will persist, necessitating stronger employer-employee relationships.

Use of Data-driven Technology

the staffing industry embraces data and technology, transforming raw data into actionable insights. Many firms utilize tools like applicant tracking systems (ATS) to streamline recruitment. In the upcoming year, companies are expected to leverage data for innovation, taking their operations to the next level.

Challenges to Overcome

While the industry is poised for growth, staffing agencies in the USA must address several challenges:

1. Talent Shortage:

Specific sectors, especially technology and healthcare, face a severe talent shortage. USA staffing agencies must devise innovative strategies to attract and retain skilled professionals.

2. Compliance and Regulations:

Navigating the complex web of employment laws requires expertise, especially in the wake of evolving remote work regulations. US staffing agencies must stay updated and ensure compliance to avoid legal complications.

3. Technological Integration:

Embracing new technologies can be challenging for traditional staffing agencies. Successfully integrating these tools into existing processes and ensuring that staff members are proficient in using them is crucial for staying competitive.

Conclusion

As per the SIA, in September, the US economy saw a remarkable increase of 336,000 jobs, surpassing economists' predictions of 170,000 in Reuters and Bloomberg surveys. The unemployment rate remained stable at 3.8%. Additionally, the labor force participation rates for overall and prime-age (25-54) workers remained unchanged at 62.8% and 83.5% respectively. The unemployment level rose modestly by 5,000, a fraction of its August increase.

Staffing companies in the USA must adapt to technological advancements, cater to the gig economy, promote diversity and inclusion, and focus on upskilling to thrive in this dynamic environment. By embracing change, staying compliant, and fostering meaningful relationships, staffing agencies can weather the challenges and drive innovation and growth in the ever-expanding realm of the U.S. job market.