Monday, December 29, 2003

Indutry brief: Temp Staffing According to a Reuters story ("Merger pace picks up for U.S. temporary help firms", 12/25/2003), there's a new set of mergers going on in the temporary staffing industry. With over 7,000 temp agencies in the US, according to the article, the industry is ripe for consolidation. The cause for the current upswing is the boomlet in the stock market, giving some of the bigger firms more access to capital. Mergers and acquisitions in the industry were strong through the 1990s, and some firms are just now getting over the indigestion caused by acquiring overpriced competitors. Still the rate of acquisitions can't match the booming 1990s, according to the story.  In 2003, about 110 acquisitions were completed. This is just one-fourth of the deals done in 1998, when mergers and acquisitions in the staffing sector burgeoned, and about half the number of transactions completed in 2000. For example, Manpower, #2 in the world, just bought Philadelphia-based Right Management Consultants, which specializes in organizational restructuring. Earlier this year manpower acquired Milwaukee-based Jefferson Wells International, a financial services staffing company and Elan Group, a UK-based IT staffing company. In addition, Kforce recently acquired California-based Hall, Kinion & Associates, which specializes in executive staffing. In November, Hire Calling of Oregon acquired Utah-based SOS Staffing Services. Worldwide, the temporary staffing industry continues to concentrate, with the top four companies owning 32% of the market, The big four also hold the cream of the business, which is supplying temp help to large, multinational corporations, often in professional and managerial areas. As temporary staffing becomes more important across the world, and as corporations seek to avoid locking in permanent staff, the power of the temp agency keeps growing. In a significant move, Germany over the past year liberalized its laws on temporary staffing, a loosening of its strong employee-protection policies and a sign of the emerging workplace of the future. This caps a 1997 ruling by the EU, which struck down most member country bans on temporary staffing. The result has been a major growth in European temp service demand since that time, and the growing domination of Europe-based companies in the field. Note that in the chart below, most of these firms now do some executive recruiting and business consulting as well as temporary staffing. Top temporary staffing firms   Company Headquarters 2002 income (billions) Market share (apporx) Adecco Switzerland $18,1 15% Manpower US $10.6 9% Vedior Netherlands $6.4 5% Randstad Netherlands $5.7 5% Kelly Services US $4.3 4% Spherion US $2.1 2% Robert Half US $1.9 2% CDI US $1.2 1% MPS US $1.1 1% Venturi Partners US $0.6 <1% 8:02:59 PM

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