2016 is shaping up to be another growth year for contingent work, following a year in which the temp penetration rate continued to climb, reaching an all-time high at 2.06% in December . According to our analysts, on a year-over-year basis (i.e., December 2015 from December 2014), total nonfarm employment was up 1.9% and temporary help employment was up 3.3%, and monthly job gains in temporary help services have averaged just under 8,000 workers over the past 12 months.
We continue to redefine what temporary work is and how it will be evaluated in the workforce of the future. Some hot areas to look at in 2016 will include statement of work (SOW), industrial, healthcare and, as always, IT. This article covers SOW and industrial. Look for my next article for trends in healthcare and IT.
SOW. While SOW is on the rise, understanding and managing it well is becoming even trickier. The definitions of the SOW category and the SOW consultant are fairly straightforward (from Staffing Industry Analysts’ complimentary Contingent Workforce Lexicon of Terms ):
Statement of Work (SOW) — A document that captures the work products and services, including, but not limited to: the work activities and deliverables to be supplied under a contract or as part of a project timeline. In contrast to a typical temp or contingent work arrangement which is billed based on time worked, SOW agreements are usually billed based on a fixed price deliverable or for hitting specific milestones. Like typical contingent arrangements, they may also be billed based on time, including arrangements where there is a time-based billing that is capped at some “not to exceed” level for time and materials.
Statement of Work (SOW) Consultant — Any consultant performing work on a project under a Statement of Work (SOW) arrangement. In contrast to agency consultants, SOW consultants are typically, but not always given a regular, consistent salary by their employer and continue to receive this salary when off project assignments (i.e., “benched resource”). While SOW consultants are typically employed by consulting firms, a host of technology and other staffing firms have also entered the solutions space for its greater premium margins (the theory being that you are paying for the firm’s proven methodology and chemistry of the team). At times “rogue” managers have used an SOW arrangement in order to avoid restrictions on the use of temporary workers or agency consultants.
Nothing has quite as many opportunities around it for cost control or quite as much gray area as SOW. Staffing firms are getting more adept at satisfying buyer needs in this area and may be acting more as a temp resource process outsourcing (RPO) for certain job categories (example: reception/greeter). Whether you have a defined project in mind or are a “rogue” manager it makes sense to continue to look at SOW as an opportunity to control project costs using fixed price or deliverables. For more advice on utilizing SOW in 2016, attend our complimentary Feb. 11 webinar: “5 Tips for Tailoring a SOW Management Solution to Meet Your Program’s Special Requirements .”
Industrial. Industrial temporary staffing is projected to be at peak levels in 2016, reaching $32.9 billion dollars in the US market — comprising nearly 30% of the total US temporary staffing market. Defined as the blue-collar segment of temporary help and permanent placement, this segment includes manufacturing personnel, factory workers, logistics/distribution staff, shipping and receiving clerks, materials handlers, and related occupations with “light industrial” often used to refer to positions not requiring heavy labor, such as electronic assembly.
Industrial staffing shows no signs of slowing down with temporary staffing revenue forecast at 5% growth in 2016. Needless to say, competition is fierce in key areas like transportation, logistics and for resources in certain geographical areas like the Inland Empire in California. Expansion is being driven in the warehousing, construction, trucking and portions of the manufacturing sector (such as motor vehicles, furniture and beverages).
By geography the latest statistics indicate global industrial temporary staffing revenue is broken down as follows: Europe has 46%, North America 25% and the APAC region 21%. The US states with the largest industrial temporary staffing markets are California and Texas by far, each comprising 10% of the total US market in 2014. Make sure to check out Staffing Industry Analysts’ Industrial Staffing Growth Assessment  for more on this tough to manage but growing segment.
As we continue to re-define what temporary work is and how it is leveraged in the workforce of the future, consider these hot trends for 2016 in SOW and industrial staffing. Keep your eye on the ball and use this information to form future business case decisions and create cohesive forward thinking strategy with your program and staffing suppliers.
In my next article, I will address trends in IT and healthcare staffing.