SI Review: November 2013

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The IT Element

Focusing on IT niche markets can accelerate revenue

By Leslie Stevens-Huffman

A rising economy lifts everyone. The IT staffing industry is no exception. The latest industry forecast update from Staffing Industry Analysts reveals year-over-year aggregate revenue growth of 7 percent in the IT sector in 2013.

But firms can be buoyed higher if they catch the crest of a rising wave. Take Protingent, for example, which provides engineering and technical talent to computer systems design and development companies and made Staffing Industry Analysts’ 2013 list of fastest-growing firms.

“We don’t care whether Apple, Android, Samsung or Motorola wins the smartphone war,” says Donn Harvey, Protingent’s president. “Because we plan to expand by staying in our niche and servicing all of them.”

Although the usual post-recession suspects like aging technology, project backlogs and limited staff are boosting the demand for IT professionals, this time, a tsunami of technology and regulatory changes is creating an insatiable appetite for contractors with cutting-edge technical skills in select industries.

“Social media and mobile computing are creating an entirely new interaction model and companies don’t have the internal resources to make the transition,” says Hiten Patel, chairman of Collabera.

Hot Verticals

Whether you focus on a single industry like Protingent or spread your eggs among several baskets, you can’t afford to overlook the opportunities in these red hot vertical markets. Best of all, owners estimate that there are three years remaining in the current five-year up-cycle.

BANKING

Regulators are demanding greater transparency and compliance with new regulations, such as The Dodd-Frank Wall Street Reform and Consumer Protection Act, customers want on-the-go banking, and management is looking for growth. National banks need the most help, after a spate of mergers left them with a bigger footprint and a host of disparate technologies.

“Security is a prime concern in the banking industry,” says Jon Olin, managing partner of ettain group. “Banks need Internet security specialists and mobile app developers who know how to build secure interfaces.”

OIL & GAS

The shift to smart grids and green energy requires an overhaul of the industry’s provisioning and billing system, which is also affecting utilities.

For instance, companies need a way to track and bill for energy generated by 200 solar plants, notes Patel, who says his clients are looking for Java programmers, business process experts and mobile app developers.

Forrester Research reports that utility company IT executives see the following four concerns as their top priorities:

  • Meeting regulatory and environmental compliance (54 percent)
  • Implementing or upgrading smart meters (41 percent)
  • Implementing or expanding use of mobile technologies for field service workforce (38 percent)
  • Upgrading distribution systems for smart grid (38 percent)

In a related note, Pike Research predicts that between 2011 and 2020 there could be $108 billion invested in smart cities infrastructure, which has garnered the attention of high-tech giants like Cisco Systems, IBM and naturally, their IT staffing partners.

HEALTHCARE

IT spending is expected to increase to more than $34.5 billion next year, according to a report from Technology Business Research Inc., as large North American organizations grapple with the impact of healthcare reform, privacy regulations and the federal government’s call for consolidated data and increased efficiencies.

The money will be parsed out across industry applications, business applications, productivity applications, business intelligence and analytics, database and technology and systems management and even mobile technology.

“Patients want to book appointments and shop for health services from hand-held devices,” says Wendy Marschke, operations manager for the VMS group at Peoplefluent. “So even physician groups, clinics and long-term care facilities are using contractors to develop apps and expand their mobile capabilities.”

COMPUTER SYSTEMS DESIGN AND DEVELOPMENT

With the lifespan of a U.S. smartphone averaging around 21 months, and consumers clamoring for increased speed and functionality, product development in this industry is a constant priority. Moreover, the cloud is boosting the demand for servers and network storage devices that can securely accommodate multiple customers.

“Tablets, smartphones and game consoles all need verification and testing and that’s a perfect application for contingent workers,” Protingent’s Harvey says. “Plus, the industry has an ongoing need for product development engineers.”

Hot Segments Within Vertical Markets

These emerging technologies and trends are driving the demand for highly skilled contractors in vertical markets.

MOBILE APP DEVELOPMENT

The age of mobile computing is here. A recent Gartner forecast predicts that more than 2.3 billion mobile devices will ship worldwide in 2013. The company expects tablet shipments to expand 67.9 percent over 2012 levels as the mobile phone category expands by 4.3 percent.

