Recent data shows the emergence of a positive trend in IT staffing, including stabilizing numbers in placements as well as revenues. Is this the first sign of a turnaround in the overall economy?
Monster spoke with a variety of staffing industry leaders about the role that IT will play in the economic recovery, including:
Monster: Have IT staffing and services been dealt the same right hook that most other industries have felt in this downturn?
Lanzalotto: Yes, especially since banking and financial services are big customers of the sector. The hit has been brutal for many companies -- large and small. Perhaps the biggest impact has been on non-wins. I use that term to refer to the IT services firms that won large pieces of business from banks, staffed up for the demand and then took a bit of P&L hit when that business never materialized.
Genzler: Fortunately not, and in many instances the salaries have edged up slightly. It is nice to see that be the case since the last recessionary cycle impacted the graduation rates of those with IT degrees.
Dickey: IT staffing in general has not felt as great a degree of year on year decline as other verticals in this economic downturn. However, in today’s uncertain times, companies tend to be pushing out new project initiatives and while they are still on the docket, they are not being realized in the short term. Instead, companies are focusing on the must haves, which include modifications to existing projects and technologies. As a result, we are seeing a shift to a bigger demand for mid-level developers, QA testers and the like, along with the normal demand for high-level skill sets such as project managers and business analysts.
McSally: No. The blow was delivered later than other industries and the impact is expected to be shorter and less profound. Of course the right jab has hit IT staffing as hiring freezes, layoffs and budget cuts have affected IT departments. Yet there is still a demand for business intelligence (internally and externally) now that IT is more strategic.
Monster: Why has IT been able to shrug off the effects of the recession sooner than other industries?
Genzler: Several factors have come into play since the beginning of the recession, when IT pulled back on capital spending, delayed projects and froze hiring of full time employees. But in terms of staffing, there has been a fair amount of resistance to reduce IT staffing.
Most IT companies are holding onto their staffs and finding creative ways to retain talent by mixing cost reduction initiatives like reduced hours, on-shore outsourcing of non-core functions to reduce overall cost and focusing on projects that truly provide value to the business.
Schumacher: IT departments have historically operated leanly, which is one reason IT unemployment was so low to begin with. Also, as companies begin to recover, they will likely begin spending in IT staffing because business recognizes how intertwined IT now is with their objectives. CIOs remain most concerned about business and IT alignment and high-performance; IT departments are responsible for creating efficiency and tangible ROI.
Lanzalotto: A lot depends on the industry(ies) a firm serves. If it’s in a space that has Stimulus funds being injected, there’s a better near-term recovery. If not, the recovery will slow. My hunch is that infrastructure and Green-related engineering and construction will thrive early because of the government incentives involved.
Dickey: IT does tend to rebound first as this is the first place a company will tend to invest -- in their technology. If a company is a technology company, they must invest in their technology in order to stay on the leading edge. There is a fixed period of time where they must invest or become vulnerable to competition in similar technology segments. Other companies need to invest in technology to simply move ahead. Usually an investment in technology will show the highest return.
Monster: Do the signs of recovery we are seeing in IT staffing point to a larger trend of economic recovery?
Schumacher: Yes. In past recessions, IT has been one of the earliest segments to recover due to its leanness and impact on core and transformational business processes. Even in the last tech-driven recession, IT recovered more smoothly.
Dickey: It is still too premature to predict the depth of the current down cycle. Because this recession is so widespread to both consumer and corporate entities, it makes it extremely difficult to predict the recovery patterns. That being said, IT staffing behaves differently in large part due to our service line -- technology. A reliance on technology allows a company to realize scale and improved efficiencies. Therefore, ROI in the technology sector generally tends to be higher than other areas of a company's investment.
Genzler: Technology innovation has always been a key driver of growth and re-emergence of any economy from recession. It has happened in every cycle and with the abundance of intellectual capital, entrepreneurism, innovativeness and additional emphasis from the Federal government on key technology areas, that assumption seems to be a safer one. I predict that the second half of '09 and into '10 will continue to see the recovery strengthen.
