Temporary Labor – Procurement Best Practices & Sourcing Strategies

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Global Temporary Labor Market Size

According to a recent ELINT Market Research analysis, the global temporary labor market is undergoing a positive transition despite the labor market’s highly turbulent fluctuations. Over the last two years (2020-2021 and 2021-2022), the international staffing industry has developed significantly, displaying its ability to rebound and flexibility. According to the research, the market anticipates an early slump in 2023 due to rising interest rates, less government spending, geopolitical events, and a slight increase in labor wages. On the other hand, the study report forecasts a promising outlook for 2024-2025, with several players designing solid strategies to stay persistent amid critical conditions and focusing on business expansion.

With substantial shifts in workforce demographics, increased demand for reliable employment opportunities, and broader global economic stability, the temporary labor market is poised to reinstate its higher growth rate. Iziwork’s recent success in raising funds of USD 43 million for its temporary work platform reflects a rise in investor confidence in the marketplace’s promising prospects. The financial investment asserts the scope for creativity and extension in the temporary labor industry to meet the market’s shifting demands.

Market Definition

Temporary labor is a novel concept in which skilled workers are employed for temporary or short-term assignments. In these scenarios, aspirants work for the organization for a specified period or on specific projects, providing employers and employees with much-needed flexibility. This type of labor is in increasing demand as organizations seek to broaden their operations cost-effectively.

Temporary Labor Market Drivers

• Upgraded Economic Productivity

In today’s dynamic marketplace, businesses must have robust cost management processes. For such things, temporary labor is the most cost-effective way, enabling companies to recruit staff as per the demand of that time. These strategies perfectly complement the growing pattern of businesses adopting cost-optimization solutions to stay relevant and competitive.

• Exploration of Specialized Skills

Short-term assignments can require acquiring skill sets that are utilized in the business temporarily. This demand is supplied by the temporary labor company, which provides access to a varied work pool with unique skills. Employers can use a talent pool for certain activities instead of making the long-term commitment of hiring permanent personnel.

• Market Uncertainties

Due to economic and market instability, businesses need help hiring versatile personnel. In a temporary labor industry, organizations can adapt to changing scenarios. Companies can change their labor composition to respond to changing economic circumstances, ensuring flexibility in the face of unexpected setbacks.

Temporary Labor Market Challenges

• Expertise Disparity

Seeking a workforce with the required skill set for temporary employment presents several challenges that harm operations. Companies must work with highly dependable staffing agencies and execute multi-level recruitment procedures to find temporary workers with the necessary abilities to meet project expectations.

• Regulatory Adherence

Organizations in the temporary labor industry require aid in understanding complex labor legislation and assuring regulatory compliance. It is critical to be informed of legal obligations to prevent legal hurdles and comply with ethical work practices.

Temporary Labor Market Opportunities

• Global Talent Acquisition

The temporary labor market is precious to organizations of all sizes because it gives access to competent resources worldwide. Companies can bring more innovations and increase overall production with such expansive capabilities and a mature workforce.

• Avenues for Skill Growth

Individuals can increase their skill sets by taking on temporary job assignments requiring higher skills. It makes them more readily available to take on higher-profile tasks with the support of their short-term employment experience.

Temporary Labor Market Trends

• Rising Remote Work Preference

The growing preference for remote work among the younger population is creating a favourable outlook for the temporary labor market, enabling all scales of companies to hire a talent pool from diverse regions. The remote work settings allow companies to make an ideal combination of their local talent and global skillsets.

• Gig Economy Integration

With the continuous evolution of the gig economy, a large younger population aims for flexible and temporary employment options. It forces companies to shift their focus per the growing demands of gig workers.

Temporary Labor Market Segmentation

• End User: The research report classifies the market into Healthcare, FMCG and retail, IT, Manufacturing, BFSI, Construction, Logistics and Telecom.

• Labor Type: The research report segments the market into Skilled, Unskilled, Management, Clerical, and Professional.

Regional Dynamics

Economic stability, technical improvements, and governing structures in high-market maturity regions aid temporary labor industry growth. The United States and the United Kingdom are the ideal regions with all these facilities. Agriculture, construction, and economic swings impact the Australian market. Japan connects solid foundations with developing gig economy trends driven by demographic shifts and focusing on flexibility in work. The Netherlands has a thriving economy propelled by competent workers and innovative technology thanks to progressive labor rules. Tourism, government policies, and industrial settings impact temporary labor markets in middle-income nations such as Spain, the UAE, Argentina, Poland, Thailand, New Zealand, and Israel.

Procurement Sourcing Models

By outsourcing the entire process to a single vendor, the Master Vendor method simplifies and streamlines processes. On the other hand, the vendor-neutral strategy encourages impartiality and competition by utilizing many vendors via a Managed Service Provider (MSP) to increase cost-effectiveness. The Hybrid model, which includes elements of both, allows organizations to engage a primary vendor for critical activities while remaining flexible via an MSP and secondary vendor pool to accommodate changing labor demands.

Recent Activities in the Temporary Labor Market

• Adecco, the world’s leader in staffing solutions, acquired AKKA, an established pioneer in the engineering and technical consulting businesses, to become the largest temporary staffing agency. Adecco’s $2.4 billion deal indicates the company’s desire to expand its global reach and broaden its products and services.

• United Parcel Service (UPS) has announced plans to hire more than 100,000 contract employees in the US. This significant hiring push will increase the company’s workforce to prepare for the next holiday season, providing seamless operations and delighted customers. The timely addition of workers strategically placed to meet seasonal demand is believed to enhance productivity and customer satisfaction.

Temporary Labor Market Players

Among the leading players in the temporary labor market are Adecco, Allegis Group, Kelly Services, Inc., ManpowerGroup Inc., Randstad N.V., Hays plc, Robert Half International Inc., Express Services, Inc., Westaff, and Persol Holdings Co. Ltd. These prominent companies serve as vital intermediaries, connecting businesses with qualified temporary labor. These companies offer a variety of staffing choices to firms in various industries due to their extensive networks and skills.