If you ask industry insiders where staffing is headed over the next few decades, many will look at the trends of recent years and posit that the industry will continue becoming more concentrated. By that they mean the “big boys” (Adecco, Randstad, Manpower, Recruit, etc.) will continue getting bigger, while the market share held by the small- and mid-size companies will keep getting smaller. So it’s the disappearing middle class phenomenon, only equated to staffing.
I’m not buying it. I don’t think this gap will continue to widen. In fact, I’m gonna argue that the opposite will take place. So buckle up, and get ready to disagree with me in the comments section. :)
When industry experts made this prediction, they pointed to statistics such as: Right now the top 15 firms have 50% of the market share, compared to 2011 when it was 45% and compared to 2007 when it was 35%.
But just because a line graph is going up doesn’t mean it will continue to go up. Now, granted, the experts’ predictions are based on quantitative analysis, which probably trumps my qualitative feelings of where staffing’s headed, but the statistical basis for their predictions is also coming from a very different economic era. My take is: “that was then, and this is now.”
In the now, we’re looking at a very different, post-recession and post-ACA business environment. And maybe it’s just me and the specific groups of people I surround myself with, but it sure feels like attitudes are shifting. It feels like there’s a sea change happening that’s moving away from the quantity approach of large chains, and moving toward the quality more often promised by small- and mid-sized companies.
The predictors also say that the small- and mid-size staffing firms will become more specialized. I completely agree. Whether it means they’ll focus on specific recruitment niches, particular markets, or a unique approach/model, the ones who survive and thrive will be innovative and specialized. They’ll tailor their services to be more about expertise and quality staffing than about generic or quantity.
Now I’ll admit that I’m coming from a specific generation and the people I hang with are typically from a like mindset, but the vast majority of them make their buying decisions based on quality. Their attitudes have shifted away from mega-corporations and focusing on more localized, specialized, and personalized products/services.
They’re into the foodie movement, purchasing their edibles from local markets, CSAs, co-ops, Whole Foods, and Trader Joe’s. They look for “green” and “energy-efficient” options whenever possible. They drink fancy microbrews instead of yellow lagers/pilsners. And they prefer things like credit unions, indie music, and things with “artisan” in the name. In short, they’re willing to pay more for something they want rather than paying a little to get a lot.
The recession taught people to be as frugal as possible, and get the most bang for their precious buck. I wonder if some of the industry experts are expecting client spending to go back to the ways of the late-90s, when everyone was spending without thinking. I certainly don’t think so. I think the recession will serve as a constant reminder to be aware of your spending, and it will foster more selective spending tendencies. Companies will take their time to make a decision to buy so that when they do they know they made the right choice.
The recession years were likewise marked by attrition, where more businesses closed, fewer opened, and some small ones were easily bought out by their larger counterparts. Now that the recession is “over,” I’d generally imagine the opposite to be true.
So all of these elements seem, at least to me, to be lining up against the “big boys.” If I’m right and more staffing companies start up, and those who make spending decisions are more deliberate about it and care about quality and specialization, it will mean good things for the innovative and specialized small companies out there. And that will add up to rising market share for them, and a declining one for the “big boys.” Will they overtake their greater portion of the shares, or even match them? I doubt it. The Wal-Marts of the world will always exist, because of their marketing power and the fact that they will always have an audience to appeal to. But could there be a distant future where the small guys have a greater market share? I guess it’s possible. If the robots don’t take over first.