SI Review: November/December 2014

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The Hustle: IT Recruiting Trends

Lightning demand for emerging tech skills is challenging the conventional recruitment approach of IT staffing firms

By Amy Bingham

If you’re in IT staffing, you know well that requirements (that’s “tech talk” for job orders) are easier to come by than candidates; that’s been the case for years. In the race to beat everyone else to market with the talent, your firm’s focus has likely been recruiting, recruiting and recruiting. And with the new year around the corner and budgets inked, you’re crossing your fingers in hopes demand won’t abate and your recruiters will stumble on a search string that magically yields the needle-in-the-haystack candidate with experience in technologies so new we have to Google them. Indeed, after receiving requirements for a technology he had never before heard of, one of my clients remarked, “The people with these skills aren’t even born yet!”

The $22.5 billion IT staffing segment is second only to light industrial in terms of size. There has been no shortage of demand for technical talent, and US staffing firms in the space have enjoyed a nice run since the country emerged from the Great Recession.

But will the good times continue? Are there emerging trends that will require us to approach the business differently?

While no one has a crystal ball, it appears the short answers are yes and yes.

Still Going Strong

With technology evolving at a breakneck pace and the prominent role it plays in our lives, it’s logical to assume, without doing any research at all, demand for emerging skills will continue to challenge employers — and thus, the industry. Technology is changing the way we work, socialize and interact with one another, and the way consumers buy. In short, it’s changing the way we all live.

I have spoken with executives of IT firms across the country and without exception, all feel bullish about the outlook for IT staffing.

When asked if good times would continue for IT firms, Sheldon Wolitski, CEO of The Select Group sums it up this way: “At 3.5 percent year-over-year growth [as of this writing], IT employment remains steady. Forty percent of IT professionals are actively looking for new jobs. Because of all this, our clients are finding the hunt for talent to be even more difficult and many are having to increase hourly rates offered to consultants to fill critical roles.”

Pete Newsome, president of 4Corner Resources, concurs. “Experienced technical talent is already in high demand, and we expect that it will only increase over the foreseeable future,” he says. And Charles Lewis, 4Corner Resources’ director of operations, adds this: “An upgrade in technology is the best way to increase a company’s competitive advantage. With technology evolving so fast from year-to-year, I believe we are looking at steady growth for years to come.”

And a world increasingly driven by technology has a dark side that will fuel demand further. Massive hacking schemes the likes of what happened at Target — which affected 40 million customers — have companies anxious about the security of their customer data.

Wheels of Change

There are three primary trends that are forcing changes in IT staffing.

Evolving roles. First, IT roles are evolving beyond traditional technical competencies and becoming more complex. As management increasingly views the IT shop through a new lens — one of a business strategist and partner — the ideal IT candidate will have more than strong technical expertise. He or she also will be able to interface and collaborate with their internal teams across multiple functions.

Ross Fernandes, CEO of Q Analysts in the heart of Silicon Valley, believes there will be more opportunity for consulting as the need for connecting business strategy with technology that enables it grows. Employers “are starting to realize the need for niche specialist vendors instead of relying solely on large generalist staffing firms,” he adds.

On the staff augmentation side of the business, technical recruiters report being challenged to locate talent with well-honed business and communication skills in addition to technical expertise, as hybrid roles become more common. For example, emerging job titles like social media evangelist, user experience manager and IT service manager require candidates with experience in marketing. The data support this trend; the marketing and creative segment of the industry is growing at a robust 10 percent due to demand for digital creative talent, some of which is now being addressed by IT firms. It’s clear that having complete job descriptions, requisition by requisition, will become even more important to making successful placements.

There will also be more opportunities outside of traditional technology environments. Today, the IT sector employs only about one-third of the total IT workforce, while non-IT industries employ the remaining two-thirds of private sector IT workers. According to a new report from advisory company CEB, IT jobs in the tech sector will stall or decline through 2018, while non-tech industries — such as manufacturing, automotive, healthcare and retail — will drive IT job growth instead. It won’t just be all about Silicon Valley and Silicon Hills anymore — welcome news for the rest of the country.

