The 3 Hottest Growth Opportunities in Staffing

growthThere’s no denying that the way talent is recruited, retained and evaluated is changing before our eyes. What does that mean for tech companies, consultants and other service providers in the space? Growth opportunities. The vendors that can help organizations navigate and optimize today’s new way of handling talent are primed to experience significant business growth. As a result, venture capital and private equity firms – where growth reigns supreme – are in hot pursuit of opportunities to finance and advise the most innovative of these providers on their journey to becoming market leaders. Here are three trends creating the hottest prospects for growth and investment.

1. Increased decentralization.  Managers are losing visibility into project milestones, quality of output and employee costs.  They need real-time analytics to help them make data-driven decisions about human capital and productivity.  Investors have their eyes on HCM software and the related ecosystem of service providers and integrators to see who’s on their way to capturing this market. Vendors can differentiate themselves by positioning theirrolein the talent managementprocess as a strategic business function. Reducing hiring costs is the price of admission, so focus on enabling greater visibility and increasing productivity to prove the ROI.

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2. Winning the war for talent. Despite the current unemployment rate, labor markets for highly skilled professionals are tight.  Investors like us are excited about the full spectrum of talent acquisition and talent management outsourcers, but those that focus on professional skill sets and, most importantly, can demonstrate superior execution in helping clients recruit and retain skilled employees will be able to capitalize the most on this opportunity.  To strengthen relationships on both the supply and demand sides of talent, recruiting firms should focus on a limited set of high-demand skills and develop deep domain expertise.

3. Growth in independent contractors and the project economy. Economic and regulatory uncertainties have increasingly caused organizations to embrace contingent labor over full-time employment.  Aside from cost savings, employers are able to bring in highly specialized skill sets on a just-in-time basis.  This wave is swelling so quickly that by 2020, it is expected that more than 50% of the workforce will be independent, according to the independent contractor workforce management company, MBO Partners.  Managed service providers, vendor management systems, payroll and other service providers that help companies organize and access talent pools, as well as navigate insurance, risk, compliance and payments, are well-positioned to benefit from these trends and attract investors.

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Sasank Aleti
Sasank Aleti is vice president of LLR Partners. He invests in and advises middle market growth companies in the human capital management industry. He can be reached at saleti (at) llrpartners (dot) com.

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3 comments
Gene Zaino
Gene Zaino

Great article Sasank and thanks for the reference to MBO Partners.   

ToddBlackofOptomi
ToddBlackofOptomi

You are spot on with your comments on Winning the war for talent.  At Optomi, we focus on a finite set of skills within the software development life cycle which allows us to build a deep network of candidates with the most in-demand skills.  It's working for us.

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