5 Global Trends Workforce Leaders Need to Watch in 2025

As we embark on a new year, it's clear that the workforce landscape is undergoing significant transformation. While “significant transformation” may sound intimidating, or even insurmountable, we at Allegis Global Solutions (AGS), are committed to helping our clients navigate these changes and turn them into opportunities.

In a recent episode of the Subject to Talent podcast, I discussed the workforce trends that impacted our industry in 2024 and previewed the trends that will continue to shape 2025. As economies continue to fluctuate around the globe, cost-saving measures remain the top priority of business leaders. Offshoring talent, reduced retirement rates, inflation, AI and skills-based hiring all are top-of-mind global trends that will shape the future of work in 2025 and beyond. Below, I will outline each trend and its effect on the market.

1. Offshoring and Global Talent Sourcing

One of the most prominent trends we are seeing is an increased commitment to offshoring opportunities. Increasingly, companies are looking beyond their borders to find workers with skills that meets their needs at competitive rates.

While many locations are sought after for specific skills, India remains a hot spot for offshoring for several disciplines. In addition, there is growing interest in expanding to other countries such as Mexico, Poland, the Philippines and Indonesia. Driven by the need to access broader talent pools, manage costs and remain competitive in the global market, organizations are seeking partners to provide access to off-shore and near-shore markets. Moving into 2025, organizations will continue to explore global talent sourcing, develop strategies for managing a global workforce and integrate technologies that provide insights in the global market and ensure seamless collaboration between global teams.

2. Shifting Worker Priorities

The focus and needs of workers have changed significantly since the pandemic. Many workers are looking for remote opportunities or flexible in-office hours. In addition, baby boomer aged workers are choosing to delay retirement or prematurely end their retirements and return to work, while millennials are outnumbering the Gen X workers and advancing to management positions. These changes may require business leaders to rethink their workforce strategies to balance the experience and knowledge of baby boomers and Gen Xers with the innovation and energy of millennials and emerging Gen Zers.

To gain the best results from these shifting worker mindsets, business leaders could consider rehiring retired workers as consultants, so organizations can leverage the experienced workers’ industry knowledge while also mentoring up-and-coming generations. In addition, adjusting their return-to-work mandates to hybrid models that allow for 2-3 days a week in office and the balance as work-from-home days, business leaders retain their workers and create a more attractive prospect for new workers that are looking for more flexibility. In addition, the in-office days can increase mentorship opportunities that better prepare the younger generations for future management positions.

Conversely, some companies are using full-time return-to-work mandates to encourage natural attrition. However, this is not recommended because while there may be cost savings in the short term, long-term company reputations and competitiveness in the market could suffer. This shift has significant implications for employee satisfaction and job searches. Surveys indicate that a hybrid model, which allows employees to split their time between the office and home, leads to higher employee satisfaction. Companies will need to balance the benefits of in-office work with the flexibility that employees have come to expect.

3. Wage Pressures and Inflation

Inflation has been a major concern globally and has put added pressure on wages and bill rates. Over the past few years, wage increases have not kept pace with the rising cost of living, which increased wage pressures on our clients and on workers. We’ve seen wage increases by approximately 27%, yet real earnings have only risen by 1%, since 2019.

In North America, the effect of inflation touches housing costs, groceries, utilities, nearly all household expenses, so workers may receive a raise for switching jobs of 9%, but they needed that raise to handle the increased standard of living costs. This is significant for workforce leaders, because inflation and wages are key factors in why we are seeing more job hopping in recent years.

While it is being reported that wage pressure is decreasing, I want to caution hiring managers, sponsors and clients out there that decreasing wage pressure doesn't mean that wages are going to decrease. We're seeing that wage pressure decrease because inflation is decreasing – which is good news and a reason for optimism in 2025.

The Federal Reserve's decisions on interest rates will continue to impact wage pressures and the overall economy. In 2025, organizations will need to navigate these economic challenges and find ways to manage wage pressures while remaining competitive in the talent market.

4. The Impact of AI on Workforce Strategies

Generative AI is starting to reshape the workforce in significant ways. Organizations are increasingly exploring how AI can increase productivity, reduce costs and create more efficiency. AI can help companies scale without increasing headcount by automating routine tasks and providing insights that drive strategic decisions. However, there are still challenges to overcome, including legal and ethical considerations. As AI continues to evolve, it will be crucial for organizations to find the right balance between leveraging AI and maintaining a human-centric approach to workforce planning. We recommend viewing AI as a way to augment talent rather than replacing it.

5. Skills-Based Hiring and Workforce Adaptability

The traditional model of hiring based on educational level and past job experience is being replaced by a focus on skills. Companies are recognizing the importance of identifying transferable skills that can be applied across different roles. Additionally, there is a growing trend of younger workers opting for skills-based education, such as trade schools and coding bootcamps, over traditional four-year degrees.

This shift is driven by the need to fill critical roles and adapt to changing business needs, such as increasing access to talent and potential for retaining internal talent with more engagement and challenges. As more organizations adopt skills-based hiring practices, they will need to invest in training and development programs that help employees build the skills needed for the future of work.

A Data-Led Future

The future of work is being shaped by these global trends, and organizations must be proactive in adapting to these changes. This means staying ahead of the trends with trustworthy data and a workforce partner that is experienced in reading the market and the economic shifts across the globe.

Current trends show that by embracing offshoring, balancing remote and in-office work, managing wage pressures, leveraging AI and focusing on skills-based hiring, companies can transform their workforces and stay competitive in a rapidly evolving workforce landscape.