Large companies need to re-architect their underlying infrastructure so employees can access applications and data from their mobile devices. Midsize companies are developing applications for consumers and employees at a faster clip, Olin says.

“Midsize firms are nimble enough to create a mobile backbone while large companies need to build an interface to provide mobile access to data,” he says.

THE CLOUD

Executives are eager to downsize their networks if cloud service providers allay their security concerns. As a result, the worldwide cloud computing market will grow at a 36 percent compound annual growth rate through 2016, reaching a market size of $19.5 billion.

The top four cloud computing-related projects enterprises are working on right now are: internal private cloud, provider assessments/strategic planning, infrastructure-as-a-service and software-as-a-service.

BIG DATA

Global management consulting firm McKinsey & Co. believes big data analytics is one of the top five catalysts that can increase U.S. productivity and raise GDP over the next seven years. However, the firm also predicts that the U.S. could face a shortage of 140,000 to 190,000 people with “deep analytical talent” and of 1.5 million people capable of analyzing data in ways that enable business decisions by 2018.

“Companies have been collecting data for the last five to 10 years,” notes Olin. “They’re finally ready to take the next steps.”

The transition from collecting to connecting data requires a bevy of Hadoop experts, strategists, scientists, architects and engineers to organize and retrieve the data and a few analysts to provide insight and actionable recommendations.

INFORMATION SECURITY

A third of all malicious data breaches are reported by third-party companies, meaning the victimized companies don’t detect the breaches at all according to Network Computing. As a result, the global security analytics market is expected to grow from $1.96 billion in 2013 to $3.22 billion in 2018, with North America leading the way. In fact, the demand for security professionals is growing at almost four times the pace of other roles in IT and has consistently outstripped the supply.

“The hackers aren’t going away and neither are the regulations,” says Marschke. “Every company needs help.”

Specifically, companies need cybercrime investigators, ethical hackers, auditors, security managers and a variety of analysts because as Patel notes “their existing risk and compliance systems are outdated.”

Optimization Strategies

Executives are taking extraordinary steps to meet the IT staffing needs of clients in hot vertical markets. They’re not only focusing on retention but the career development of their contract workforce.

“I think our industry has a chance to double in the next few years as clients increase their reliance on contingent workers,” Harvey says. “We’re jumping in with both feet by giving our consultants 100 percent company-paid health insurance. It’s a gamble, but so far, it’s giving us an edge when negotiating rates with clients.”

Harvey says contractor retention and staff longevity go hand in hand. He’s quick to point out Protingent’s advantages in that regard as an employee-owned staffing firm.

“Our recruiters have long-term relationships with engineering managers,” he explains. “They know the culture and the environment which is critical when time is of the essence. You can’t have a revolving door and succeed in a niche market.”

Other firms are offering contractors career tips, training and stretch assignments to keep their skills fresh and their loyalty intact.

“Contractors want more than a job, so we’ve hired relationship managers and created a new interaction model,” Patel explains.

“We talk with our contractors every month and refer them to conferences or offer them assignments where they can increase their skills. We track our ROI by measuring our join and retention rates.”

At ettain group, Olin hired advocates to oversee the onboarding of contractors assigned to large MSP accounts. Each advocate is responsible for the retention, career development and satisfaction of some 100 to 150 contractors.

“We develop relationships with local community colleges so we can secure a spot for contractors at an agile training or A+ certification class,” he says. “We don’t just call them to see how things are going, we give our contractors career-enhancing tools and access to the staff and resources in our people department.”

Because demand usually outstrips supply in hot vertical markets, Olin developed a triaging protocol for requisitions to keep recruiters from spinning their wheels. They give priority to orders from IT managers who supply interview times up front and swift feedback after an interview.

“You’ve got to reduce time-to-fill to succeed in hot markets,” he said. “You just can’t afford to service clients who take too long to make a decision or drag their feet.”

Demand Up

The demand for IT talent has increased for 23 straight months as of press time, according to Mark Roberts, CEO of TechServe Alliance, which provides employment data and analysis to the IT & engineering staffing and solutions industry. On average, candidates with hot skills are finding work within two weeks, he says.

Leslie Stevens-Huffman can be reached at lesliestevens@cox.net

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