The November Pulse Survey Report published just before the Thanksgiving holiday, and it revealed that IT staffing strength is carrying over into the fourth quarter. IT staffing segment revenue was up 10% year over year in October. Despite big layoffs and economic headwinds, demand for digital transformation projects has proven resilient thus far; year-over-year growth in IT staffing decelerated only 3% from the previous Pulse Survey.
A net 49% of IT staffing firms saw an increase in bill rates over the last three months, while a net 38% expect an increasing trend over the next six months. This indicates that bill rate inflation is slowing.
Meanwhile, the chart below tells quite an interesting story. The Pulse measures average sales difficulty and average for all staffing segments. In IT, things got out of whack with Covid and from early 2021 to early 2022, recruiting difficulty was at all-time highs and sales difficulty was at all-time lows. This is proof of the extremely tight labor market during that period. However, the two values have been converging, and in the most recent survey, the lines crossed. Recruiting difficulty is at least for the time being lower than sales difficulty, signaling a significant loosening in the labor market.
Click on chart to enlarge.
Beyond the usual metrics, in the November survey we also took a special look at the current state of affairs with remote/hybrid/on-site work.
A mean 53% of temporary workers at IT staffing companies were working fully remotely at the time of the survey, while 23% were working on a hybrid basis (a combined 76%). A mean 47% of internal staff were working fully remotely, and 44% on a hybrid basis (a combined 91%).
To give a basis for comparison, the last time we analyzed work-from-home arrangements in the Pulse was in January 2021. At that time, 83% of IT temporary workers were working remotely primarily (that survey did not ask about hybrid arrangements), and 83% of internal staff were working remotely primarily.
While most other segments have seen higher percentages of people return to regular office work, IT remains more conducive to longer-term remote or hybrid work.
In IT Staffing: Growth Themes in the New World 2022, we saw that remote work is indeed a longer-term phenomenon in IT staffing; 50% of IT staffing temporary workers are expected to be working remotely in 2027.
In that same report, we also see that IT staffing company revenue from statement-of-work increased to 60% in 2022 from 6% in 2015 and will likely continue to grow. Furthermore, cloud infrastructure services are expected to grow 31% in 2022. Another important point is that IT spending is expected to continue well into the future; Gartner forecasts worldwide IT spending to grow at a CAGR of 7.8% from 2021-2026, more than double the 3.4% which the IMF forecasts GDP to grow during that same period.
In all, digital transformation projects have continued to lead to significant demand, spending and growth in the segment. To see how the year ultimately ends in IT staffing, participate in the January 2023 Pulse; keep an eye out for the invite at the beginning of the month, or visit our Surveys page.
