The gig economy heralds a sea change in how we work. But that does not mean that it’s all smooth sailing.
Adecco illustrated some hiccups on Wednesday (Sept. 19), when the world’s biggest staffing company said it is seeing a slowdown tied to Europe.
As reported by Reuters, the company has said that thus far in the quarter, revenues were up by 2 percent in July and August — a rate that excludes the impact of currency swings and one-off items. That growth rate is half the rate that had been seen in the quarter that ended in June. And in another signal that the top-line and core staffing metrics may be a disappointment, the company said volume trends had declined further in September.
In a statement, the CFO of the company, Alain Dehaze, said, “recent trading has been more challenging than expected,” driven by continental Europe.
The statement follows on the heels, Reuters noted, of earlier statements by the company that have said that trade tensions (we assume you know between which countries by now) and slowing economic growth had not yet hit hiring enthusiasm.
Maybe that’s changing.
Temporary staffing companies may be a bit of a barometer of broader economic sentiment from the corporate sector. That’s because they can take on workers quickly. Hiring increases as demand ramps up for projects or other temporary work. Those projects, of course, come from firms that are looking to capitalize on new revenue opportunities. Uncertainty breeds a “wait and see” attitude, which kind of means you’ll be “seeing more waiting” on true commitment to new projects, at least across the pond.
To be sure, some of the slowdown is company-specific. In one market, top line stemming from Germany has been hurt by the consummation of the merger between Adecco and Tuja staffing businesses, while in France, management has been outperforming peers. Mixed results, then, seem to be in the offing.
Beyond the various impacts that may show up as the company reports quarterly results, the slowdown is notable, and perhaps sustained. Consider the fact that the first-quarter revenue growth rate was 6 percent, the second quarter was 4 percent and the third quarter now seems to be around 2 percent. The sequential slowdowns seem to outpace the slowdown in growth that is being logged by the European Union as a whole, where GDP growth was 2.3 percent at the beginning of the year and now stands at 2.1 percent.
Telltale Signs in the Numbers Beyond Adecco
It’s been said that the stock market is a basket of stocks — we’re paraphrasing here, but you get the gist. Likewise, the economy — any economy — is a patchquilt of companies, individuals and various stakeholders. So it is with the gig economy, which has as its constituents (the independent workers) and the enterprises that have an immediate or near-term need for project-based work to be completed.
Adecco may offer a hint of a hiccup — or maybe not. As the largest temp staffing firm globally, the company operates across several service offerings, where temporary staffing and permanent placement are in the mix, and where the company made a direct overture to the gig economy itself. It had launched, in November, the Adecco Group’s YOSS freelancer marketplace, which went live in France. The EU economy at large, and the business lines that are specific to Adecco, will be revealed in commentary tied to earnings reports.
A larger-scale picture may emerge from data that is contained in the S-1 filing from Upwork, which, as you may know, is planning to list on public markets in the United States. The filing notes that within the 12 months that ended June 30, the company’s platform enabled $1.6 billion of gross services volume (or GSV). The reach is global — 375,000 freelancers and 475,000 clients across 180 countries. And while Adecco has roots in several business lines, Upwork bills itself as the largest online global marketplace that serves the freelancing community specifically.
The Upwork filing further notes that the annual growth rate shows an excess of 20 percent annually — again, as measured in gross services volume. Into June, the company said the first six months of the year presage even better traction, with growth rates north of 30 percent.
Call it a tale of two gig economy companies, with, perhaps, differing points of view? We posit that choice may be one reason some slowdowns may be seen here and there with some firms (say, for Adecco) as they embrace the gig economy and the digital age. As we noted in this space with the most recent iteration of the Gig Economy Index, at least in the U.S., 55 percent of independent workers have said they used one online marketplace to source leads, and the implication is that the remainders have been trying out several avenues of securing new gigs. Europe has its own vagaries, as we spotlighted here in an interview with Shine’s CEO and Co-Founder Nicolas Reboud, where, for example, paperwork and regulations (and even relatively slow payment methods) can stymie a smooth embrace of the gig economy.
In the meantime, quarterly earnings reports and tariff wars aside, it looks like the sea change will be inexorable even if the waves are uneven.