What next for IT staffing firms?

Last year's recession wreaked havoc on the staffing industry, but all things considered, IT staffing came out relatively unscathed, particularly compared to what happened in some other segments of the industry. It certainly could have been worse. Moreover, in talking to some of the IT staffing firms during our Executive Forum, I heard some good news about how business is starting to pick up and people are definitely seeing light at the end of the tunnel.

Phew! So we survived this recession. What happens next?

We estimate that the IT staffing market was down 20% in 2009 to $15.8 billion. Remember 1997? The hey days of the IT staffing market, when Y2K and the emerging Internet market was pumping in money for IT? Well, according to our data, the IT staffing market in 1997 was  ... $15 billion. About the same size as today. Yes, we have braved through catastrophes such as 9/11, but the bottom line is that IT temp employment has not really expanded much in the past 10 to 12 years.

In addition to the economic turbulence, IT staffing firms are also dealing with some other hurdles. It doesn't help that buyers of IT staffing services have the highest adoption rate for VMS. Our most recent Staffing Firm survey indicates that most IT staffing firms are deriving the majority of their revenue from big clients versus small or midsize clients, which again means that they are encountering vendor management systems. On top of all this, there are these new H-1B visa restrictions that will hurt the bottom line of staffing firms placing H-1B professionals. Then there is the SUTA rate increase. This list of depressing items is depressingly long.

So what is an IT staffing firm to do in order to grow and thrive in these conditions? Is IT solutions the solution? Is partnering with a big MSP the solution? Is opening offshore offices the solution? Is establishing the firm as a niche/regional/technology specialist the solution? One thing is pretty clear -- it's time to go back to the drawing board and start strategizing. It's definitely time for some out-of-the box thinking. And we are hoping that you will join us in doing so on April 20 during our Webinar, "IT Staffing Trends and Outlook," where we will talk about recent trends in the IT staffing market and opportunities that will help you grow as we come out of the downturn. To register, contact memberservices@staffingindustry.com.

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