Survey Shows Staffing Providers Bullish On 2012

This according to the 15th Annual Proprietary Staffing Survey and Industry Outlook, compiled by BMO Capital Markets.

One of the largest and longest running surveys in the industry, the report is a compilation of results from 103 temporary staffing providers surveyed in late-December and early January, we surveyed to gauge their 2012 expectations.

In short, the report indicates "we believe the results show that the optimism for 2011 has carried over into 2012 and the group remains relatively bullish a sign of continued momentum."

And that's good news for staffing providers such as MY HR Supplier.

A leading consultation firm in maximizing human capital investments, MY HR Supplier was part of the survey, and Chief Operating Leader Omer Mutaqi echoes the results.

"We certainly saw some improvements over the latter half of 2011, and are excited about the industry turning the corner in 2012," said Mutaqi, who's company witnessed a 20% growth in its placement services in 2011, and is anticipating even bigger returns this year. "Employers are feeling more confident and stable, and the first thing they look at when they're in this position is staffing."

Overall, survey respondents were similarly bullish about their prospects for 2012 as they were in 2011, with expectations of 17% annual growth in both sales and net income, respectively, with expected improvements in gross margins of roughly 180 basis points.

This mood continues the positive momentum this group experienced in 2011, when it generated an average 16% annual increase in both sales and net income.

Now while BMO cautions investors that expectations of the entrepreneurial group survey are historically optimistic and tend to be more bullish than perhaps others, the firm is "fairly comfortable" with our projected increase of roughly 6%-8% in sales in 2012.

"This sustained optimism bodes well for the industry and expect momentum to continue," cites the report.

BMO is also quick to note that over the previous two surveys, expectations for sales growth
before the year began matched almost exactly to actual results for its respondents (15% and 16%, respectively).

"We're very excited by this report because it's the most respected and accurate in the business," added Mutaqi

Some other highlights of the report:

While growth and net income expectations were relatively solid across all skill groups, the cycle appears to be continuing to mature as high-skilled providers outperformed on both sales and net income expectations, as this group typically gains momentum later in the cycle when labor demand move more "upstream." However, small companies were a close second for both sales and net income expectations and this group expects the largest gross margin improvement in 2012.

With regard to 4Q11 trends to gain some insight prior to the earnings releases from the publicly held providers, sales increased on average 13% year-over-year in 4Q11, with annual growth trends flat versus 3Q11 results. Additionally, the 29% of firms that cited 4Q11 sales above expectations (i.e., an "upside surprise") improved significantly from only 19% in 3Q11 this was particularly strong for large companies.

Looking at outlooks for the current 1Q12 to gain some insight into near-term expectations, respondents were more bullish this quarter (versus the 3Q11 survey) on sales expectations, but equally as bullish on net income expectations, implying firms expect continued margin pressure in the near term.

As well, the higher-skilled suppliers appear considerably more bullish than their lower-skilled peers although some of this may be seasonal (i.e., the lower-skilled group includes light industrial suppliers that rely on some outdoor work).

So the bottom line?

"We're poised and prepared for a solid year, ready to assist clients with the best and most talented talent," said Mutaqi.

But Mutaqi was quick to send out a warning signal regarding this industry uptick.

"While businesses are ready to begin slowly accelerating, they do need to react quicker rather than later, as this huge talent pool now available will start to shrink as folks are hiring The best are going to go quickly, but all in all, it's still win-win for everyone."