Employment Services

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 28,500 employment services firms in the US offer a wide range of employment-related services and solutions, including temporary and contract staffing, permanent placement, recruiting, outsourcing and outplacement, training, and human resource consulting. The industry is organized along three distinct segments: temporary help services, employment placement agencies, and professional employer organizations.

Internet Job Services

The proliferation of Internet job boards has made it easier for companies to advertise openings and find applicants on their own.

Growth of Flexible Workforces

Companies are placing increased value on the ability to quickly adjust to market conditions.

Industry size & Structure

A typical employment services firm has about 107 employees and annual revenues of $15 million.

    • The overall industry consists of about 28,500 firms and generates around $430 billion in annual revenue.
    • 56% of firms have less than 10 employees.
    • The top 4 firms account for over 25% of industry revenue. The largest employment services firms include Adecco, Kelly Services, Manpower, Spherion, and Kforce.
    • Workers average 34-35 hours per week, comparable to permanent employees.
    • Services are provided to customers in all employment segments: Manufacturing, services, and government.
    • With limited capital costs associated with start up, there is little barrier to entry into this field.
                            Industry Forecast
                            Employment Services Industry Growth
                            Source: Vertical IQ and Inforum

                            Recent Developments

                            Mar 27, 2023 - Job Growth Likely to Slow Later in 2023
                            • The Employment Trends Index (ETI) rose to 118.29 in February from a downwardly revised 118.14 in January, according to the Conference Board. While the ETI ticked upward in February, and the Conference Board said job gains were likely to continue in the coming months, the Federal Reserve’s use of interest rate hikes to tame inflation likely will hinder job growth later in 2023. In addition to the hiring freezes and job cuts in the tech sector, the Conference Board noted there are signs of cooling job gains in several other industries, including warehousing, finance and insurance, and construction. However, hiring remains robust in the healthcare and social assistance, and leisure and hospitality sectors.
                            • In March, payroll firm ADP issued a report indicating that US private sector payrolls increased by 242,000 in February. Large businesses added 160,000 positions, and medium establishments added 148,000. However, small businesses shed 61,000 jobs. The balance between goods and services continued to moderate back to pre-pandemic levels. Service-providing establishments added 190,000 jobs, and the goods-producing sector added 52,000 positions. In February, average pay up was up 7.2% year over year.
                            • US average shift work volume decreased by 0.5% in February compared to the prior month, according to data compiled by HR solutions firm UKG. February marked the ninth drop in workforce activity in 12 months, which signals that the labor market is gradually tightening. Retail, foodservice & hospitality was a bright spot as shift work saw a 1% increase over January. Shift work in the healthcare sector declined by 1.1%, and manufacturing decreased by 1%. Shift work in services & distribution fell by 0.1. The UKG Workforce Recovery Scale, which compares shift activity to pre-pandemic levels, fell to 92.6 in February compared to 93.4 in January.
                            • In March, online recruiting platform Indeed announced it would lay off 2,200 employees, or about 15% of its workforce, according to The Wall Street Journal. Indeed, which is owned by Recruit Holdings Co., noted that a recent drop in US job openings would likely reduce revenue for HR tech firms and that the company expects future job openings to continue to decline for the next two or three years. Indeed’s move followed a spate of layoff announcements by firms including Meta, Alphabet, Microsoft, Goldman Sachs, Dow, and 3M, signaling that more companies are trimming headcounts and pulling back on hiring to reduce payroll expenses.
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