IT Staffing Forecast: Growth Steady, Not Heady By Jeff Reeder www.sireview.com/articles/forecast.html Abstract: This article looks at the prospects for growth in the IT staffing industry. After describing the then-current decline in the growth of IT staffing and commenting upon the reduction of firms’ IT budgets, the author asserts that many companies are still considering outsourcing IT. Sources who believe the IT staffing industry will not suffer long-term from the economic downturn are cited. Finally, the author discusses factors that will potentially influence the future of the IT staffing industry, both positively and negatively. Findings: Recent annual growth rates for IT staffing (10% to 18%) fall far below the 30% to 40% annual growth experienced in 1997 and 1998. However, in a survey of 50 U.S. and 20 European companies, 40% of the respondents said they are still considering outsourcing IT. IT staffing may grow in a recession because clients freeze permanent hiring and use consultants instead. Other research supports this notion. The Gartner Dataquest research institute projects that the IT staffing market will grow only slowly in the coming years. Factors that may contribute to growth include increased e-business and the expansion and streamlining of business practices among IT service providers. On the negative side, growth could be hindered by the movement of application development to other countries, the loss of the best staffing firm employees to client companies, and a shortage of skilled workers. Methodology: There is no formal methodology. Information comes from informal interviews with high-ranking employees of IT and IT staffing firms, specifically Cognizant Technology Solutions Corp., Robert W. Baird and Co., Metro Information Services, Inc., Cysive Inc., Impact Innovations, Cherry Tree, and I.T. Placement Inc. A number of surveys and reports, including a Merrill Lynch repot, a TechStrat survey, Federal Reserve District reports, and Gartner Dataquest projections, are also cited. Policy Implications: If IT employment indeed moves toward outsourced and contingent work, the obvious policy question is whether temporary IT workers receive adequate wages and benefits. Within this context, factors listed as “negative” for the IT staffing industry may be viewed as benign for policy makers. The obvious example of this is the hiring of IT temps by the firms to which they are assigned – it’s a negative development for the staffing industry, but a positive one for the workforce as a whole.