Automation and Staffing Agency Job Risks

Business Team Pulling Rope Against Robot With Artificial Intelli

In June of 2018  Staffing Industry Analysts (SIA) did a survey of job risk perceptions of internal staff members of staffing agencies. The survey’s question was “What is the risk that your job will be replaced by automation  (AI or Robotics) in the next 10 years?”

Here are the results. 43% responded that there was “no risk” while 48% said the risk was “low”. Only 9% thought the risk was “High”. So, 91% saw little or no personal job risk due to automation over the next 10 years. That is surprising.

That was just less than 3 years ago but I wonder if the perceived job risk due to automation would be higher today? More than a year has been consumed by the chaos of the pandemic, which had its own job security issues, so it’s hard to tell.

But this year, 2021, in another survey of staffing companies’ core staff by SIA, on a related subject (“What should be Automated”), they ended with a kind of addendum by referring to their 2018 “job risk” survey and calling attention to staffing agency staff’s low job risk perception due to automation.

“Despite increasing usage of technology by staffing firms, as well as rapid growth in automated forms of staffing such as human cloud platforms, staffing firm internal staff see little likelihood that such changes will affect their future job prospects.”

It seems that SIA was also surprised by the overwhelming (91%) lack of serious concern over job risk due to increasing automation. Reading between the lines, they seem to disagree with their survey respondents and spell out two major areas of automation that, perhaps, should be concerning to them, especially, as the survey question specifies, “in the next 10 years.”

So, who is right, SIA or the internal staff of staffing companies?

SIA’s two major areas of concern are “the increasing use of technology by staffing firms”, i.e., staffing software,and “the rapid growth of automated human cloud platforms”, i.e., gig economy platforms like Fiverr, Uber, Upwork, etc.

Let’s take a very brief look at recent developments in each of the categories of staffing software and the gig platforms. Our purpose will be to not only see where they are today but to get an idea of where they might be in 2028, i.e., “in the next ten years” from the date of SIA’s 2018 survey.

Finally, we will give our own estimate of the potential for internal staff job loss in the traditional staffing company due to automation or robotics.

Staffing Software

Todays staffing software is an increasingly comprehensive front and back-office solution that automates hundreds of details necessary to run a modern staffing company.

Because staffing software has grown up with the industry, the actual impact on job loss has not been much of an issue. In fact, individual companies have grown, and jobs have been created because of the automation enabled by staffing software. So, it is easy to understand the industry’s internal staff lack of concern about the potential for job loss due to automation.

Yet the desire/demand for much more automation is evident in the two recent SIA surveys in 2019 and 2021. Since they were both related to automation the 2021 survey reported on both their surveys

SIA’s 2021 survey of “What should be automated”, covered two areas 1. Functions related to interfacing with temporary workers, and 2.functions related to interfacing with clients.

The 2019 survey of “what should be automated” in their own internal operational functions.

The 2021 results suggested 15 areas for interfacing with Temp workers, 11 for clients interfacing   and the 2019 survey suggested 12 areas automation (or outsourcing) in their own internal operations.

When you look at all three results it is significant that many (but not all) are already a reality in many software packages in 2021.So, staffing software is, despite a certain “maturity”,increasing its development.

And while some of these developments might be considered routine and incremental, some like the almost complete automation of the Onboarding process and Benefits Management like health care, and 401k type accounts are major internal work savers that could have, coupled with other software work-saving developments,have an effect on job loss “in the next ten years.

But still, if I were an internal staff member of a staffing company, I might well consider these software (automation) developments as securing my job by making our company more professional, competitive, and profitable.

So, were the respondents to SIA’s 2018 survey right in believing that automation will have little or no effect on job loss over the next ten years?

Let’s take a look at the entire picture before we decide on what the next few years may bring about.

The rapid growth of the Gig Platforms.

While the growth of the staffing industry and its staffing software (automation) has grown together incrementally over many years, the same is hardly true of the “automated forms of staffing such as human cloud platforms”.

These have come on the scene in a revolutionary manner. They represent very well-funded, cloud-based,web platforms that allow thousands of transactions to be simultaneously negotiated using state of the art software.

Any freelancer can, without any cost to themselves, set up a profile with work history, pictures, skills, experience, portfolio, references, ratings, languages spoken. Briefly they can open a business for nothing, and the platform will provide the customer traffic.

Actually the freelancers themselves provide or attract much of the traffic because when you have millions of skilled freelancers on a website ready to bid on thousands of different jobs, clients will come looking for them.

Example: Wikipedia reports that Upwork Global Inc. has over 18 million registered freelancers and five million clients.Over 3 million jobs are posted annually worth $1 billion. And that is just one platform.

Their products are not only digitized for electronic delivery worldwide, but as most everyone knows who has heard of Uber, Lyft or GrubHub, that other gig platforms deliver personal services locally as well.

You can also hire a massage therapist in 51 cities in the USA (Soothe), hire a caregiver (Care), hire a babysitter(UrbanSitter), rent a home(CouchSurfing), deliver goods(from groceries to heavy equipment via “Shipt”), hire an office project consultant (Catalant), Build a website (Fiverr), hire a plumber(Homeadvisor), a software developer (Gigster), hire a dogwalker (Rover), etc. etc. etc. Every year the list keeps getting longer.

So, this is where I see the “job threat”via automation coming from over the next 10 years. And, not only for the in-house employees of staffing companies, but the staffing companies themselves.

Conclusion, suggestion, and a possible solution:

The traditional staffing industry is doing well and, I believe is on the right track in continuing to increase the labor-saving utilities, efficiencies, and conveniences of its staffing software. The job loss it creates will be minimal and may even increase job opportunities.

The real job risk to traditional staffing companies is the competition from the “rapid growth in automated forms of staffing such as human cloud platforms”. For many reasons they are here to stay,and it is not really possible to compete with them.

However, I believe a solution is available that is based on two major factors; one is the essential fact that both the cloud-based platforms and staffing companies are in the same business, i.e., providing temporary workers for the short term projects(gigs) of their clients.

The second is the equally relevant fact that a typical company,looking to do a one-off project, outside of their internal competence, can be intimidating. The gig economy platforms are large, worldwide,and it takes some time to get familiar with the process.It can be a little complex to find and assess the relevant talent and their competence. quality, to supervise and manage projects, to get the right price/value, etc.

For the same reason your clients hire an agency to staff certain projects,is the same reason they will hire you to staff many different kinds of projects available on the gig platforms.

So, the suggestion is, and the solution may be, to “simply” look at the gig economy platforms as your own worldwide talent pool to increase service opportunities to your present clients and to open the doors to new ones.

Stay Safe!

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