IT Staffing Report: Jan. 10, 2019

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Vital signs signal thriving environment for IT staffing in healthcare

IT staffing firms face a continuous struggle to differentiate in a fragmented market with low barriers to entry. Some firms accomplish this by specializing in specific occupations or skill sets, while other firms may focus on specific geographies. Some IT staffing firms benefit by concentrating on serving a specific industry (or industries). These strategies can lead to meaningful competitive advantages over staffing firms with a less specific focus. For example, a commitment to a specific industry yields a greater fluency with industry language, understanding of the unique challenges faced by buyers, and provides opportunities to be more consultative with clients.

These advantages are particularly evident for IT staffing firms serving the healthcare industry. Healthcare is undergoing a transformative period, driven in part by the paradigm shift to value-based care. The resulting rapid changes are causing disruption within IT. As a result, buyers are increasingly gravitating to suppliers with subject matter expertise, knowledge of best practices and access to specialized talent related to a variety of new investment areas, including data analytics and cloud migrations.

We cover the many catalysts behind the current wave of IT disruption in healthcare and where IT staffing firms can specifically take advantage in our recently published report, “IT Staffing in the Healthcare Industry.” As shown in the graphic below, the IT staffing to healthcare end markets are primarily bifurcated between providers (hospitals) and payers (insurance companies), with a majority of the total addressable market derived from providers.

Source: SIA

Nevertheless, there are other buyers of IT staffing in healthcare as well, such as pharmacy benefit managers, pharmaceuticals and medical device companies. Further, while staffing firms naturally prefer a direct business relationship with the healthcare organization, additional revenue generation opportunities are commonplace with consulting firms and system integrators.

Combined, we estimate total IT staffing to the healthcare industry was a $2.9 billion market in 2018, with $2.6 billion in temporary staffing and an additional $300 million derived from direct hire. Staffing firms with specialized practices in healthcare should benefit from swelling healthcare IT budgets and a continuing shift away from electronic health record implementations and maintenance. We believe this is leading to incremental investment that is both more conducive to staffing and provides higher margin opportunities than experienced during the past wave of electronic health record implementations.

IT Staffing in the Healthcare Industry” is available for download now to all corporate members.

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