As more data comes out, we can see truly how hot IT staffing has been since 2021.
SIA recently released its Largest IT Staffing Firms in the US: 2022 report. On the list are 62 firms that generated at least $100 million in IT staffing revenue in 2021, with a total combined revenue of nearly $30 billion. Of these 62 firms, an impressive 13 appeared on the list for the first time.
The combined market share of the five largest (36%) and 15 largest (58%) were higher than any previous year since we started collecting list data in 2007. This reflects consolidation in 2021, with several large acquisitions reported. Double-digit new firms showing up on the list in spite of this consolidation is evidence of the revenue-generating power of IT staffing in 2021.
The strong 2021 run carried over into the first half, and is now still being seen in second-quarter earnings. We’re also getting a glimpse of what to expect in the latter half of the year from earnings calls.
In Kforce Inc.’s (NASDAQ: KFRC) second-quarter earnings call, management referred to 2021 and early 2022 as an historically strong period of growth, with activity levels and trends at all-time highs. And ASGN Inc. (NYSE: ASGN) in its second-quarter call noted that “customer IT spend is showing no signs of slowing.”
Kforce reported 26% year-over-year growth in the first quarter and 23% in the second quarter. Meanwhile, ASGN in the first and second quarter reported 18% and 11% growth, respectively, in its commercial assignment division. The company noted specifically that it saw high single-digit growth in IT staffing in the second quarter.
Both ASGN and Kforce referred to wage inflation (Kforce second-quarter bill rates were up 8% year over year). But for both companies, bill rates have been passed onto customers and have not yet had an effect on demand for IT talent. Furthermore, some moderation in bill rates is expected in the second half.
Despite economic headwinds and news of tech layoffs, companies are still prioritizing their digital transformation projects. However, after such record levels in the first half, more focused hiring and more challenging year/year comparisons have led to an expectation that the third quarter will see IT staffing growth return to more moderate levels.
But with such an extreme talent shortage still in place, “moderate” certainly doesn’t mean weak. To this point, Kforce expects third-quarter IT staffing growth to be in the mid-teens.
Industry trends and sustained demand point to modest growth until at least the end of the year.
To see the extent of IT and other staffing segment growth and trends in August, be sure to participate in the September Pulse; keep an eye out for the invite at the beginning of the month, or visit our Surveys page.
