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GRID 2022: Staffing Industry Trends Overview

2021: A triumphant rebound led by digital transformation

Heading into 2021, staffing firms were cautiously optimistic on the heels of a challenging 2020. Winning clients was a top priority and agencies seriously stepped up their investment in digital transformation.

A lot has changed in a year. Agencies enjoyed a strong performance in 2021, but an increased talent shortage has re-emphasized the need for candidate acquisition. Clients are not a top-three priority for the first time in a decade. The one thing that hasn’t changed? Agencies have once again taken a strong step towards embracing digital transformation: for the second straight year, adoption has nearly doubled.

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What does 2022 look like for recruitment professionals?

Candidates dominate the agenda for 2022. The talent shortage is the top challenge after a hiatus last year. Candidate acquisition is the top priority, and candidate sourcing is the top recruiting obstacle. How are firms solving their candidate acquisition challenges? Digital transformation. After a breakthrough year in 2021, it is again at the top of minds for 2022 as the second overall priority for 2022. The investment appears to be paying off: firms who have already embraced digital transformation reported a stronger 2021 and higher expectations for 2022.

Recruitment Industry Outlook

Firms enjoyed a fruitful 2021 after reporting record-low performance in 2020. Most agencies maintain an optimistic outlook in 2022, although less than half of agencies plan to increase their investment in technology or their operating budget.

Compared to 2020, how has your business performed in 2021?

2020 was a historically challenging year for recruitment agencies, with 2 out of 5 agencies reporting year-over-year revenue losses. For most agencies, 2021 represented a tremendous rebound. Three out of five respondents reported revenue gains in 2021 and just 1 out of 7 reported year-over-year losses.

What characteristics correlated with significant revenue gains for staffing and recruitment businesses in 2021? Firms specializing in IT/Technical clients and firms that reported multiple verticals reported the strongest performance in 2021, with 68 percent of respondents in each group reporting a YoY increase in revenue. Light Industrial firms were on the other end of the spectrum with just 50% of respondents reporting YoY revenue gains from 2020.

On a global scale, North America and APAC respondents were more likely to report revenue gains than European respondents. APAC respondents led the pack with 68 percent reporting revenue increases, while just 58% of DACH respondents reported the same.

How do you expect revenue to change in 2022?

Roughly 70 percent of respondents expect revenue to increase in 2022. Above all else, an agency’s confidence in its talent acquisition propositions impacted its expectations for the year. Respondents who cited candidate sourcing as a strength were 21 percent more likely to predict revenue gains in 2022 than those who rated their sourcing as below-average.

 

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Respondents are slightly more likely to invest in technology than expand their operating budget in 2022. Notably, plans for investing in budget and technology investments are both down from 2021, despite more businesses reporting revenue gains.

How Will Your Operations Budget Change in 2022?

How Will Your Technology investments Change in 2022?

Top Priorities

The top priorities for agencies in 2022 reflect a departure from years-long trends. For the first time in a decade, clients (either winning new business or managing client relationships) are not a top-three priority for agencies. Talent acquisition is again the top priority for agencies, reflecting the talent-first environment of the industry. Additionally, the findings reveal a seismic shift in the number of respondents who selected digital transformation as a top priority.

 

What are your top priorities for 2022? (Global Respondents)

Top Challenges

After a decade of agencies citing the talent shortage as their number-one challenge, Covid-19 overtook it as the number one obstacle in 2021 for all regions. They remain the top two challenges but have swapped positions.

 

What are your top challenges for 2022? (Global Respondents)

Talent Engagement

Candidate engagement has always been a top priority for firms, but it has become a singular focus in 2022. How are firms handling the shortage and what approaches are they taking?

 

Is there a talent shortage?

Across all regions, roughly half of respondents cited a talent shortage, but the response varied greatly by staffing type and verticals served: 72 percent of all temp firms and 82 of light industrial firms reported a shortage.

 

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What approaches are you taking in light of the talent shortage?

How are agencies combating the talent shortage? On the ground level, recruiters are reinvesting in relationships. Leaders report upping redeployment efforts and leveraging technology to ease their sourcing load.

