Industry Insight Report: Staffing and Recruiting Q2-2025
Industry Insight Report: Staffing and Recruiting Q2-2025
A Mixed Bag for Staffing as Remote Work Trends Reshape Hiring Dynamics
The staffing and recruiting industry continues to navigate evolving workforce expectations and economic headwinds in Q2 2025. While demand remains steady in key sectors like healthcare, logistics, and skilled trades, client companies are becoming more selective with hiring decisions amid ongoing uncertainty over tariffs, interest rates, and wage inflation. Remote and hybrid models are no longer just pandemic adaptations—they’ve reshaped the way clients define roles and seek talent, requiring recruiters to adapt their sourcing strategies.
At Lion Business Advisors, we’ve seen an uptick in conversations with founders of niche recruiting firms—especially those focused on IT, healthcare, and executive search, who are exploring exit opportunities in light of long-term burnout and succession challenges. Buyers remain active in the space, with PE-backed platforms and regional acquirers looking to bolt on highly specialized firms with consistent EBITDA and strong client relationships.
Key Trends Shaping the Market
Remote Work Drives Engagement, But Brings Retention Challenges According to Gallup’s recent global workplace report, fully remote workers are now 31% more likely to feel engaged than their in-office peers. However, they also report higher levels of stress, time management struggles, and social isolation, all of which are fueling turnover and creating opportunities for staffing firms offering retention-focused solutions. Firms that help clients address these issues, through onboarding support, HR advisory, or tech-enabled staffing, are better positioned to win recurring business.
Labor Market Growth Still Outpaces the Broader Economy Employment in human resources consulting (which includes staffing support) grew 1.2% year-over-year in April and has risen 22.4% over the past decade, outpacing private employment growth. While growth in the past three years has slowed to 2.5%, it remains a signal of long-term opportunity in staffing, especially for firms that have carved out a defensible niche.
Wage Pressure Continues, but Margin Compression is Manageable Wages in management consulting services rose 2.8% year-over-year to $43.05/hour. While staffing firms typically operate with tighter gross margins, those with higher-value placements, executive search, tech staffing, or fractional talent, are better able to absorb wage hikes and preserve profitability. Many buyers are actively seeking firms with billable contractor pools and W2 placement models that offer predictable revenue and EBITDA.
Outlook for Q3 2025
The outlook remains cautiously optimistic. While economic signals are mixed, the need for specialized talent solutions hasn’t slowed. Buyers are still pursuing quality staffing firms with recurring clients, scalable back-office systems, and strong internal teams. We expect deal activity to increase in the second half of the year, particularly for firms in Texas and the Southeast where job growth continues to outpace national trends.
Thinking about selling your staffing firm in the next 1–3 years? Now’s the time to explore your options. Take our Sellability Score Today to benchmark where your business stands.
Lion Business Advisors’ quarterly industry insights incorporate data and trends sourced from internal deal flow and buyer activity, Vertical IQ, and market comparables from platforms such as Axial and BVR (Business Valuation Resources).
Industry Insight Report: Staffing and Recruiting Q2-2025
A Mixed Bag for Staffing as Remote Work Trends Reshape Hiring Dynamics
The staffing and recruiting industry continues to navigate evolving workforce expectations and economic headwinds in Q2 2025. While demand remains steady in key sectors like healthcare, logistics, and skilled trades, client companies are becoming more selective with hiring decisions amid ongoing uncertainty over tariffs, interest rates, and wage inflation. Remote and hybrid models are no longer just pandemic adaptations—they’ve reshaped the way clients define roles and seek talent, requiring recruiters to adapt their sourcing strategies.
At Lion Business Advisors, we’ve seen an uptick in conversations with founders of niche recruiting firms—especially those focused on IT, healthcare, and executive search, who are exploring exit opportunities in light of long-term burnout and succession challenges. Buyers remain active in the space, with PE-backed platforms and regional acquirers looking to bolt on highly specialized firms with consistent EBITDA and strong client relationships.
Key Trends Shaping the Market
Remote Work Drives Engagement, But Brings Retention Challenges
According to Gallup’s recent global workplace report, fully remote workers are now 31% more likely to feel engaged than their in-office peers. However, they also report higher levels of stress, time management struggles, and social isolation, all of which are fueling turnover and creating opportunities for staffing firms offering retention-focused solutions. Firms that help clients address these issues, through onboarding support, HR advisory, or tech-enabled staffing, are better positioned to win recurring business.
Labor Market Growth Still Outpaces the Broader Economy
Employment in human resources consulting (which includes staffing support) grew 1.2% year-over-year in April and has risen 22.4% over the past decade, outpacing private employment growth. While growth in the past three years has slowed to 2.5%, it remains a signal of long-term opportunity in staffing, especially for firms that have carved out a defensible niche.
Wage Pressure Continues, but Margin Compression is Manageable
Wages in management consulting services rose 2.8% year-over-year to $43.05/hour. While staffing firms typically operate with tighter gross margins, those with higher-value placements, executive search, tech staffing, or fractional talent, are better able to absorb wage hikes and preserve profitability. Many buyers are actively seeking firms with billable contractor pools and W2 placement models that offer predictable revenue and EBITDA.
Outlook for Q3 2025
The outlook remains cautiously optimistic. While economic signals are mixed, the need for specialized talent solutions hasn’t slowed. Buyers are still pursuing quality staffing firms with recurring clients, scalable back-office systems, and strong internal teams. We expect deal activity to increase in the second half of the year, particularly for firms in Texas and the Southeast where job growth continues to outpace national trends.
Thinking about selling your staffing firm in the next 1–3 years?
Now’s the time to explore your options. Take our Sellability Score Today to benchmark where your business stands.
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