Are online project staffing websites impacting the traditional recruiting market?

Some workers may ask themselves “What’s the difference between a traditional recruiter and online project staffing websites?” While both serve to connect workers with employers, they are hardly the same thing. As a staffing professional, you know that you provide professionals with an invaluable connection to employers that is built on trust and expertise.

However, it’s understandable if you’re worried online project staffing websites are cutting into your business. Elance.com, one of the premier online freelance communities out there, is dominating a large portion of the contingent workforce. But, this unique portal is vastly different than a recruitment firm.

Elance is an industry leader and controls about 25 percent of the online staffing market share, according to a paper from Deutsche Bank Markets Research. Online staffing generated about $1 billion in 2012 and gross revenues are expected to grow to $2 billion by the end of 2014 and $6 billion by 2018.

Approximately 50 percent of the work contracted through Elance is IT, 35 percent is marketing and creative and 15 percent is in a category that lumps customer service, administrative, translation, engineering, finance and legal. While 33 percent of the talent working on the site is based out of the U.S., 60 percent of the hiring companies are U.S. companies. Most of these organizations (90 percent) are small-to-medium sized businesses.

While you may be saying to yourself that those are exactly the markets you’re working in as a recruiter, you have to take a look at how business is conducted on online project staffing websites like Elance. Companies are hiring for particular jobs and projects and rarely are they continuous work. As a result, a vast majority of the jobs offered to contract workers provide work here and there, and while these jobs are certainly positive for a portfolio, many workers are not going to be thrilled with managing a large client base in order to make a living wage.

As a staffing professional, you may offer contingent work in these fields, but it’s typically for longer periods of three or six-month contracts (maybe even longer). You’re hiring and recruiting for a completely different niche, which is why there is enough room in the staffing world to fit both traditional recruiters who use strategic cloud-accessible staffing software and online project staffing websites.

“While online staffing is growing very fast, we believe so far that online staffing is expanding the overall contingent labor market, not yet taking share from temp staffing. We think IT is the staffing discipline that faces the biggest challenge, but not until large companies embrace online staffing – which is likely still a number of years away. Even if SIA is correct in its long-term forecast, online staffing would only take about 1pt off IT staffing’s revenue growth rate annually over the next five years, but even then we have to assume all incremental growth is W2 (which is highly unlikely). Longer term, as the online staffing market develops and becomes more mainstream, we believe temp staffing agencies will either have to embrace this more efficient, self-service model, or miss out on servicing a potentially large piece of the expanded pie,” said Elance senior management, according to Deutsche Bank Markets Research.

The number of employed individuals using both staffing resources may increase as professionals become more comfortable taking on contract work instead of being a part of the permanent workforce. The key question is: Do you think that online staffing represents an employment trend that you should be concerned about? Sound off and let us know.