Rather than simply focusing on new talent, we have reached out to our database of over 50,000 candidates that we know are working within a relevant industry to check in and ensure we have up-to-date information on the types of roles they are looking for
Global Respondent GRID 2022
Staying informed on what it takes to pull someone from a job. Lots of training on the different strategies. Getting creative. Informing our clients what it will take to get the kind of candidates they are looking for.
Global Respondent GRID 2022
Only accepting assignments that are competitive from a compensation and opportunity perspective and where the client is cognizant of the tight labor market and the need to move with urgency.
Global Respondent GRID 2022
We are trying everything possible, including evaluating or using new platforms and tools, hiring more recruiters, and strengthening our brand to capture more candidate's attention.
Global Respondent GRID 2022

Top Recruitment Lifecycle Challenges

 

Once again sourcing tops the list of recruitment lifecycle challenges. With the exception of requirement gathering, many of the top challenges can be streamlined through automation, and indeed many firms have reported newly automating these processes in 2021.

 

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What are the greatest obstacles to providing a better candidate experience?

What stands in the way of an incredible candidate experience? Nearly everything. Respondents cited a long list of obstacles, ranging from limited resources to non-communicative clients.

We have quite a few manual processes that are a time-suck from the team. However, we have a parent company that has other more important tech issues, so we are on the "back burner" for now.
Global Respondent GRID 2022
Lack of qualified candidates and inefficient talent sourcing.
Global Respondent GRID 2022
I find that there are a lot of talented people who don't know what kind of job they need and whether the job is suitable for them, which makes my job of collecting needs more difficult.
Global Respondent GRID 2022
In this market, talent has a short shelf life. We must stay engaged with them and provide updates on the hiring process sometimes we don't have the client feedback we need to do this.
Global Respondent GRID 2022

Client Relationships

The landscape for winning and maintaining clients has changed radically in the last two years. Amidst the peak of the pandemic in 2020, respondents cited winning business as their top overall priority. Less than two years later and client relationships don’t rate as a top priority, and the client-related challenges that agencies face have shifted dramatically. Still, building relationships with clients remains an important skill, and most respondents believe they do this well.

Is your agency above-average when it comes to handling client relationships?

The vast majority of respondents believe that they are better than their competition at managing client relationships. Past reports have found that the majority of recruitment businesses don’t use NPS or otherwise quantify client satisfaction, so there may a discrepancy between perception and reality in some cases.

 

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What is your biggest obstacle to winning new clients?

The top client challenge of 2020, hiring freezes, is significantly less of a problem for businesses heading into 2022, but competition remains as fierce as ever.

What is your biggest obstacle to retaining existing clients?

Respondents increasingly cite challenging or unreasonable job requisitions as a source of conflict. When asked to describe what makes a requisition challenging, recruiters and other practitioners cited non-competitive pay for the position as the top factor.

 

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Digital Transformation

Digital transformation is the use of digitization, automation, and eventually AI to change the way your business operates. Two years ago, just a quarter of recruitment agencies had a digital transformation strategy in place. Now the overwhelming majority do. Agencies with a digital transformation strategy in place were more likely to report revenue gains in 2021 and are more likely to anticipate revenue growth in 2022.

Does Your Agency Have a Digital Transformation Strategy or Plan in Place?

Digital transformation adoption has absolutely exploded over the last two years. Industry-wide adoption increased 95 percent from last year, an incredible 236 percent from two years ago, when just 25 percent of firms reported the use of a digital transformation strategy or plan.

What Are Firms Automating? (Global Respondents)

Given the importance of talent acquisition, agencies that automate sourcing may find themselves at a strategic advantage in 2022.

 

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Adopting a Digital Transformation Strategy

What’s stopping agencies from embracing digital transformation? Respondents cited resistance to change and a lack of resources as the most common obstacles. Respondents cited a wide variety of benefits but increased productivity and the ability to reallocate time saved from manual work emerged as the most common themes.

What are the biggest roadblocks to adopting a digital transformation strategy?

“Speed. You weren’t fast enough and now the goalposts have shifted.”

“Lack of resource availability and resource management plans.”

“I think the biggest roadblock is the need to have a plan.”

“The biggest hurdle is acceptance and adoption.”

What have been the greatest benefits of embracing digital transformation?

“Productivity from our recruiters and office admins has increased.”

“Faster responses from clients and candidates.”

“We’re able to focus on other areas of the business.”

“Matching talent to job requisitions more seamlessly.”