Continued efficiencies. The second trend is technology is driving the need for continued efficiencies in recruiting.

Vendor management technologies, beloved by HR and despised by the staffing industry, are here to stay. Many firms cite further commoditization as a result of VMS as a challenge they have to contend with. VMS is already mature in the enterprise account space. IT staffing firms report getting more calls from their mid-market clients informing them their company is adopting a VMS, and it will change the way they’ll do business together. Right or wrong, we know buyers perceive VMS as a way to level the playing field between suppliers, manage cost and broaden their candidate pool.

In a VMS environment, speed to market is critical. IT firms competing heavily in the VMS space must create the fulfillment models to support it. Taking candidate sourcing offshore, hiring very junior recruiters for pure sourcing roles, and adding recruiter headcount to support VMS accounts are now common responses to the growth of VMS.

But it isn’t all about VMS. When it comes to sourcing the best and brightest, reaching the passive IT candidate pool is critical. “Staffing and social media are now co-dependent,” Lewis says. “It was only five years ago that we started seeing LinkedIn become a major player in recruiting. Now it’s a necessity in reaching the skilled IT candidate pool.”

Finally, adopting virtual technologies to drive efficiencies in the interviewing process will become a necessity for recruiters and hiring managers alike. “WebEx, Skype and even FaceTime interviews are becoming standard,” Lewis says. “And as millennials assume hiring manager roles, the comfort level of using these types of interviewing methods will grow. It’s faster, more flexible and cheaper than doing it in-person.”

Rising direct hire demand. It’s a candidate’s market in IT. The war for talent is fierce and will only get more competitive over time.

While use of contractors is standard in the IT world, employers know they’re always vulnerable to losing a contractor to a full-time position elsewhere. So they’re adopting a defensive strategy which is to lock those valuable skills in when they find them. They want to buy, not rent the talent — and that’s just what many IT firms say is happening.

How to Adapt

Here are steps to help your firm adapt to these trends:

  • Look beyond traditional tech organizations and geeky candidates as the ideal target accounts and candidates.
  • Talk to CIOs about how the IT department is viewed and positioned in their organization today. Ask if the team is charged with responsibilities beyond ensuring the system works and help desk calls are answered.
  • Help hiring managers clarify the job description when the consultant they’re describing a need for is one of the emerging hybrid roles. Ask, “So what I’m hearing is that you’re really looking for an IT service manager to stitch your data, support, applications and strategy together for your internal users. Is that an accurate assessment?”
  • Screen candidates beyond just technical experience for marketing, management or finance experience as well as confidence and good communication skills.
  • Ensure your recruiters are socially competent, such as on LinkedIn, Twitter or Facebook. They must reach candidates wherever they live, work and play.
  • Use Skype and other video technologies to expedite the interviewing of candidates, and encourage your hiring managers to do the same.
  • Enter the direct hire space strategically, not just opportunistically. If you don’t, your competitors will, and you may lose market share over time.

The world of IT staffing is changing. While demand is expected to continue for the foreseeable future, candidate supply will be further constrained over time. New technologies and emerging roles will require adaptations in our historical approaches to business.

Amy Bingham can be reached at abingham@binghamcp.com.

[SIDEBAR]

IT Staffing: What’s Hot, What’s Not

Hot

Technologies driving demand: big data, business intelligence, cloud, UX, agile, mobile applications, data security, DevOps, service virtualization Most Requested Positions:

  • Web Application Developers / HTML, Java, .Net
  • Systems Engineers
  • Project Managers
  • Quality Assurance

Not

All positions that support the following “dinosaur” technologies:

  • SDLC Methodology
  • Waterfall
  • C, C++
  • Legacy / AS400
  • Mainframe
  • VB.Net
  • ActionScript / Flash