IT Staffing Report: Dec. 10, 2015

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What is driving the IT staffing market heading into 2016?

As 2015 draws to a close, the year is shaping up to be another solid one for the IT staffing market, but it has not been without challenges. Staffing Industry Analysts estimates growth in the US market at 6% this year, and project a similar rate of growth in 2016, which would bring its scale to an all-time high of $28.9 billion. While signs indicate that demand remains fairly robust, an uptick in perm conversions on top of an already-tight supply environment for many IT skills has made recruiting particularly challenging. We examine some of these issues in depth in our recently published IT Staffing Growth Assessment: November 2015.

With a seventh straight year of healthy growth forecast for 2016, it’s no surprise that talent has become increasingly scarce. The report’s opening section delves into the major tech trends that are determining which skills employers are most actively seeking, such as cloud computing, data analytics, mobile connectivity, digital marketing and cybersecurity. The rush to secure talent has driven unemployment rates for IT occupations lower, with several recently below 2%.

While the fixed annual allocation of H-1B work visas remains a constraint on new supply — there were nearly 3x as many petitions filed as visas available this year — the number of computer science (CS) graduates in the US is on a rapidly rising trajectory, and the number of CS master’s degrees is at an all-time high. Though still only a fraction of the number of CS graduates, coding bootcamps are becoming an increasingly important resource for IT workforce development, with an increase of nearly 8x in those completing a full-time, in-person program between 2013 and 2015.

Section 2 of the report explores the primary target markets for IT staffing firms, with market size estimates ranging in scale from the continental regions followed around the globe to local metro areas in the US and UK. Detailed wage data, estimated temporary penetration rates and long-term growth projections by occupation are featured here as well. An industry profile makes up the report’s third chapter, including the competitive landscape, fastest-growing firms in the US and Europe, and a recap of recent global merger and acquisition activity in the sector.

Growth prospects and benchmarking data are presented in Section 4. In addition to the details of the market forecast, it includes an analysis of revenue trends among publicly traded firms, as well as financial and operational benchmarking data encompassing gross margins, bill and pay rates, fill rates and early terminations, among other metrics. In the report’s final section, we discuss the expanding trend of IT staffing firms moving into higher-value services under a statement of work (SOW), including the motivating factors that are driving this shift both from the staffing firms’ and the buyers’ perspectives. Engagement patterns, types of projects and services commonly provided, team structures, pricing and billing models are all covered here, along with a checklist that can be used to conduct a skills gap analysis to determine whether your firm is well positioned to achieve success in the SOW market for IT projects and services.

The macroeconomic environment appears conducive to growth as we approach 2016, and the manifold trends that are driving business demand for technology solutions show no signs of abating. But beyond the continuing battle to recruit IT talent, which has been intensifying for several years, there are bound to be unforeseen challenges that emerge as the year transpires. Arming yourself with the data in this report will help ensure your firm is positioned to capitalize on the considerable opportunities that exist in this market, while weathering any storms that might gather on the horizon.

Corporate members can access the IT Staffing Growth Assessment online.