Companies and individuals need to hire staff. Finding the right staff is hard. Staffing agencies promise to make that easier. We have gone from hiring with posters on the street to staffing agencies to online platforms. But a lot has changed in the recent years.
Take the 56-year-old temporary staffing company Tempositions Group of Companies, a leading company offering temporary staffing across various verticals from education to legal to office & administration. With an annual revenue of over $100 million they are valued at about $100-$150million.
On the other hand, compare that to Wonolo, a 7-year-old company that provides mostly light industrial staff has raised over $50 million in investment and is valued at over $400-$500 million. Why is it that this 7-year-old company was able to raise $50 million in private investment? Wonolo with a fraction of revenue, was valued four times higher than Tempositions? The reason is that Wonolo uses an On-Demand Staffing Platform to automate the deployment of its staff. It uses automation and AI to deploy at scale temporary staff as compared to temporary staffing companies which use recruiters to advertise, find, interview, and deploy candidates.
On-Demand Staffing allows economies of scale that traditional staffing companies just cannot have. These platforms have another major advantage when compared to traditional staffing. But to fully grasp that, we will have to look at the evolution of the staffing industry and how we got here. What other players have been involved and the trends underlying the industry.
Listing Era: In the late 90s and early 2000s, we saw an advent of listing platforms with the offer to provide a marketplace where companies looking to hire can connect with individuals looking for jobs. Here we saw the debut of sites like Craigslist and Monster. Suddenly a wave of euphoria and fear took hold of the staffing industry. Some thought platforms like Monsters would eliminate the need for staffing agencies, while others thought it would give a boost to staffing agencies. The latter obviously proved to be correct. This is because listing platforms made it easy to do distribution and discovery but there was still a lot of work before the right candidate was found. So companies had to outsource this work to other specialized companies.
Curation Era: The second era of the curation platforms was UpWork, Freelancers, Care.com, and ZipRecruiter to name a few. These platforms did mild curation of the staff or relied on the wisdom of the crowd to curate the workforce. Hence instead of posting a job to an open world, where anyone can apply, on these platforms you could see the past reviews of the candidate and hire them with more confidence and ease. However, since the jobs in these platforms are so diverse and each client has a different preference for what they would like in a given candidate, this approach could not be transferred to other sectors of jobs. The advantage of the curation platforms was that clients could get high-quality staff with much less work than trying to find them outside, but there was still work to be done.
On-Demand Era: Clients needs have changed. Clients need to hire now and effortless. Client trust the platforms to choose the candidate that would be best for them and take all logistical responsibility of it. Clients want staff now, at short notice not having to plan for a month or a week in advance. That gave birth to On-Demand Staffing Platform: These platforms focus on specific jobs and standardize what it means to be good at this job. What are the different preferences that each client might have for this job? Take a Nurse for example or a Waiter. The platforms break down Waiter into multiple categories like "Fine Dining Waiter," "Fast-moving Restaurant Waiter," etc... They have a special vetting process that ensures a standardized vetting and grading of candidates for each job type along with a standard bill rate and pay rate, allowing for the economies of scale Once this is done, the On-Demand Staffing Platform is ready to take over the market. The main benefits are: Request a staff for a given job and have them arrive within minutes or hours at max. A client can have the staff they need at a moment's notice and at a speed that cannot be matched by any other alternatives. Instead of posting jobs, screening resumes, doing back and forth interviews, and background checks. Now recruiters/clients can just post a request and have the staff. It can't get any easier.
The combination of these two benefits makes On-Demand Staffing ripe to take over the traditional staffing as we know it. It is the first time in history that when hiring a candidate the trust is shifted from the candidate themself to the platform. While previously we would interview the candidate to ensure we have the right fit, we now trust the platform to ensure they send us the candidate that has the right fit.
For On-Demand Staffing the key is focus.
Staffing agencies are really broad and can handle any hiring requirements for a given client. The downside is this means they must conduct individual hiring operations for each order from the client.
Curated platforms usually have a focus on industry or sector. Example: ZipRecruiter focuses on Hospitality, UpWork focuses on Tech, 99Designs focuses on Design and Creative. You can only post jobs for those specific sectors. It's broad but not that wide open.
On-Demand Platforms: Have a focus on specific jobs. Each job title is specialized and refined to perfection. Which allows for scale and quick deployment.