How to win more business in a slow-growth staffing market
Competition in the staffing industry has always been fierce. But with the industry still overcoming a slump, agencies cannot rely on rising demand to increase revenue. To grow, they need to win a larger share of existing business.
This raises an important question: if everyone is competing for the same business, what actually helps an agency win more of it?
While the answer is different for every agency, there are clear steps you can take to retain more clients and land new business. The first step is to understand how trends impact the broader industry.
State of the Staffing Industry
The staffing industry is experiencing growth, albeit at a glacial pace. A recent SIA study forecasts the US market will expand by a modest 1% by the end of 2026. This puts the industry on track to reach $180.2 billion, a figure still below pre-pandemic levels. A further 2% increase is forecast for 2027.
The silver lining is that growth is returning at all, especially considering AI uncertainties and the fact that industry revenue fell in preceding years. Demand has also shifted. Many of our staffing partners report that their clients increasingly limit recruitment positions to roles with immediate need. They’re also stricter about candidate suitability and take longer to approve roles, making placements more difficult to fill.
At the same time, SIA data reveals a larger share of work is moving toward scope of work (SOW), consulting, and managed services. Under these arrangements, staffing agencies play a supportive role in helping partners assemble the teams needed to deliver a defined outcome. This differs from traditional staffing, which begins with a role that needs to be filled. Here, the starting point is the work itself. The client is buying support to get that work done, while talent is brought in as part of the delivery.
To win this work, staffing agencies must adapt their approach to support these types of project- and solution-based engagements. This shift is taking place in an environment where larger players hold significant market share. In the US, for instance, just over 200 of the largest firms control roughly 67% of the market.
Clearly, it’s a challenging environment. But there are still many opportunities to improve your positioning and outperform the competition. It starts by looking at your existing clients.
Customer Retention Remains Key to Competing
Serving existing clients can be just as important to growth as winning new ones. Their repeat business provides the strong trunk from which your agency can branch out and expand. In fact, McKinsey reports that 80% of the growth achieved by successful companies comes from generating more revenue from existing customers.
Retention depends on your ability to grow with your clients. As their businesses evolve, their workforce needs will change with them. A client that once hired locally, for instance, may begin expanding into international markets. Keeping their business may require you to build the infrastructure and expertise needed to place talent across new jurisdictions.
Your existing clients should be front of mind as we explore the factors that may be holding you back. Because solving them makes your agency as attractive to existing clients as it does to new ones.
Strategies to Help International Staffing Agencies Drive Growth
Improve Capacity and Speed to Market
As project-based work becomes more common, many clients need to scale their workforce up or down at short notice. They rely on agencies that can respond quickly, manage a high volume of placements and get workers on assignment without unnecessary delay.
That level of flexibility depends on a robust back office. Payroll, compliance, onboarding and worker support all need to run smoothly, even as demand rises.
Technology can add valuable capacity, while the right back-office partner can provide the infrastructure and expertise to scale. Both approaches can help you place more workers, more quickly, without increasing internal headcount.
Support More Multi-Country Placements
Clients are widening their search for skilled workers. Some are looking across borders because the right expertise is scarce locally. Others are entering new markets where suitable talent may be more accessible or cost-effective.
Agencies that can support placements across more states, provinces, and/or countries are better placed to grow with those clients. They can also offer a broader pool of candidates when local options fall short.
This capability must extend beyond recruitment. The agency also needs a reliable way to employ or engage workers in each market. Employer of record and agent of record services provide the infrastructure to do this, while supporting essential functions such as payroll, compliance and worker administration.
Differentiate Your Firm
Recent ASA insights highlight that employers are becoming more selective about the people they hire, often focusing on specific skills needed for immediate projects. This creates opportunities for agencies with deep knowledge of a sector or role.
Differentiation can also come from how the agency delivers. A firm may stand out through its geographic reach, its ability to support project-based work, or its record on compliance, an exceedingly important consideration we explore in the next point.
Regardless of what makes your agency special, the key is to make that difference clear. Broad claims about service or quality are easy to make and difficult to prove. Clients need a clear, specific reason to choose one agency over another.
Compete on Compliance
Compliance has always mattered; but today, growing complexity around compliance has made it a competitive advantage.
