Differentiation is the need of the hour for staffing operations

As the staffing industry becomes increasingly competitive, differentiation has become a critical factor, particularly for those operating in the frontline segment.

In the last year alone, our team at Hunar.AI has spoken with over 100 staffing companies across various industries and sizes. Through these conversations, we've gained valuable insights that we're excited to share.

The frontline staffing industry faces a challenging double-whammy of service commoditization and rising operational costs, particularly in sourcing and recruitment. We have highlighted some strategies and tactics that can help companies stand out and succeed in this challenging environment.

A quick summary

• Payroll Processing & Compliances - The adoption of software solutions for automating payroll generation has helped in payroll processing and compliance management for staffing businesses. By leveraging HRMS/Payroll technologies, staffing agencies have been able to significantly increase payroll throughput per HR-back office resource, resulting in an increase in billable employees without having to expand HR back-office operations. This trend is expected to continue as the industry continues to benefit from the increasing penetration of these technologies, paving the way for more streamlined and efficient payroll management.

• Sourcing & Recruitment Operations - The recruitment operations, including both field and centralized recruitment, have become the biggest cost base for staffing agencies, with sourcing and follow-on processes seeing an exponential increase in recruitment costs. Factors contributing to this trend include rising payroll costs for recruiters, the increasing cost of relevant job boards, and a decline in throughput per recruiter per month. These challenges are only set to worsen over time, with reducing information arbitrage in frontline talent, demand-supply mismatches in skill, low job standardization, and negative wage growth in core industries leading to attrition. Even the emergence of new industries and new worker engagement models will exacerbate these issues.

Technology is needed to improve recruiter throughput and create differentiation in staffing agencies. Traditional ATS systems are ineffective, especially for frontline workforce ecosystems, given the lack of standardization in candidate data and slow information movement between entities, and heavy engagement with candidates in a short period.

A multi-channel sourcing platform that drives engagement, uses quick pre-assessments to enhance funnel relevance, leverages contextual relevance, automates recruiter effort, and makes sourcing operations more data-rich to reduce reliance on external channels is urgently needed to address these challenges.

While these ideas are not exhaustive, they are an excellent starting point for driving efficiency and differentiation in the recruitment process for staffing agencies.

• Onboarding - The rising demand for verified candidates is increasing the cost of worker onboarding for staffing agencies. However, many agencies grossly underestimate the true cost of onboarding, assuming that the cost of verifications such as Aadhar, E-Courts, and Driving License is the only factor. In reality, the cost of onboarding includes the time and resources required for on-ground supervisors to collect and send documents to HR for processing, as well as the delay between hiring and joining, which can result in a 30% drop-off rate.

Fortunately, technology can help reduce the cost of onboarding and provide a competitive advantage for staffing agencies. With advancements in NLP techniques, widespread smartphone adoption, and government initiatives on digitization, on-the-spot onboarding is now possible, reducing onboarding costs by at least 50%.

Fully compliant and verified onboarding with complete employer visibility on day one creates a significant advantage for staffing agencies.

• Business Development & Marketing - Efficiency in business development and marketing is an essential component for staffing agencies to achieve success in their operations. I don't have a lot of exposure to this and hence would not cover this topic in depth here. But the presentation of the existing candidate ecosystem can be one powerful tool for business development teams. With a collection of candidate profiles in one place, allowing for the extraction of information using NLP techniques will present a unified view of reach and specialization showing capabilities to customers.

Generally considered as just a middleman but staffing agencies serve as important workforce partners for employers and play a critical role in India's workforce ecosystem. It is in the best interest of employers to have efficient and growing staffing partners. Technology adoption is essential for staffing agencies to increase efficiency in their business operations and become more effective in their role within India's workforce supply chain.

We at Hunar.AI aspire to learn more about the staffing ecosystem in India and would like to engage in deeper conversations with operators in India's workforce ecosystem.