Staffing + Recruiting
Market Landscape Overview
Signs of Market Stabilization with Select Segments Exhibiting Growth It’s been a long (almost) three years – but are we back? Cyclical normalization (thanks, COVID!), economic uncertainty (thanks, rates – and tariffs!), and structural change (thanks, AI and automation!) have all teamed up to create one heck of an uphill climb for staffing However, there are signs of life – the U S Staffing market is now projected to contract 3% to $179.8B in 2025, a slight improvement from SIA’s previous forecast of a 4% decline. And select categories – Locum Tenens (+5%), Education (+5%), Engineering (+1%), Marketing / Creative (+2%), and Retained Search (+6%) – are expected to see growth this year. These directional movements suggest staffing may have finally found a floor and be on the road to recovery Looking forward, SIA projects 2% growth overall in 2026 to $183 3B, with modest gains across key segments, including Healthcare (+2%), IT (+1%), and Industrial (+1%).
Staffing’s Resilience in the Face of Disruptive Technology
This isn’t the first time pundits have foretold the END OF STAFFING. Remember the internet, online job boards, and VMS systems? Though the form and shape may be changing, we’re still here. Even now, with rapid evolutions in AI, staffing demand persists. Many large companies are maintaining, or growing, their temporary workforces, remote work has enabled staffing firms to access broader talent pools, and platform technology is expanding the industry’s reach by improving self-service, automation, and user experience for both candidates and clients
M&A State of Play + Outlook
Over the last few years, Staffing M&A activity has been as choppy as the broader market itself With lower client spend, large companies and consolidators have aggressively been searching for alternative growth channels, including inorganic expansion. Buyers buy – that’s what they do. However, the limited inventory of healthy, marketready assets has made for an extraordinarily tight and selective deal landscape Transactions are getting done –however, the bar has been sky-high as far as strategic fit, and much creativity has been required when it comes to structuring and general negotiations.
A moderate increase in deal volumes is anticipated as business confidence returns. However, buyers are still likely to remain focused on high-quality, truly-differentiated assets. Sellers with pockets of sustainable growth and momentum, scalable operations, segment or role specialization, and technology-enabled efficiencies will be bestpositioned to achieve premium valuations going forward.
U.S. Staffing Industry Market Size (YoY Change)
2025 forecast improved from (4%) in SIA’s April report to (3%) in its September update
By The Numbers
Bullhorn Indicator Values – US Staffing
U.S. Staffing hours remain below 2023 and 2024 levels, but the gap has narrowed at multiple points throughout the year – including recently, as hours hit their year-to-date high in the week before Labor Day. In line with historical seasonal patterns, this momentum persisted, with two consecutive weeks of post-holiday gains propelling total hours to record levels for 2025.
Staffing + Recruiting M&A Activity – Deal Count by Quarter
The quarter-over-quarter decline in deal volume may reflect normal timing variability but could also be influenced by increased macro uncertainty leading to a more cautious M&A environment
Updates and Notable Transactions by Segment
IT Staffing
• Deal activity in the IT Staffing sector slowed meaningfully quarter-over-quarter, declining from 8 transactions in Q2 2025 to just 2 in Q3
• The U S IT Staffing market is expected to decrease by 2% to $37 7B in 2025 – however, even as persistent economic and geopolitical uncertainty continue to delay or downsize non-essential IT initiatives, a modest rebound to $38 1B (1%) is expected in 2026
• The market appears to be stabilizing, albeit at a lower baseline, supported by ongoing project extensions and a sustained need for high-value, flexible IT talent
• AI is reshaping talent dynamics, dampening demand for routine coding roles while accelerating the need for specialized expertise in data engineering, architecture, cybersecurity, and machine learning
Healthcare Staffing
• Deal activity in the Healthcare Staffing sector declined sharply quarter-over-quarter, falling from 13 transactions in Q2 2025 to just 5 in Q3
• The U.S. Healthcare Staffing market is projected to decrease by 6% to $39.4B in 2025. Moderate growth of 2% to $40 2B is estimated in 2026, reflecting a gradual stabilization following the significant and extended post-COVID contraction
• Platform-based delivery now represents over 20% of U.S. Temporary Healthcare Staffing, which is driven by its ability to provide faster candidate matching, flexible clinician access, and lower-cost fulfillment for less complex roles
• AI-enabled tools – such as voice agents, dynamic scheduling, and predictive matching – are enhancing fill rates, reducing recruiter labor costs, and improving overall operational efficiencies
• International Nurse Staffing remains a consistent growth segment driven by ongoing domestic nurse shortages, but immigration limits and licensing bottlenecks have moderated the pace of expansion
• Locum Tenens is experiencing strong demand due to physician shortages, an aging workforce, and coverage gaps in underserved areas – however, inflation-driven wage increases that outpace bill rates are increasing margin pressure
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Updates and Notable Transactions by Segment
Industrial Staffing
• Deal activity in the Industrial Staffing sector remained stable quarter-over-quarter, with 9 transactions in both Q2 and Q3 2025
• The U S Industrial Staffing market is projected to decline by 3% to $37 4B in 2025, followed by modest growth of 1% in 2026 to $37.8B as macroeconomic conditions are expected to become more favorable
• Tariff and trade policy uncertainty has contributed to volatility (project delays, cancellations, etc ) for manufacturing and logistics end clients, particularly among firms with global supply chains
• Industrial Staffing demand is rising in targeted sectors such as electronics, semiconductors, basic metals, express delivery, and data center construction, resulting in pockets of growth despite an overall dampened market
Other Professional Staffing1
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• Education Staffing is seeing strong utilization with expected growth of 5% in 2025 due to growing adoption among urban and rural districts facing teacher recruitment and retention challenges
• Engineering Staffing is expected to decrease by ~1% in 2025 as geopolitical disruption and trade uncertainty continue to delay major projects, particularly in manufacturing and oil & gas