In the United States, employment law is changing rapidly. StaffingHub reports that a wide array of workplace laws have been introduced in recent years, to say nothing of intricate worker regulations in effect at the local level. Clients are, understandably, uncertain about their compliance requirements and concerned about possible exposure.
According to the IRS, businesses that misclassify workers can become liable for both the employer’s and employee’s share of employment taxes. Some states impose additional penalties. In Colorado, repeated and uncorrected willful misclassification can result in fines of up to $50,000 per worker. While these examples are focused on the US, compliance is a global issue. According to an international PwC survey, 85% of businesses feel compliance requirements are more complex than ever. And these requirements shift all the time.
When evaluating staffing firms, clients are looking for a partner who can offer certainty and risk protection. They also want a proactive partner to help them keep up with compliance changes before they have an impact.
Test Your Business: Can You Confidently Answer This RFP?
Common RFP requirements provide a useful test of your agency’s offering. From what differentiates your business to prioritizing compliance, the strategies shared above should inform your RFP. Review your offering against the following areas to see where you are ready to compete and where further investment may be required.
1. Workforce Planning
- Demand forecasting: Can you support the client’s projected hiring volumes during both peak and quieter periods?
- Recruiter capacity: Do you have enough recruiters and account resources to support the expected workload?
- Talent sourcing: Can you consistently source candidates with the required skills and experience?
- Candidate screening: Can you demonstrate a clear process for assessing, verifying, and presenting candidates?
2. Service Delivery
- Speed: Can you meet submission, onboarding, and time-to-fill expectations?
- Geographic coverage: Can you place and engage workers in every required market?
- Technology: Can your systems integrate with the client’s vendor management system (VMS), applicant tracking system (ATS), and reporting requirements?
3. Compliance & Risk
- Worker classification: Can you demonstrate a robust approach to classifying workers in each jurisdiction?
- Payroll and tax: Can you manage payroll accurately while meeting local tax and employment obligations?
- Compliance controls: Can you show how you protect the client from employment risk?
4. Proof & Pricing
- Track record: Can you demonstrate success on similar engagements?
- Pricing: Is your pricing clear, transparent, and presented in the format requested by the client?
Bridge Capability Gaps with the Right Workforce Partner
Necessity is the mother of business evolution. Even if you are not ready to expand your offering, or your current clients’ needs are already being met, you should still keep an eye on what may come next.
A client may suddenly need talent in a country you do not cover. When that happens, you should already know how you will close the gap. The right workforce partner can help.
Partners like People2.0 can significantly expand your capacity and speed by handling critical tasks ranging from onboarding and payroll to worker administration. By outsourcing these back-office functions, your teams are freed up to focus on client relationships and business development.
At the same time, employer of record and agent of record services enable you to place talent in jurisdictions and countries where you do not have a local entity. Their expertise is essential to ensuring compliance in these new markets.
For over 25 years, People2.0 has helped staffing agencies pursue opportunities and improve their competitiveness. We enable you to compliantly and quickly place talent virtually anywhere. One of staffing partners, for instance, built a $1.7M business in only one year using People2.0 as its back-office foundation.
If you’re looking to unlock growth and compete with industry giants, explore our services to learn more about what we can do for you.
FAQ
1. How can staffing agencies stay competitive in a slow-growth market?
Staffing agencies stay competitive by expanding the value they offer clients beyond recruitment. This can include improving capacity, supporting international hiring, strengthening compliance, and developing specialist expertise.
2. What capabilities do clients look for when choosing a staffing agency?
Clients look for agencies that can reliably deliver the talent they need while reducing operational risk. Capacity, speed to market, geographic reach, compliance, and specialist knowledge all play a role in the decision.
3. How can staffing agencies support international and cross-jurisdictional hiring?
Staffing agencies can support international hiring by partnering with employer of record (EOR) and agent of record (AOR) providers. These partners handle local employment, payroll, and compliance requirements, enabling agencies to place talent in markets where they do not have a legal entity.
4. Why has compliance become a competitive advantage for staffing agencies?
Clients want certainty that every placement meets local employment and tax requirements. Agencies that can demonstrate strong compliance processes also help clients reduce legal and financial risk.
5. How can a workforce partner help my staffing firm unlock growth?
A workforce partner helps staffing firms unlock growth by expanding their operational capabilities without requiring significant internal investment. This can include increasing placement capacity, enabling international hiring, managing compliance, and taking on back-office administration.
