IT Staffing Report: May 2, 2019

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US IT temporary staffing growth outlook gets upward revision

The US IT staffing sector is projected to reach a record $35.5 billion in 2019, according to Staffing Industry Analysts’ recently published “US Staffing Industry Forecast: April 2019 Update.” This is predominantly comprised of $32.3 (up 4% year over year) billion in temporary staffing, marking an increase from our prior forecast last September of $32.0 billion (up 3% year over year) and representing the sector’s 10th consecutive year of annual growth.

As we analyze the components of revenue in arriving at our revised forecast, little changed in our view since our last update in projected volume (hours billed) for 2019. Recruiting difficulty continues to intensify due to talent shortages. We see this particularly in areas such as cyber/data security, cloud architects and data architects/scientists. Supply constraints are a bottleneck on volume growth even as demand trends remain strong into this historically long economic expansion period.

The catalyst behind our upward revision is evidence of a sustained growth in bill rates we attribute to the tight labor market. One example of this comes from our Pulse survey (see chart below). There has been a step-up in the net proportion of IT staffing firms reporting bill rate increases since early 2018. This metric reached an all-time high in our most recent survey where 40% of firms reported bill rate increases and 0% reported decreases. Based on our conversations with industry executives, the greatest bill rate increases are occurring in mid-market client accounts and related to emerging job roles, such as those involving artificial intelligence, machine learning and blockchain.

(click on chart to enlarge)

In addition to increasing bill rates, buyers are taking other steps to be more competitive in the war for talent. We hear anecdotal evidence of buyers expediting hiring decisions, extending contract durations and waiving term limits.

We anticipate secular tailwinds to continue to support temporary IT staffing growth in the US beyond 2019. Nevertheless, we project a slight deceleration to 3% growth in 2020, largely due to moderating economic growth, as reflected in consensus GDP forecasts.

Corporate members have access to SIA’s semiannual forecast updates, which include analysis of the US staffing industry economic backdrop along with historical and forecasted growth rates and market sizes of individual skill segments.

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