Inflation is on the minds of most business leaders across the US these days with inflation rates reaching 7% in 2021, the highest level since 1982. While many debate the cause of the rapid rise in inflation, its effects are certainly being felt in the staffing industry as bill rates climb to new heights.
The robust demand for IT talent amid a shortage of available workers has pushed companies to increase wages to attract new talent in a competitive market, leading to considerable wage inflation. Data from compensation software provider Pave found that median salaries for software developers in the US grew 7% in 2021, consistent with the inflation rate. Other IT occupations have experienced even greater salary growth, with data engineering salaries growing 10% and DevOps salaries growing 12%.
Naturally, the rising IT salaries is leading to higher bill rates for IT staffing firms. In SIA’s January US Staffing Industry Pulse Survey, 58% of IT staffing firms reported increasing bill rates over the past three months after reaching a record high of 59% in October 2021. Only 2% of IT staffing firms observed decreasing bill rates, which marks the lowest figure for IT staffing since SIA began collecting such data in 2016. Furthermore, 51% of IT staffing firms expect bill rates to increase over the next six months. When looking at the historical trend, the percentage of IT staffing firms observing an increase in bill rates have been increasing since the summer of 2020 but really accelerated in 2021. In fact, prior to 2021, only once did more than 50% of IT staffing firms report increasing bill rates, while that figure was surpassed four times last year.
Higher bill rates and a competitive hiring market have fueled strong double-digit growth in US IT temporary staffing. SIA Pulse Survey data shows that IT staffing firms have seen steady revenue growth since October 2020, with median revenue growth reaching 25% in December 2021, another all-time high for the survey, which dates back to December of 2013.
Median IT Staffing Y/Y Revenue Growth
Source: SIA
After a prosperous 2021, IT staffing is well positioned for another year of growth. Various factors will play a role in driving growth, but the dual trends of rising bill rates and supply constraints are likely to remain intact in 2022.
For more information on trends in staffing revenue and bill rates, we encourage readers to participate in SIA’s US Staffing Industry Pulse Surveys. Selected highlights from the Pulse Survey are available to corporate members, while participating firms will receive a full report that includes in-depth data on the IT staffing segment.
