Online Staffing Trends and the Rise of the Human Cloud

Barry Asin

President, Staffing Industry Analysts

Barry Asin was appointed President of Staffing Industry Analysts in January 2010, with overall responsibility for the company’s strategy, operations and growth, both in the U.S. and globally.

As President of Staffing Industry Analysts, Barry Asin has his finger on the pulse of the entire workforce solutions ecosystem.  As staffing firms enter the realm of total talent solutions, there’s a fine balance between collaboration and competition with technology providers. Barry walks us through trends in online staffing and, in particular, the emergence of the human cloud segment.


Q: How does talent acquisition technology—and in particular the “human cloud” segment—fit into the workforce solutions ecosystem?

A: As a portion of the entire ecosystem – which includes staffing, consulting, payrolling, and process outsourcing, among other solutions – talent acquisition technology is fairly small. It’s still an emerging segment of the market, but fast growth rates definitely make it worth tracking, and in many ways, it is intimately tied to traditional temporary and permanent staffing.

Staffing Industry Analysts defines talent acquisition technology as being related to attracting, sourcing, recruiting, and placing employees; the category includes job boards, applicant tracking systems (ATS) and vendor management systems (VMS). It also includes the human cloud, which refers to web-based platforms where work arrangements are assigned and completed entirely online. We look at three different areas under this category:

  • Crowdsourcing, which is a system that parses outcome-based projects to a “crowd” of independent workers
  • Online Work Services, the delivery of specialized services performed by workers who are organized and managed by the platform provider – think online translation or Uber.
  • Online Staffing Platforms, which enable specific hirers and workers to enter into a direct legal relationship, including freelancer management systems.

Online staffing like Upwork are probably the most familiar to traditional staffing firms, but the others are also related as they all involve work delivered and managed through an online platform.  One thing this category is doing, primarily through the visibility of organizations like Lyft and Uber, is raise the visibility of all forms of contingent or gig work.


Q: Do human cloud services represent a viable competitive threat to staffing firms?

A: At this point I think they are primarily growing the pie.  For instance, Uber has attracted a whole category of people to work on a contingent basis who never would have considered it in the past. As far as the B to B platforms, they don’t present an immediate or massive threat to the staffing industry… in the short term. They actually have much more of an impact on all the previously unmanaged and nearly invisible use of independent contractors that represent a market four to five times larger than staffing. They’re still in their early days; in some ways, the trajectory reminds me of the growth of VMS.

Of course, no one knows exactly how this will play out, but my theory is that over time you will see more convergence among segments. Human cloud firms will run up against the reality of employment law and handling the compliance needs of large enterprise clients, not to mention the more complex hiring requirements for higher skilled and local workers. They will start looking more like staffing firms and take on more of a human component.

On the flip side, there’s an opportunity for staffing firms to act more like cloud players, and to promote their ability to access a primarily online self-service talent pool in addition to those they find and manage through traditional channels. Those firms that can move along the value chain will have an edge in promoting total workforce solutions.


Q: Do you see staffing firms investing in the technology to move towards managing diverse labor pools? Or, are they better off collaborating and partnering to gain that functionality?

A: Technology innovation has long been a challenge for staffing firms. It takes a different mindset and different skills to run a tech company. We’re seeing this separation of technology in the VMS space, with Adecco spinning out Beeline.

Staffing firms should be active users and partners of technology, though. We’re seeing some firms investing in startups and creating incubators as a way to keep their eye on what’s coming. There’s an unprecedented level of interest among VC and PE firms in the human capital space. They see it as ripe for innovation and disruption. We launched a new event last year focused on Collaboration in the Gig Economy that explores all the changes and opportunities for operating in the new tech enabled world.  We were expecting 200 to 300 people but had over 600, including 300 enterprise buyers, staffing firms, gig platforms/human cloud firms and VMS/MSP providers, which I think illustrates the level of interest in all the changes going on with technology and the ecosystem around staffing.


Q: What trends are you seeing around the rise of the total workforce solution environment?

A: We’re starting to see a coming together of the management of all the varieties of talent that organizations need, including traditional full time employees, temporary workers, independent contractors, consultants, gig workers and other non-employee labor, and a recognition of the need for more systematic management. We refer to the acquisition of all these forms of labor as Total Talent Acquisition. MSPs might be the gateway for more opportunity, or more likely some blend between MSP and RPO. We see some players blending these models, particularly in Europe. All this attention on the gig economy has raised the profile of staffing and contingent work. After all, we’ve all been doing this for decades.

Significantly more people work as independent contractors (ICs) and human cloud workers than work through a staffing agency. We estimate that about 9.5 million people worked as temporary workers through a staffing firm in 2015, while over 23 million worked as independent contractors and another 9.7 million worked through a human cloud platform.

The reality is, while most people prefer a traditional 40-hour “permanent” job, a significant minority, 37% by our research, prefer an alternate way of working, either part time, temporary or other flexible forms.  That is a lot of people in a workforce that already has significant skill shortages and it can’t be ignored. The staffing industry is well-positioned to understand and capitalize on these trends.


Q: Are end clients actually ready to adopt a total workforce solution approach?

A: Suppliers are more and more ready to deliver an integrated talent solution that includes direct hire, temp staff, ICs, private talent pools, SOW consultants, and other gig workers. But clients may not be ready to act on those trends.

Our research shows that companies predict they will be more strategic in their use of contingent labor over the next two years. But I’ve been watching these trends for a while and it always seems that a more strategic view is two years into the future… the timeframe keeps shifting, because it’s easier said than done.

One reason is that particularly in large organizations, we see functional silos. For example, the people that manage non-employee work and contingent labor are often not the same people who are doing the college recruiting and perm hiring, making it much harder to have a coherent strategy around all the types of workers in a business.


Q: What steps can staffing firms take to position themselves as total workforce solutions providers?

A: Let’s be clear, this is not the answer for every provider. Most firms need to focus on being great in their specialty. There’s always a place for the people who know a segment of the market better than anyone else, whether that’s a particular geography or skill set.

It’s hard to stay out in front of technology trends, so more firms are going to be better off renting or buying technology to open up virtual connections with candidates and clients. You just have to look at the fact that teenagers don’t talk on the phone anymore to understand that’s the way things are going, and the pace is only going to accelerate.

If you’re coming in to outsource the provision of talent—either on the contingent side or from a total workforce standpoint—you have to build a network of partnerships and capabilities within your organization to be able to deliver a total solution to your clients.

Many of the building blocks are already there, it’s just figuring out how to integrate and package it. As automation increases, the sell will be more consultative than transactional, focusing on how to solve bigger problems rather than just making core processes more efficient.