• Finance / Accounting Staffing is expected to decline by ~3% in 2025 as macroeconomic uncertainty, tighter budgets, and delayed hiring decisions weigh on demand – however, client sentiment is improving, with strong demand for senior accounting roles supporting higher bill rates and minimal AIrelated disruption to date
• Marketing / Creative Staffing is expected to grow ~2% this year, driven by evolving technology in graphic, website, and app design, strong demand for specialization in marketing technology, and an overall tight labor supply
• Looking ahead, a rebound across all segments is expected in 2026 as clients resume deferred projects and respond to stabilizing economic conditions
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Updates and Notable Transactions by Segment
Executive Search
• Executive Search activity saw a modest increase in M&A activity, with transaction volume rising from 6 deals in Q2 to 7 in Q3 2025
• The U.S. Executive Search market is projected to grow 6% to $8.1B in 2025 and an additional 3% in 2026, driven by elevated C-suite and CEO turnover as boards place greater emphasis on leadership capable of navigating sustained periods of economic and operational volatility
• Leading firms, including Korn Ferry and Heidrick & Struggles, are reporting double-digit revenue gains in this segment, highlighting Executive Search as one of the few bright spots in the recruiting industry as organizations take a more rigorous lens to consequential leadership hires
• The quarter saw Starfish Partners invest in HireMinds, a Boston-based executive search firm. The transaction provides HireMinds with the infrastructure to expand its specialized footprint across the high-growth verticals of life sciences, marketing, and finance & accounting on an international stage
Staffing Software and Solutions
• A technology “arms race” is emerging, with staffing firms integrating AI and automation into their workflows to gain competitive advantages in speed, scalability, and service delivery
• Staffing firms are investing in – and increasingly internalizing – technology capabilities to enhance automation, streamline operations, and boost efficiency, exemplified by Proman’s acquisition of backoffice automation startup Embarq
• Market consolidation is also accelerating among leading vendors, such as Bullhorn, The Access Group, and Zvoove, who continue to pursue acquisitions to expand platform capabilities and capture greater market share
• Even enterprise software leaders like SAP and Workday are acquiring AI-enabled recruiting platforms to strengthen end-to-end talent acquisition, streamline high-volume hiring, enhance candidate and recruiter experience, and expand their HR ecosystems – leveraging AI not just for automation, but to integrate recruiting more fully into workforce planning and broader enterprise HR strategies
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Staffing + Recruiting Conference Takeaways
AI is a Tool, Not a Replacement
AI is reshaping recruitment as a productivity multiplier, not a headcount reducer. Firms that position AI as a means to enhance recruiter performance and client outcomes – rather than replace people – see stronger adoption, cultural alignment, and valuation upside. This “human-first” AI approach resonates with acquirers seeking scalable, techenabled platforms that preserve the human element of staffing.
AI Adoption Requires Strategic Execution
Successful AI integration depends as much on change management and communication as on the technology itself. Buyers are increasingly evaluating how AI was deployed – favoring firms with structured rollout plans, clear ROI metrics, and active recruiter engagement A thoughtful implementation signals organizational maturity and reduces perceived integration risk for acquirers
Unified Platforms Are the New Imperative
The market is shifting toward unified, cloud-native platforms that integrate ATS, CRM, and back-office operations into one seamless ecosystem Firms burdened by fragmented or legacy tech stacks risk being discounted in valuations, while those with modern infrastructure are viewed as more scalable and “bolt-on ready” Technology consolidation is becoming a key driver of both operational efficiency and M&A attractiveness
Value Creation Through Specialization
The industry continues to evolve from transactional staffing toward consultative, value-driven talent solutions. Firms with deep vertical expertise and the ability to solve complex client challenges – particularly in sectors facing chronic talent shortages – are more likely to command premium valuations. Buyers are prioritizing specialization and strategic capability, rewarding firms that deliver measurable client impact.
AI is Reshaping the Staffing Value Chain
In 2025, AI transitioned from a buzzword to a core business infrastructure, with firms demonstrating the real impact implementing AI can have across sourcing, screening, onboarding, and back-office operations. AI maturity has become a key valuation driver – acquirers are likely to place a premium on firms that have AI embedded within core workflows and can demonstrate measurable efficiency gains
Uncertainty is the New Normal
Persistent economic, regulatory, and geopolitical volatility now defines the staffing landscape, requiring firms to build resilience into their operating models Investors are emphasizing leadership depth and organizational culture – favoring seasoned, well-rounded management teams over founder-dependent models to mitigate key-person risk
Demand Remains Strong and Talent Supply Is the Constraint
The industry faces a “labor recession” – driven not by weak demand but by sustained talent shortages across critical sectors Firms that expand candidate access through AI-enabled sourcing, referral automation, or deep vertical specialization may differentiate themselves from peers and attract heightened acquirer interest.
Technology Adoption Is Fueling an M&A Rebound
Technology is no longer an adjunct function – it is now central to scale, differentiation, and investor appeal. Buyers are prioritizing firms with scalable digital infrastructure, predictable margins, and automation-driven productivity, setting the stage for a reacceleration in staffing M&A activity in 2026.
Public Markets
Median TTM EBITDA Multiples Quarter-Over-Quarter Median TTM EBITDA Multiples
Historical Index Performance
Staffing + Recruiting stocks have been exhibiting mixed performance YTD – in general, temp staffing continues to face pressures, but Executive Search and more specialized temp staffing firms have remained relatively resilient
Staffing + Recruiting Q3 2025 Transactions
HVA Staffing + Recruiting Expertise
About Harbor View Advisors
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