What happens when you mix together economic uncertainty, fierce competition, technological innovation, and disruptive business models? You get a radically evolving landscape, a lot of confusion, and an incredible opportunity for staffing and recruitment agencies.
Is a recession around the corner?
Are we headed for a recession in 2020? Recruitment professionals certainly think so. Forty-five percent predict a recession, compared to just 35 percent who don’t. European respondents are the most concerned; more than half of all DACH and UK&I respondents expect a recession. And while it’s true that some have been predicting a recession for a while, recruitment professionals are significantly more convinced of a recession this year—just 30 percent predicted a recession last year.
Fittingly, economic uncertainty is the top macroeconomic or political challenge for respondents in 2020 by a landslide, with 64 percent citing it as a top challenge. That is to say, even respondents who predict a recession-free 2020 are still concerned about a turmoil-ridden year ahead.
Recession or not, the skills shortage and other woes loom large
If you are one of the 35 percent who doesn’t expect an economic downturn in 2020, you’re still probably concerned about the low unemployment rate and skills shortage.
Year after year, recruitment professionals say the talent shortage is the biggest challenge in the industry, and year after year, respondents say that it’s only getting worse. Fifty-one percent say it’s worse now than it was five years ago. The skills shortage is the top hiring challenge for 2020, and the top challenge overall.
What are your top overall challenges for 2020?
The skills shortage has made it harder than ever to find qualified candidates and the vast majority of respondents (77 percent) say that their clients need to offer more compensation to compete for candidates.
Of course, the talent shortage isn’t the only challenge necessitating change. Popular self-service technologies like online and freelance talent platforms have already left an indelible mark on the industry and they aren’t going away. In fact, 65 percent of respondents expect the demand for new labor models (e.g., freelance/gig, SOW) to increase.
As internal competition within the industry heats up concurrently with talent shortage woes, winning—and retaining—candidates and clients may become more difficult than ever.
The opportunities amidst the chaos
With a possible recession on the horizon and a premium on talent, what’s a recruitment business to do? Overwhelmingly, respondents believe that the answer lies in technology and innovation.
All aboard the digital transformation train
Of every single topic discussed in this year’s trends report, respondents were most unified in agreement on the importance of digital transformation. Digital transformation—defined here as the integration of technology into all areas of your business for the purposes of improving operations and the way you deliver value to customers—has nearly unanimous approval from industry professionals.
Eighty-three percent say digital transformation will help their business and 86 percent say that businesses must embrace it if they want to remain competitive.
Respondents are similarly optimistic about artificial intelligence (AI), one of the most visible manifestations of digital transformation. Fifty-seven percent of respondents expect AI to have a positive impact on candidate and client relationships, compared to just 17 percent who disagree.
Reskilling—also known as retraining and upskilling—is the process of helping workers turn outmoded skills into ones that are highly applicable to the modern world. By investing in online courses, training academies, and apprenticeship programs, recruitment agencies can transform the careers and lives of candidates, all while filling positions through the creation of newly-qualified talent pools.
Given the urgency of the talent shortage and the demand for candidates, reskilling is an incredibly appealing option for agencies that creates a rare win-win-win: happy clients, grateful candidates, and successful staffing firms.
Big changes or big talk?
It seems like everyone is in agreement: embracing technology and innovation is the brave new way forward in the recruitment industry. Not so fast. While there’s no doubt that respondents are excited about the possibilities of concepts like digital transformation and reskilling, there’s less evidence to suggest that businesses are doing anything about them.
Take artificial intelligence. AI is the number one trend recruitment professionals say they’re excited to follow in 2020, yet 78 percent of respondents say they have a limited understanding or no understanding of machine learning.
The gap between enthusiasm and activity is even greater for reskilling. Three-quarters of respondents believe reskilling is an effective way to address the talent shortage, yet a staggeringly low four percent say reskilling is a priority for 2020.
This trend is reflected in smaller-scale opportunities for change as well. One of the first steps towards embracing digital transformation is to improve adoption of your staffing technology. Yet a fifth of all respondents cite little or no adoption of staffing technology.
Maybe the problem is with your staffing technology provider? Even those who are unhappy with their provider stay put because of a hesitation to make a change: respondents cited disruption as the top reason that they don’t change staffing technology providers.
Recruitment professionals anticipate new challenges in the year ahead and they’ve even found solutions to navigate these obstacles, yet execution still remains uneven at best.
Capitalizing on the opportunities in plain sight
What does all of this mean for your business? Staffing and recruitment firms have a unique (and likely short) window of opportunity in 2020: there’s near-unanimous industry agreement on the right steps forward, but most businesses are still unable or unwilling to enact the necessary changes to succeed. Those businesses that do embrace technology and innovation will be at a considerable competitive advantage for 2020 and the foreseeable future.