Three years after the Covid-19 pandemic began, US staffing firms can be proud of the role they have played in supporting and growing the US economy through a turbulent period. The US staffing industry soared 32% in 2021 and 14% in 2022 to reach an extraordinary $212 billion, according to SIA’s September 2022 US Forecast, driven by double-digit revenue expansion across nearly all skill segments.

Nevertheless, as all economic expansions must eventually come to end, US GDP is projected to edge up a mere 0.3% this year, according to The Conference Board, as inflation and high interest rates act as a brake on growth. Accordingly, revenue growth rates in the staffing industry decelerated noticeably in the fourth quarter of last year. This article highlights observations from a handful of publicly held staffing firms regarding their most recently completed quarter and shares comments on their strategic positioning for this year and beyond.

Declines in Commercial Staffing

The sharpest reversal of fortune appears to have impacted industrial staffing. In the fourth quarter of 2022, TrueBlue reported a 13% year-over-year decline in its PeopleReady division and a 2% decline in its PeopleManagement division that delivers large, on-site staffing engagements as well as commercial drivers. TrueBlue noted weaker demand in transportation services and retail but stronger demand in the construction, manufacturing, hospitality and green energy sectors.

Similarly, Kelly Services reported that fourth-quarter 2022 revenue in its professional and industrial division decreased 17% year over year. This division supplies primarily blue-collar and skilled-trades workers and saw slowing demand among clients in manufacturing and industrial distribution. Also in the fourth quarter, ManpowerGroup reported that its US Manpower brand staffing revenue decreased 8% year over year as part of a progressive pullback in demand experienced over the quarter.

Meanwhile, Robert Half reported an 18.8% year-over-year decline in its administrative and customer support division (formerly OfficeTeam) after adjusting for billing days. Robert Half explained the decline was driven by lower demand from public-sector clients, fewer open enrollments and a willingness for clients to cut staff in these areas as part of cost reduction targets.

Professional Staffing Trends

In contrast to the aforementioned trends, Robert Half reported 2.9% year-over-year growth in its finance and accounting staffing division. In fact, staffing revenue related to manager and higher positions in finance and accounting grew by double digits in response to strong demand. Meanwhile, revenue related to IT staffing was roughly flat, held back by more volatile demand among small and midsize clients.

Kforce reported 8.5% year-over-year growth in its IT flex staffing division in the fourth quarter, a deceleration from double-digit growth in prior quarters. Kforce continued to see strong client demand for cloud migration, user interface, data analytics and project management staffing. The average bill rate was $90 per hour. In a similar pattern, ManpowerGroup’s Experis division saw 1 % revenue growth in the fourth quarter, mainly due to a high base of comparison in the prior year’s quarter.

A bright spot for Kelly Services was its 43% year-over-year organic revenue growth achieved by its education division, driven by strong demand for staffing at K-12 schools as well as growing business from the daycare and higher education sectors.

Revenue was lower in the fourth quarter at AMN Healthcare and Cross Country Healthcare as health system clients focused on cost reduction initiatives and bill rates edged down. Nevertheless, volume and bill rates at both staffing firms remained substantially above their pre-pandemic levels. In the fourth quarter, AMN reported a 17% year-over-year decline in revenue, while Cross Country noted a 2% decrease when including revenue from several acquisitions. AMN reported travel nurse revenue declined 24% year over year, while allied revenue rose 6%. Cross Country reported nurse and allied revenue declined 5%.

Technology Investments

A common theme mentioned by publicly held staffing firms was their strategic commitment to investing in technology to boost efficiency and enhance their candidate and client experience. TrueBlue shared that its PeopleReady division continues to strive for a digitized model of staffing via its JobStack app, which has achieved 90% candidate adoption. TrueBlue also announced it will soon deploy additional JobStack functionality including faster initial registration, easier timekeeping and assignment acceptances that can be granted conditionally while certain compliance steps are pending.

In healthcare staffing, AMN Healthcare noted a strategic plan to allocate approximately 2% of revenue to capital expenditures, with a heavy focus on digital innovation. Similarly, Cross Country Healthcare spent an estimated $16 million on IT projects in 2022, including a new candidate portal and a vendor-neutral VMS technology offering for clients.

Robert Half noted that recent investments in artificial intelligence have been transformative. Management explained that the term “ART” (for Al Recommended Talent) has become a household term internally, as it has enabled recruiters to instantly identify the bestfitting candidates out of Robert Half’s database of roughly 30 million individuals. As a next step, work is currently underway to establish an “ARC” process by which Al technology will recommend the best client for a given candidate.

No matter how the economic cycle plays out this year, it is clear that staffing firms targeting all types of staffing segments are making heavy investments in technology to innovate their processes and operations. Staffing firms small and large would be wise to carefully think about how their own technology stacks and roadmaps tie into their overall strategy for the near term and beyond.