IT Staffing Report: April 10, 2014

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Blog: Five reasons we are still bullish on IT staffing

We are into the fourth month of 2014 and the IT staffing market is still cruising. As we all go about our business, at the back of our minds is always the question, “Is this IT boom going to slow down?” It’s not that we are awaiting the slowdown, it’s just so we are ready to brace ourselves. 

It’s always good to be prepared, but it’s hard not to feel good about the IT staffing market after going through the latest forecast of the industry from Staffing Industry Analysts. So, I thought I will list five main reasons, why I continue to see IT staffing as a strong and healthy market that will sustain in the coming few years.

1. Short-term forecast: According to the above-mentioned forecast update (http://www.staffingindustry.com/Research-Publications/Research-Topics/Region-North-America/U.S.-Staffing-Industry-Forecast-April-2014-Update) from Staffing Industry Analysts, IT staffing segment is expected to grow 8 percent in 2014, and an additional 8 percent in 2015, to reach $28.5 billion in 2015.

“We expect that the acceleration of growth in the U.S. economy will drive increased demand for enterprise software projects, mobile apps and website reconfigurations, software application development, data security, and other projects that utilize IT staffing firms,” said Timothy Landhuis, senior research analyst with Staffing Industry Analysts. “As a result, we continue to forecast a high rate of growth in this segment.”

In 2013, Staffing Industry Analysts estimated that the IT staffing segment grew a robust 8 percent, or slightly higher than expected in its previous forecast. “We believe growth has benefited from wage inflation, due to the severe shortage of qualified workers,” Landhuis added.

2. Penetration rates: The overall news for the temporary staffing industry is good, too. According to Staffing Industry Analysts, the U.S. temporary penetration rate reached a record high of 2.06 percent in March, indicating a record level of acceptance and adoption of temporary staffing in the U.S. workforce. The temporary penetration rate has doubled since 1990, providing evidence of the secular factors driving growth in the industry.

This was validated in our 2013 Contingent Buyers Survey & Cumulative Index, (http://www.staffingindustry.com/Research-Publications/Research-Topics/Region-North-America/2013-Contingent-Buyers-Survey-Cumulative-Index-to-2006-2012-Surveys) Staffing Industry Analysts’ annual survey of buyers of contingent workforce. The percent of buyers’ workforces that are contingent increased in average from to 18 percent in 2013. Penetration rate for contingent IT workers is at 19 percent and is expected to go up to 20 percent in two years. Additionally, buyers of IT staffing, on net, are more likely to use more contingent IT workers in the coming two years. 

3. IT staffing firms are optimistic, too: The Staffing Industry Monthly Pulse Survey (https://www.surveymonkey.com/s/StaffingIndustryPulseSurvey_Apr2014) that goes to a whole gamut of staffing firms — small, big, publicly held and private — showed that in March the year-over-year aggregate revenue growth for IT staffing firms accelerated to 15 percent from 12 percent and median year-over-year revenue growth was 10 percent. The percent of firms reporting positive year-over-year revenue growth increased to 72 percent in March from 67 percent. 

4. It’s not just temp IT: I know we are talking about temporary IT staffing here, but I just wanted to throw it out that the time is also ripe for IT staffing firms to bolster their direct-hire service offerings as well. Staffing Industry Analysts’ buyer survey shows that on net, buyers primarily purchasing IT skills have very ambitious plans to increase their fulltime IT workers as well.

5. Favorable long-term forecast: It’s not just a rosy picture for IT staffing in the short-term only. Long-term growth for IT staffing looks robust, too. The U.S. Bureau of Labor Statistics released in December 2013 its employment projections through 2022 for hundreds of occupations and industry groups. Based on that, Staffing Industry Analysts came up with its own long-term projections (http://www.staffingindustry.com/Research-Publications/Research-Topics/Region-North-America/2022-employment-projections-and-long-term-U.S.-staffing-industry-forecast) for the temporary staffing industry as a whole, and for the various staffing segments. Staffing Industry Analysts forecasts, IT staffing to expand by 5.6 percent compound annual growth rate to a market size of $39.0 billion in 2022. 

“Although competition from IT solutions providers is significant, we believe IT staffing will continue to benefit from high rates of temporary penetration (5 percent ratio) and recent momentum (five years with >7 percent revenue growth,)” Landhuis said.