Monster: Will the long-term impact of this economic downturn be positive or negative for IT staffing?
Lanzalotto: I believe companies are paring back the number of full-time staffers and will use staffing suppliers to bring in additional project-related resources. The thinking here is that firms do not want to perform the draconian types of cuts they’ve had to put in place over the past two years.
Genzler: The number of students pursuing technology degrees will increase, newer technologies will push productivity even higher, Green initiatives will create a new economy and IT will be a big beneficiary. Additionally, as the economy begins to improve, capital spending will increase and the technology replacement cycle might accelerate in the next few years.
McSally: A somewhat positive result the downturn may cause for the staffing industry is that IT departments may fail to hire full-time employees as they continue to operate at lean levels. This could increase IT’s reliance on staffing to accomplish projects that drive business transformation.
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Contributor Bios:
Robert M. Dickey, President, Sapphire Technologies, a Randstad company
As president, Robert is responsible for managing all of the Sapphire Technologies’ national and regional sales efforts in its 42 business units across the US. In addition, Robert oversees the company’s key functions including the marketing, technology, and employee development groups, as well as all other operational support departments. Accelerating growth and expanding Sapphire Technologies’ market presence are Robert’s key initiatives. In line with this, he also directs the management of DBConcepts, Sapphire’s international recruiting arm which handles all the company’s immigration and global hiring activities as well as the strategic development of offshore and near-shore recruiting capabilities with facilities in Hyderabad, India.
Alisia Genzler, Vice President, Technisource, a subsidiary of Spherion Corporation (NYSE:SFN)
Alisia is responsible for offices in Virginia, West Virginia, Maryland, Pennsylvania, New York, Vermont, Massachusetts, Connecticut, New Hampshire and Maine. She joined Spherion 14 years ago as an account executive. Alisia moved into a regional leadership position in 2006 and later joined Technisource in conjunction with the Spherion merger in 2007. Offices under her leadership have repeatedly won quarterly and annual production awards. Earlier this year, Alisia was the single recipient of the Pinnacle Award, Spherion's highest performance recognition award. She holds a finance degree from Marquette University.
Jim Lanzalotto, Principal at Scanlon.Louis
Jim is an award-winning marketing and eBusiness leader with nearly 25 years of direct, leading-edge experience for some of America's highest-impact B2B brands. Before starting Scanlon.Louis, he was Vice President of Strategy & Marketing for Yoh, a market-leading provider of talent and outsourcing services. His team was instrumental in cementing the company's reputation as an innovative click-and-mortar business and high-value service provider. His team produced the best marketing programs in a $130 Billion industry in 2006 and 2008, winning the Communications Award in the VOICE competition. For the American Staffing Association, Jim led a team of peer-marketing executives to brand a $130 billion industry with break-through thinking and sharp, creative execution.
Mike McSally, Vice President of Staffing Operations, TEKsystems
Mike has spent over 18 years in the Recruiting and Human Capital Management industry. In his current role, Mike is responsible for designing and optimizing TEKsystems’ traditional branch recruiting and account management operations as well as alternative delivery models. Because of his extensive IT market knowledge, Mike is often is asked to speak to CIOs and other IT industry leaders during conferences. In addition, he has created a series of articles entitled “insITe,” which educate IT leadership on best practices with respect to sourcing, recruiting, managing, and retaining top IT talent.
Steve Schumacher, Executive Director, TEKsystems
With over 13 years of experience in human capital consulting, program management, and talent acquisition, Steve currently leads TEKsystems’ Direct Placement Search practice, RPO business model and Workforce Management Solution (WMS) delivery strategy. As a part of his role, Steve guides the implementation of TEKsystems’ proven sourcing, screening, and selection methods for Fortune 1000 clients seeking top IT talent. An active member in several industry organizations, he frequently speaks to executive forums about effective recruiting strategies in a dynamic marketplace.