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Tight Labor Market Forcing Changes in Staffing Services.

THE TIGHT LABOR MARKET has forced significant changes in the staffing services industry, says Mary Segraves, owner of Premier Staffing of Little Rock.

"There's a lot of upward pressure on wages," she says as companies have raised salaries to attract and retain their employees, but "it has made it horrible to find qualified individuals. It's frustrating."

For Segraves, the low unemployment rate is costly because it means the work she puts into finding and training a worker is wasted if that worker quits after a few days to go somewhere else for higher wages.

Growth in the staffing industry has slowed in recent years, forcing some companies that focused on more narrow areas, such as light industry or clerical workers, to expand to other areas, such as professional or technical. Some have even formed a cross between traditional staffing companies and outsourcing companies called professional employer organizations, which became the employer of record for a company, handling all the personal issues, according to Jim Watson of People Works in Little Rock.

Staffing companies face the same problem as their clients: difficulty in recruiting new employees.

"Any worker today must be more technically proficient. Computer-use is a must. All the information technology and technical positions call for a different search method to locate workers," says Segraves.

Nationwide, the temporary help and staffing industry provides nearly 3 million individuals a day with the opportunity to choose when, where and how they want to work, skills training, and the chance to enter or re-enter the work force, the American Staffing Association says.

From the employers' side, the staffing industry helps businesses manage labor costs by providing temps with skills they need to keep fully staffed during busy times, or to fill employee absences or special assignments and projects.

According to American Staffing Association research, about 72 percent of assigned employees eventually go on to permanent jobs. "The temp-to-hire program" is Segraves' most-used plan, but, according to the Bureau of Labor Statistics, more than one-third of temporary employees now prefer alternative arrangements over traditional employment.

One of the major trends in the staffing industry, Segraves says, is the rise of independent professional workers, such as engineers and accountants, who, along with technical workers, now make up a quarter of the temporary help payroll. Office/clerical workers continue to dominate the field.

The Outsourcing Industry

Outsourcing is expected to continue its steady growth in 2000 as more companies discover the value of letting some-one else do tasks that keep a company from focusing on its core business, industry experts say.

With the recent increase in mergers and growth by acquisitions, they say, outsourcing has become even more attractive as companies find it more economical to turn back office operations over to an outsourcer rather than trying to integrate them all.

Outsourcing analysts are expecting the biggest growth areas to be in the areas of human resources because of the tight labor market, procurement and finance.

But the buzzwords in the outsourcing industry this year are application service providers (ASPs), the use of software applications, and the Internet.

ASPs are seen as a major factor in the rapid growth of outsourcing. E-mail outsourcing and disk storage outsourcing are areas that analysts believe will do well in the future, as well as web hosting or applications hosting, or back-end logistics, back-end distribution and payment services and transactions services.
 Temporary Help in Arkansas
 Temporary Help Payroll ($000) Temporary Help Establishments
1995 138,086 121
1996 155,510 122
1997 186,062 140
1998 199,007 152
1999 209,339 145
 Temporary Help Employment
1995 14,807
1996 15,842
1997 17,009
1998 17,031
1999 17,345
Source: American Staffing Association (Alexandria, VA) and the
Omnicomp Group (New London, NH)
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Comment:Tight Labor Market Forcing Changes in Staffing Services.
Publication:Arkansas Business
Article Type:Brief Article
Geographic Code:1USA
Date:Feb 14, 2000
Previous Article:Businesses Must Have Goals When Outsourcing.
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