Temporary staffing firm On Assignment booms as U.S. economy improves
Sometimes, employers aren’t looking for a long-term, committed relationship.
That’s where On Assignment Inc. comes in.
The Calabasas firm provides skilled employees — many of them in the technology field — to companies looking for temporary workers. Its profits come from charging employers about 30% more than it pays the workers. That markup is used in part to pay the temporary workers’ employment taxes and benefits.
As the U.S. economy improves and the jobs picture brightens, employers increasingly are turning to On Assignment for workers. The company has posted record sales and profits this year, and its stock price is up more than 60% year-to-date.
About 80% of its revenue comes in the technology field. Companies like the flexibility of employing information technology workers, using their unique skills as they’re needed for specific projects, said On Assignment Chief Executive Peter T. Dameris.
In addition to technology, On Assignment provides companies with employees in healthcare, science and engineering. It operates more than 100 offices in the United States and Europe.
The latest
On Assignment has grown through a series of acquisitions, the biggest of which was the 2012 purchase of Apex Systems Inc., a privately held Virginia company that specialized in information technology staffing.
“It doubled the size of the company,” said Jim Brill, On Assignment’s chief administrative officer. “And it has performed as we had anticipated it would perform.”
Apex provided On Assignment with access to mid-level technology workers who provide day-to-day staffing at an average billing rate of $60 an hour. On Assignment already had high-end technology workers, for whom the company bills an average of about $120 an hour.
“Temporary staffing provides you with the flexibility to staff to your needs,” Brill said. “Because you have that flexibility, you can eliminate people quickly and you can bring them back quickly.”
Since its formation at the end of 1985, On Assignment has acquired 10 staffing companies.
Accomplishments
Under Dameris’ leadership, the company has managed to grow without losing its focus, Brill said.
“We have acquired so many companies and integrated the companies to work effectively under a single parent,” Brill said.
The Apex acquisition turned On Assignment into the second-largest technology staffing firm in the United States. The largest is TEKsystems, a subsidiary of Allegis Group, a staffing company owned by Steve Bisciotti, owner of the NFL’s Baltimore Ravens.
On Assignment’s acquisitions have positioned the company to thrive in an improving economy.
“It’s not a bad time for temporary staffing,” Brill said. “We’re in a growing environment. To the extent the economy is growing, it’s not a bad place to be.”
Though heavily dependent on the technology industry, none of the company’s 6,511 clients last year accounted for more than 5% of its revenue.
Challenges
To some extent, On Assignment’s performance is out of its control.
“The big risk for a staffing company is that the economy is going to turn down,” Brill said. “In a down labor market, you probably aren’t going to be hiring a lot.”
The professional staffing industry’s revenue is expected to grow 7% this year to $56 billion, the company said in its annual report. On Assignment anticipates that its healthcare and life-sciences staffing business, its original operation, will pick up along with its technology staffing.
Analyst views
Nine analysts recommended buying On Assignment’s stock, one suggested holding it and one said investors should sell the stock.
