It's the End of the World As We Know It

Posted by Jeff Pelliccio on Apr 26, 2017 9:00:00 AM

In ICS insights, hiring trends

What makes your company run so well? Is it your profit margins, or is it your employees?  Most would agree that employees are a crucial part of a company's success.  However, the types of employees you choose to hire may strike a different balance in the future. Who's dominating the workforce?  Contractors. Queue the rise of temporary staffing agencies. 

Businesses are evolving and with that, they are shedding their dead weight. They are super excited about the possibility of trimming their personnel and there's no question why.  This strategy of moving from full-time to contractors cuts costs and helps them be nimble when a further change in demand comes. It's a win for the companies, but maybe not those that crave job security. That could have unknown effects on the market, but for now, employers are happy with the results that contractors bring. 

It's everywhere you look these days in major companies like Virgin America Inc., Wal-Mart Stores Inc., Pfizer Inc., Alphabet Inc., Bank of America Corp., Verizon Communications Inc., Proctor & Gamble Co., and FedEx Corp, to list a few. These are all big companies and they are all invested in using contractors in their staffing solutions. There must be something working if so many are willing to change the way they run their business. 

What does employee even mean? 

Things are starting to move in a different direction for all. The meaning of an employee is changing and the definition of a company is changing with it. American companies are actively trying to employ fewer people. This has already happened in a few industries like apparel, but it's starting to infiltrate into many others. Those outsourced jobs are no longer sources of talent allowed to move up in the workforce.  For some companies, this could be a loss of star talent. However, the appeal of having more control over costs seems to outweigh this danger. 

This trend has been very hard to observe due to the blurred lines of where a contractor fits into job categories that are monitored by the government. In fact, government agencies are finding it very hard to track these positions, but some economists estimate contractors to be at least 20 million people. At larger firms, according to staffing executives, a number of outsourced workers can be anywhere from 20 to 50 percent of the total workforce. It's predicted that the same will happen for higher-paying, white-collar jobs.  

Full-Time Employees Won't Dominate Staffing Solutions Anymore 

An even bigger prediction out there is that within 10 years, there will be a large company that will have no full-time employees outside of the C-suite. While this prediction is outlandish, there is a move to use contractors for non-customer facing roles. Companies are looking to make things easier and cost effective, so first they look to automate, then outsource, then give it to a freelancer or independent contractor.  There is little demand for the full-time employee when it comes to these "non-essential" jobs. Hiring full-time is looked at as a last resort in these cases.  

Complete Automation May Be The Future 

It makes sense when you look at the average revenue per employee at the largest U.S. companies.  That number has climbed 22% since 2003 and that is largely due to the increasing use of contractors and temp workers. Now, many companies are looking to do the same to gain a competitive advantage. The pressure is on from high-powered executives to be up there with those who have impressive average revenue per employee numbers. Although, some might tell you that contractors are just a phase into complete automation. 

But It isn't for everyone 

While this trend doesn't seem to be reversing any time soon, some companies have already tried it and went back to the way things were before outsourcing. One of these companies was Target Corp. They believed that full-time or perm was the best way to go if they wanted a competitive advantage. Some companies believe more in their own people than the trends but to each his own. Nothing should ever be a cookie cutter solution when it comes to staffing a company.  

Companies Should Use Collaborative Temporary Staffing Agencies 

When you're looking for temporary staffing agencies, use ICS for your personalized source for contract workers. We can work with you to make sure you are getting the most out of your staffing solutions. Don't get lost in the trend or get left behind with other agencies. Find talent now with ICS today to get your company going in the direction you need it to be, even when the sky is tumbling down.