It’s always wise to look ahead. Twice a year, SIA forecasts the big picture for staffing providers and the ecosystem. According to the “US Staffing Industry Forecast: April 2023 Update,” released earlier this month, there are big changes ahead that every program manager should be aware of when it comes to their contingent workforce. If your organization uses staffing services, you should take a look at what’s in store for the industry.
Opportunities to Find Talent
A bigger talent pool has emerged post-pandemic for those jobs that are not purely on-site. The entire contingent workforce industry has benefited from the shift to remote work. There is also a greater acceptance of contingent work arrangements in general as workers of all ages demand more flexibility and technology continues to enable faster, more flexible work arrangements that benefit everyone.
What Goes Up
The staffing industry experienced very high growth over the last few years — an impressive 33% in 2021 and 17% in 2022. But prepare for change in 2023 when growth in most staffing segments will slow down — or, in many cases, decline. Exactly where will this happen, and how will this affect your program? Use these forecast insights to determine where you will need to flex your recruiting muscles or prepare for a decline.
Staffing is a bellwether, and a sluggish GDP will be a precursor to flattened demand — especially in the industrial and office/clerical segments, which are actually expected to decline. Place and search will also feel the heat, with a 9% decrease forecast. In better news, all professional segments (IT, engineering, and finance and accounting) will grow in 2023 — except travel nursing.
Overall, SIA predicts a decrease in staffing revenue growth of 3.2% overall for the US staffing industry in 2023. This follows two years of unprecedented growth bringing more than 3 million jobs and almost 2% of the US workforce to the economy, according to the March 2023 jobs report.
State Employment Trends
Our forecast also looks at regional employment, where we saw 32 states experience an increase and 18 experience a decrease over the last three years. Companies should look to national and regional sources to carefully evaluate, benchmark and leverage the data for the geographic areas in which they operate. The chart below displays the top 10 most and least impacted states when comparing January 2023 to February of 2020. Use this to consider labor arbitrage tactics and geographic attractiveness for your candidates.
Hot Jobs — And Not
Future growth areas for industrial staffing may include companies active in factory construction, electrical equipment manufacturing and green energy infrastructure. Higher interest rates have slowed business investment and impacted manufacturing and construction. This has led to pushback on pay and bill rate increases and re-sourcing or scaling back at some contingent worker programs.
Information technology. IT continues to grow (albeit more slowly) in 2023 as the digital transformation marches on, with specific areas in IT seeing very high demand. Jobs in cloud, cybersecurity and digital transformation will be the leaders driving 2023 IT staffing revenue growth.
Concerned about IT bill rates? Since 2016, SIA has tracked the net percentage of IT staffing firms seeing an increasing trend in bill rates. In 2021, this metric hit record levels and in April 2022 hit a peak of 71% of firms as bill rate increases skyrocketed. This fell to 16% of firms in February 2023, matching levels commonly seen pre-pandemic.
Engineering. Staffing firms have benefited from demand in the oil and gas sector and the emerging green energy sector, especially for project engineers, mechanical engineers and electrical engineers. To position your engineering jobs more attractively, prioritize flexibility and fully remote/hybrid positions. Take advantage of reports that candidates are seeking longer-term contracts and some are interested in converting to full-time roles. The federal infrastructure spending bill passed in November 2021 designates $550 billion for transportation, broadband and utilities. The CHIPS Act of 2022 is also expected to provide a boost to US semiconductor manufacturing. Both will help drive engineering staffing.
Finance and accounting. Staffing will grow in the finance and accounting space. Both stand to benefit by the recent banking collapses that could increase appetite for compliance projects at clients in the banking sector, similar to how the Sarbanes-Oxley regulations spurred staffing demand.
2024 Growth Projected
The pendulum will swing as we look ahead to 2024, and we forecast the overall industry will grow slightly more than 2% (over 4% if you exclude travel nurse staffing). In 2024, our analysts predict industrial and engineering will grow 4%, IT will be up 7% and finance/accounting will be up 5%. We predict that travel nursing will decline and office/clerical will remain unchanged.
Published twice a year, the US Staffing Industry Forecast is the go-to resource for workforce program managers, executives and the suppliers that support them. The full report is available to SIA’s CWS Council members.