Just-in-time staffing is newest twist in recruitment
A new type of recruitment firm has recently emerged that incorporates the technology and low cost/low touch of online staffing providers such as Upwork and Freelancer.com but whose business model looks more typical of an old-fashioned offline staffing firm.
Staffing Industry Analysts categorises these firms as “just-in-time staffing” and they represent an interesting new hybrid. Examples include ShiftGig and Wonolo in the US and Staff-Finder in Switzerland. One such just-in-time staffing firm, Sidekicker, is based in Melbourne, Australia.
These firms are essentially Web and smartphone-enabled staffing services for on-site blue collar work. They provide the services of a traditional industrial recruitment firm with online staffing technology such as two-sided digital labor marketplaces, ratings systems and algorithmic recruiting and assignment matching.
Typically, these firms are characterized by:
- Business-to-business, on-site work arrangements.
- Blue-collar occupations such as hospitality and warehousing.
- Short-term work assignments
- Hourly pay
- Often, but not always operating according to local temporary agency work law including taking responsibility for tax and social charges (e.g. acting as the ‘employer of record’ as defined in the United States).
Gross margins that are similar to staffing firms.
While it’s true that traditional staffing firm also have websites and smartphone applications, just-in-time staffing firms differ because they automate the recruiting process by letting workers more or less freely choose their assignments and use data to steer jobs toward the best workers. This is a paradigm shift from the traditional staffing model, where recruiters exercise much more control in hiring and placement decisions.
Just-in-time staffing firms also differ from online staffing firms. The former cater to on-site work and many categorize their workers as employees while the latter focus mostly on remotely performed work and typically classify workers as independent contractors.
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Staffing Industry Analysts estimated the size of the just-in-time staffing market at between USD 40 million and USD 50 million in revenue during 2015. The largest of the firms, Staff-Finder, represented approximately USD 25 million of that revenue.
Still, the size of the just-in-time staffing market pales in comparison to the larger, global temporary staffing market which Staffing Industry Analysts estimates had USD 361 billion in revenue in 2015. However, just-in-time staffing is still at an early stage of development with six of the 10 firms identified by Staffing Industry Analysts having been formed in or after 2013.
Even at this early stage, investors have noticed the space with one firm, Shiftgig, having raised a total of USD 36 million in funding and Staff-Finder having raised USD 21.9 million. These investments are a big deal because it will enable just-in-time firms to expand much more quickly. In addition, because there has been investment, it could mean there will be more firms entering the space in the next couple of months.
One difference among just-in-time staffing firms and old-fashioned staffing firms is that the average assignment length appears to be shorter. The average assignment length at just-in-time staffing firms measured by Staffing Industry Analysts ranged from four hours to one week. In comparison, the median assignment length at an old-fashioned staffing firm in North America is 13 weeks. Traditional staffing firms focus their efforts on longer work assignments as, for example, a four-month temporary assignment is likely more profitable than a four-hour shift. Just-in-time staffing firms, however, have a much lower cost model so shorter assignments are no deterrent. The most-common occupations filled by just-in-time staffing firms include food and hospitality roles, promotion/event staff, customer service/admin and distribution/logistics. Just-in-time staffing firms seem to be some of the first examples of a “hybrid” staffing model. Among online staffing firms, they are the one category that most resembles old-fashioned staffing firms. On the other hand, it’s quite possible that old-fashioned staffing firms may implement some of the features of just-in-time staffing firms into their own service offerings.
While some recruitment firms may not be interested in taking part in the just-in-time segment; it may be of interest to larger staffing providers who wish to be a one-stop shop for their customers. The ultimate purpose of just-in-time staffing is to get more of the right contingent workers deployed faster and to deliver fill rates close to 100% with as little human intervention as possible. While this model is currently used for mostly blue collar roles and for short-term assignments, speed of response and lower costs are important priorities for staffing firms operating in many other sectors of the staffing market so it is not inconceivable that we see this model evolve to incorporate a broader range of industry segments in the future.
Written by John Nurthen and initially published in the RCSA Journal. John Nurthen is executive director, global research, for Staffing Industry Analysts, the global advisor on contingent work.
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