If the stock market is any indication - and it is - the staffing
industry is in for some tough times in 2008. I'm getting calls from
friends in places like Dubai and France asking how bad it's going
to get. The Hang Seng was down more than 8 percent the other day
alone, and the staffing stocks in the U.S. markets have already
been cut in half over the last six months.
Our clients generate roughly a $10 billion run rate and although
that represents a small portion of the overall U.S. staffing
industry, it's enough for some statistical observations. The
downturn started in earnest in the second quarter of 2007 and
mostly hit temporary staffing while direct hire stayed strong. By
the 4th quarter, direct hire began to take a hit and temporary
staffing stabilized. All trends point to an awful 2008 market for
direct hire and simply a crummy one for temporary staffing.
That's enough to get in a defensive mode. Fortunately, we have the
staffing crash of 2002 to learn from. Over the years since those
unpleasant days, I've gathered the stories from those that survived
or even thrived in the hard times. Some common themes:
- Cut out the frivolity beginning with the owner iron. This is
not the time to buy that Mercedes. Already got one? Sell it and buy
an Altima. Show the team you're the first to make sacrifices.
- Outsource. Eliminate all possible non-revenue generating
positions. Outsource computer operations, payroll processing, tax
filing - everything - and eliminate expensive accounting
staff.
- Negotiate. In a weaker economy, your customers will look to you
for price cuts. Be prepared. Have your negotiating agendas ready.
Don't expect that your clients will determine on their own the
overall value you bring to the table.
- Top-grade. You're in a much stronger position now with vendors
and employees than you were two years ago.
- Capitalize on competitor mistakes. In 2002, when all seemed
hopeless, the bigger staffing companies stumbled badly. They let
customers down left and right. Example: one of our clients picked
up a high-margin, $80 million contract that Adecco fumbled. You
don't get those chances in a strong economy, so take advantage
now.
By Gregg Dourgarian
President and CEO, TempWorks Software