The latest numbers are in and everyone is talking: The use of contingent labor is growing in force and workers and their employers are becoming increasingly comfortable with the change. This trend is causing more businesses than ever to invest in the services of staffing professionals equipped with the most advanced recruiting software.

We have Amy Bingham, managing partner and staffing industry consultant for Bingham Consulting Professionals, LLC, speaking with us today about the recent developments in the sector.

The increasing trend of contingent labor
News reports celebrating the increase in hiring are common. However, unlike in previous decades when the nation was recovering from an economic slip, the positions being created are not necessarily permanent, salaried work. Reuters reported that three out of four of the nearly 1 million hires made in 2013 were for part-time positions. This number represents a great opportunity to ensure that recruiters are as efficient as possible with the right recruiting software.

According to the U.S. Bureau of Labor Statistics, the number of adults employed part-time was 8.2 million in July 2013. While part-time and contingent labor are different, the increases in both categories indicate a growing trend toward greater employment flexibility in the marketplace.

“I think that one trend [in the staffing industry] is the increased use of contingent labor. The increased adoption of contingent labor services by employers is the result of skittish hiring due to the economy. This has resulted in a sluggish jobs picture, unemployment rates that remain stubbornly high and consumer confidence levels that are up one month and down the next,” said Bingham. “The adoption of the ACA is also increasing costs associated with hiring. All of these factors weigh heavily on employers and when they have the option to shift those costs to staffing agencies they do so, which has boded well for the industry in the past few years.”

Bingham continued on to say that “the staffing industry remains strong, but it is moderating. Most of the national firms have announced their revenue increases over the prior year are down in the low single digits. There is some leveling off, but that is to be expected relative to the wave the industry has been riding for the past few years.”

The adoption of managed services impacts the recruiting industry 
The increased use of contingent labor is not the only trend Bingham sees impacting the staffing industry. According to her observations, the widespread use of management services is also changing how business is conducted and the staying power of the staffing industry.

“Another trend impacting the industry is the widespread adoption of managed services and vendor management services, which continues to exert downward pressure on industry margins,” Bingham said. “I think that employers will continue to rely on the staffing industry to manage their labor costs. [It could be more cost-effective], for example, for a company to break one full-time position into two part-time jobs. I believe businesses will look to creative solutions to manage rising labor costs.”

Generational reactions differ on the switch
Like many things regarding the workplace, the different generations will have mismatched opinions and reactions to the growing presence of contingent labor.

“We will likely see more work being parsed out in contract type positions and project roles, and an increase overall in part-time employment. For an employee that is accustomed to holding a full-time job, it could be challenging to adjust to the evolution to more part-time work,” said Bingham. “I think that generally, Gen Y is not skittish, they are typically very confident and they look to work as a series of experiences. Instead of expecting to hold one full-time job for 20 years – they are much more open and will embrace the changes associated with an increasingly contingent workforce. Aging baby boomers who are looking for more flexibility will embrace this type of work as well. Gen X could be challenged as this group is in the throes of raising families and therefore will be more inclined to seek the stability of full-time employment.”

Changes in the marketplace impact staffing firms
All of the trends previously mentioned are impacting staffing professionals, but mostly on the reactionary front toward employment. However, in the recruiting world, agencies are also changing processes by increasing consolidation. One of the best ways to consolidate is utilizing the right recruiting software.

“I think we are going to continue to see more consolidation among staffing firms and more short-lists of preferred suppliers within their customer base which will increase competition,” Bingham told us. “In the next few years, we will likely see margin compression in professional staffing sectors that haven’t experienced this to the same extent the commercial staffing sector has. We are already seeing this in healthcare, and in industries like accounting, finance and IT. As a result, staffing firms will have to get smarter about how they deliver their services, using technology for virtual delivery models so that they can drive down their costs and reduce delivery costs.”

She continued on to say that “within staffing organizations, more staff training will be required as the market continues to change and the way they talk to buyers of staffing services requires adjustments to effectively take their message to market.”

The importance of selling the staffing service
As employers continue to tighten their figurative belts, it’s important for staffing agencies to perfect sales and operations tactics to gain clients and prove to customers the value of the service. By implementing the right recruiting software, staffing agencies are able to create value to pass onto their customers.

“The staffing industry understands first-hand how the employment landscape is changing, and it is more expensive to employ people today than in the past,” said Bingham. “[It’s therefore important to] craft the right message on a sales campaign and package that message correctly. Staffing firms will need to package their value propositions and take the company message to market in a way that resonates with employers.”

The recession taught many businesses how to make do with less and how to increase efficiency. As a result, it is the job of a staffing agency to prove how services can reduce operational expenses in the long term and show a return on investment.

“A staffing firm can be a significant enabler of workforce management for employers – even more so today,” Bingham said.