Though the tepid pace of this economic expansion is not fueling the rapid growth staffing industry stakeholders might prefer, one upshot of this plodding recovery may be that its length is protracted, meaning the next recession may not come as soon as we might expect in a more typical cycle. Our baseline case calls for GDP growth in the US to hover in the 2.0% range for this year and next. Similarly, in our April forecast update, we see the US market for IT staffing remaining through 2017 in the moderate, steady growth mode that has characterized the last few years for the industry. 

As shown in the graph below, we project that the IT staffing market in the US will decelerate slightly from 7% year-over-year growth in 2015 to 6% this year, and hold at 6% in 2017. This is in-line with the rate of expansion we have seen since 2013 following three years of double-digit growth in the early part of this recovery.

US Temporary IT staffing revenue growth, historical and projected

While healthy enough in that it represents a multiple of annual GDP growth, this is somewhat lower than the level of demand would seem able to support. We’re hearing from many firms that their order volumes are sufficient to drive greater revenue growth, but the dearth of qualified candidates is causing fill rates on those requisitions to fall. Even when prospects with the right skills can be found, those individuals typically understand that their skill sets are highly sought, and are therefore choosy about the types of assignments they take and the pay rates they accept.

One consequence of this competitive dynamic is that, beneath the surface of the “steady as she goes” market growth, there is significant divergence in the results among competing firms, with some reporting sustained, double-digit year-over-year IT staffing revenue growth and others showing declines of similar magnitude. In general, this could be characterized as a gradual shift in market share away from large, generalist agencies and legacy IT staffing suppliers in favor of specialists. As we detailed in our recent report What’s Working in IT Staffing, many of the firms that have exhibited the highest rates of IT staffing growth in recent years have done so, in part, through the development of specialized practices aligned with subject matter expertise, offering a proven talent pool to address one or more of the emerging IT skill segments.

Though most of the firms profiled in that report were below $100 million in annual IT staffing revenue, this strategy is by no means restricted to mid-market and smaller suppliers. In fact, On Assignment and Insight Global — respectively the second- and third-biggest players in the US market for IT staffing by our estimates — are examples of large companies that have sustained double-digit annual growth in recent years despite their billion-dollar revenue bases.

Thus, we see solid growth for the overall IT staffing market in the US through the next two years, but emphasize that conditions are sufficiently robust to support growth well in excess of our 6% forecast for companies that have positioned themselves for success in this evolving landscape.