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 28,200 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 137 employees and annual revenues of $20 million.

    • The overall industry consists of about 28,200 firms and generates around $575 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 34-36 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 1, 2024 - Employment Services Wage Growth Outruns Pricing
                            • US producer prices charged by employment services firms are not rising as fast as industry wages, which could suggest some firms’ margins may be squeezed by higher labor costs. In Q4 2023, employment services wages were rising nearly four times faster than Q4 2023 employment services pricing. In Q4 2023, employment in the employment services industry was moderately lower compared to a year earlier.
                            • Two-thirds of middle-market companies plan to expand their hiring efforts over the next six months, according to a recent report by consulting firm RMS. The report suggests the tight US labor market is prompting middle-market companies to invest in productivity-enhancing technology and workforce optimization strategies. In Q3 2023, 97% of executives surveyed said they anticipate attracting enough qualified workers will be a problem for the next year. RSM chief economist Joe Brusuelas said, "The labor market is cooling but will remain tight by historical standards for the foreseeable future. The onus continues to be on middle market companies to navigate persistent staffing challenges in pursuit of profitability. It is essential that firms attempt to get ahead of the curve and identify the proper mix between labor and investment capital to create the conditions under which they can grow, anticipate and meet future demand."
                            • Some white-collar workers who want to switch jobs are encountering fewer opportunities and less generous wages and perks, according to The Wall Street Journal. In a recent LinkedIn poll of 1,000 US professionals, 85% said they are considering changing jobs this year, up from about two-thirds in 2023. However, according to data from the jobs site Indeed, the number of listings for white-collar jobs has fallen below pre-pandemic levels. According to a January survey of economists by The Wall Street Journal, the US is expected to add an average of about 64,000 hires per month in 2024, less than a third of the average in 2023. Professional services and tech are expected to see some of the weakest job growth. However, some economists believe white-collar hiring could pick up later in the year if interest rates fall.
                            • While a steady economy and falling inflation have moderated concerns of a recession, some firms may still be cautious about hiring additional workers, according to The Wall Street Journal. In early January, the Labor Department announced there were 5.5 million new hires in November. Aside from the drastic dip in hiring early in the pandemic, November’s hiring activity was the weakest since December 2017, and job openings were unchanged from the prior month at 8.8 million. While hiring still outpaced total separations (layoffs, quits, retirements, and other separations) in November, firms do not appear to be in hiring mode. However, hiring is likely to pick up if recession concerns continue to wane.
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