Geopolitical uncertainty and recession fears served as headwinds on the economy through much of 2019. However, a strong labor market and unemployment at historically low levels — 3.5% as of December 2019 — have continued to drive demand for staffing services. This is particularly the case within the IT staffing segment, where computer and mathematical occupations exited 3Q19 with a microscopic unemployment rate of 1.7%.
Below, we summarize the latest round of financial results of publicly traded US-based staffing firms active in the IT segment.
ASGN Inc. (NYSE: ASGN) touched a significant milestone by reaching $1 billion in quarterly revenue for the very first time, at a growth rate of 10.6% year over year or up 10.1% on a same-billable-days and constant-currency basis. Apex Systems achieved double-digit growth, with strength in the aerospace & defense, business services, financial services, healthcare, and consumer and industrial industry verticals. Apex Systems’ 4Q19 growth will be aided by its October acquisition of Intersys Consulting for $67 million in cash. Intersys is expected to contribute approximately $31 million in revenue in the quarter and maintain a double-digit growth rate in 2020.
ASGN’s Oxford division third-quarter revenue was $152.5 million, essentially flat year over year on an adjusted-billing-days and constant-currency basis. Oxford’s CyberCoders division (direct hire for IT, engineering, F&A and healthcare segments) was a headwind on growth, although management indicated it performed better through the quarter by undertaking long-term projects.
Kforce’s (NASD: KFRC) 3Q19 Tech Flex (IT temporary staffing) revenue of $345.6 million increased 4.2% year over year and 6.5% on a same-billing-day basis. Management cited the improvements in starts activity in the second half of the quarter and longer assignment durations as the key reasons for accelerated growth.
Robert Half’s (NYSE: RHI) third-quarter global revenue was $1.552 billion, up 6% year over year. Robert Half Technology, its IT staffing segment, reported revenue of $185.2 million, up 4.9% year over year, or up 4.8% adjusting for constant currency and billing days. Management cited a strong labor market, particularly in the US, and noted that macro and trade policy uncertainty did not significantly impact business trends.
CTG (NASD: CTG) reported 3Q19 IT staffing revenue of $64.2 million, up 4.7% year over year as the company refocused sales efforts to secure and ramp-up the growing number of new middle-market clients. Fourth-quarter 2019 revenue guidance was muted, reflecting the company’s renewed focus on prioritizing more profitable opportunities and not renewing a portion of lower-margin staffing business with a large client.
Mastech Digital (NYSE: MHH) reported 3Q19 revenues of $49.5 million, a 12% increase year over year while the IT staffing segment contributed $42.4 million at the growth rate of 10% year over year. Strong demand was supported by an increase of 84 billable consultants in the IT segment helped to fuel double-digit growth.
Among the larger, more diversified global staffing companies, Adecco’s 3Q19 global IT staffing business was down 5% year over year in constant currency. Specifically, within North America, management noted softness within IT (along with finance and legal segments). Randstad’s US IT staffing declined by 4% year over year and was flat sequentially. ManpowerGroup’s Experis revenue from IT skills grew 3% year over year on a billing-day adjusted basis, reflecting a significant improvement from the 3% deceleration of 2Q19 level due in part to increased activity in the middle market.
Although, US IT staffing growth decelerated a bit from 2018 levels in recent quarters, there was generally a sequential improvement in 3Q19. With GDP forecasts hovering around 2% for 2020 and IT unemployment exceptionally low, the outlook for the new year remains conducive for an 11th consecutive year of growth. More details and analysis of 3Q19 financial results of staffing companies, across all segments, can be found in Staffing Industry Analysts’ report: Financial Results of Staffing Companies - December 2019 Update.
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