Staffing Industry Analysts recently released its US Staffing Industry Forecast – September 2017 Update. In the report, we forecast the US IT staffing segment to maintain its 2016 growth rate of 4% in 2017, representing a $29.7 billion market and continuing this trajectory into 2018, reaching a scale of $30.9 billion.

US temporary staffing market size year-over-year growth (%): IT segment

In forecasting the staffing market, assuming the mix of skills holds relatively constant, year-to-year fluctuations in market size are driven by two factors: volume and price. As it relates to volume, growth in IT staffing is supported by large positive secular trends. For example, the digital economy is driving significant IT job creation. Not only are corporations placing an increased importance on IT workers, but they are also favoring the staff augmentation model for its flexibility in managing costs and the ability to tap into more specialized IT skill sets.

Further heightening demand for IT staffing right now is the struggle corporations face in identifying and attracting relevant talent in an environment where an IT skills gap is becoming more pronounced. This, of course, serves as a double-edged sword for IT staffing firms. As IT staffing sales difficulty softens, recruiting difficulty for certain skill sets has risen to historic levels.

As it relates to the other side of the growth equation, price, we would naturally anticipate inflationary pressure on bill rates in an environment where demand is clearly outstripping supply. However, based on our proprietary benchmarking surveys, bill rate growth has remained constrained. There are likely several factors at play in explaining this. Within large enterprise accounts, for example, MSP and VMS penetration has clearly played a role in stymying inflationary pressures. Additionally, as recruiting difficulty increases, some staffing firms are reporting greater competition on price as peers maneuver to generate revenue streams. Other external factors that may be serving as a headwind on bill rates include competition from offshore solution providers in lower-cost regions, as well as the impact of foreign IT workers coming to the US through the H-1B and other related visa programs.

Finally, as with any forecast, there are risks and opportunities. For example, fiscal stimulus, such as corporate tax reform could serve as a catalyst. On the other side of the coin, though we are not projecting a recession through 2018, there is always potential for an economic shock.

Corporate members can access the full forecast report on our website here.