If the stock market is any indication - and it is - the staffing industry is in for some tough times in 2008. I'm getting calls from friends in places like Dubai and France asking how bad it's going to get. The Hang Seng is down more than 8% today alone, and the staffing stocks in the U.S. markets have already been cut in half over the last six months.

Our clients generate roughly a $10 billion run rate and although that represents a small portion of the overall U.S. staffing industry, it's enough for some statistical observations. The downturn started in earnest in the 2nd quarter of 2007 and mostly hit temporary staffing while direct hire stayed strong. By the 4th quarter, direct hire began to take a hit and temporary staffing stabilized. All trends point to an awful 2008 market for direct hire and simply a crummy one for temporary staffing.

That's enough to get in a defensive mode. Fortunately, we have the staffing crash of 2002 to learn from. Over the years since those unpleasant days, I've gathered the stories from those that survived or even thrived in the hard times. Some common themes:

    • · Cut out the frivolity beginning with the owner iron. This is not the time to buy that Mercedes. Already got one? Sell it and buy an Altima. Show the team you're the first to make sacrifices.

      · Outsource. Eliminate all possible non-revenue generating positions. Outsource computer operations, payroll processing, tax filing - everything - and eliminate expensive accounting staff.

      · Negotiate. In a weaker economy, your customers will look to you for price cuts. Be prepared. Have your negotiating agendas ready. Don't expect that your clients will determine on their own the overall value you bring to the table.

      · Top-grade. You're in a much stronger position now with vendors and employees than you were two years ago.

      · Capitalize on competitor mistakes. In 2002, when all seemed hopeless, the bigger staffing companies stumbled badly. They let customers down left and right. Example: one of our clients picked up a high-margin, $80 million contract that Adecco fumbled. You don't get those chances in a strong economy, so take advantage now.

Tags: Industry