The fact that temporary staffing is creating the bulk of the job growth since we dug our way out of the 2008 recession bodes well for the likes of staffing firms like Kelly Services, Inc. (NASDAQ:KELYA) and Robert Half International Inc. (NYSE:RHI). Investors seeking strategic opportunities can do better than concentrating on proven-but-broad growth arenas, though. There's another trend within the employment arena that actually favors small newcomer (relatively) Staffing 360 Solutions Inc. (OTCBB:STAF)... the huge and fast-growing need for more and better information technology workers. IT positions are opening up faster than any other industry is creating jobs, and it doesn't look like the trend is going to change anytime soon.
Just to put things into context for anyone who owns or is mulling owning a name like Robert Half International or Kelly Services, there are more temporary workers in the United States now than there have ever been before. We've seen 17 consecutive quarter-over-quarter increases in the number of temporary workers, and we're likely to make it 18 once June's numbers are tallied. In Q1, the temporary staffing workforce grew by 9.3%.
When one drills deeper into the data, however, investment-worthy nuances appear.... nuances like the projections suggesting IT temporary staffing will grow at 8% this year while temporary staffing for healthcare and accounting should only grow at about a 6% clip in 2014. The numbers jive with an outlook The Bureau of Labor Statistics has recently published, indicating an expected a 53% increase in the number of information security professionals needed through 2018. This pace of job growth is three times faster than the job growth predicted for other technology arenas and about five times the expected job-growth rate of all other industries combined.
In other words, there isn't one major employment trend in place now - there are two. A smart, enterprising company capable of satisfying both needs could find itself in the proverbial catbird's seat, while shareholders benefit handsomely. Well, Staffing 360 Solutions is that company, acting as a staffing agency that specializes in computer technology workers. No other staffing form out there does "tech" as well as STAF does on a worker-for-worker basis.
That said, while focusing on temporary staffing's fastest-growing niche just makes good business sense as STAF works to entrench itself in the industry, it's the growth strategy itself that's so compelling for current or would-be shareholders. See, Staffing 360 Solutions knows it would be far more expensive and far riskier to build a new company from the ground up; it would take longer than most shareholders are willing to wait too. Instead, STAF is expanding by joining forces with other IT staffing firms, bringing suitable competition into mix to make them an ally, sharing resources and expertise when it makes sense, but still allowing that acquisition to run as an independent company under the Staffing 360 umbrella. That autonomy - rather than an ill-advised forced integration - is why it works.
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It works for shareholders, as the terms of these deals are quite reasonable. The target companies are typically purchased with about 1/3 cash, 1/3 STAF stock, and 1/3 performance-based equity or payback. It puts everybody on the same page working together, and continuing to work hard.
As for where it's going, Staffing 360 Solutions Inc. has completed five of the twenty or so acquisitions it intends to make by the end of 2015. If things go as planned, revenue should grow from $22 million last year to about $102 million this year to an annual revenue run rate of $300 million by the end of next year. And, given all we know about the temporary staffing industry, the swelling need for technology workers, and the savvy way Staffing 360 Solutions is expanding, the company is likely to do everything it's planning on doing in the way of growth.
Investors interested in learning more about Staffing 360 Solutions can visit the company's website here. It's got several investor-centric publications available.
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