2009 It Hiring Outlook

2009 IT Hiring Outlook

PROVIDING THE TALENT THAT DRIVES YOUR BUSINESS SUCCESS

Introduction IT hiring, with its tight labor pool, specialized skills, and ever-shifting requirements, has always presented unique challenges to HR. But today’s rapidly changing economy is changing everything—what skill sets and types of workers companies are looking for, what specific recruiting challenges they face, and what strategies will help them maximize value in the new IT labor market. We set out to discover what IT hiring trends are emerging in the wake of the financial crisis, how these were reshaping the face of IT hiring, and what companies can do about it. In early 2008, Veritude conducted primary research to gather insights from those involved in hiring IT staff; at the end of the year, we conducted the same research using the same methodology to understand how the trends we uncovered had been impacted by 2008’s economic changes.

Change in Anticipated IT Staffing Requirements Decrease 4%

2008 Anticipated Requirements Increase 52%

2009 Anticipated Requirements

No Change 43%

No Change 25% Increase 38%

Decrease 38%

22%

Decrease 1 to 5%

In particular, we wanted to understand:

Decrease 6 to 10%

>Is IT staffing declining or on the rise?

Decrease more than 10%

7% 8%

>What employee types, skills, and qualifications are most in demand, and which are hardest to find? >What are the biggest IT staffing challenges?

Respondents were asked to select anticipated percentages that their staffing requirements will decrease by.

>How do companies use outside support for IT staffing? We have analyzed the results to create a broad picture of how emerging trends are reshaping IT hiring for 2009.

Changing Needs Overall Hiring Trends Between Q2 and Q4 of 2008, overall anticipated IT hiring decreased significantly. In Q2, IT hiring was almost universally rising or holding steady, with 52% anticipating increases and 43% planning no change. Only 4% anticipated cutting IT staff.

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By year end 2008, companies planning decreases for 2009 soared from 4% to 38%. Those anticipating increases in IT staffing simultaneously dropped to 38% (from 52%). While most of the decreases are not expected to be drastic—22% anticipate cuts of only 1 to 5% of IT staff—this represents a major change in IT hiring trends from 2008. The market for IT workers has hit an equilibrium heading into 2009, with equal numbers of employers looking to increase staff and looking to cut. Notably, however, this anticipated slowdown in IT hiring is not the result of diminished need for qualified IT personnel. When we asked respondents why they planned to decrease IT staff, they universally cited outside pressures overriding hiring requirements.

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Reasons for IT Staffing Reductions in 2009

Categories of Staff to be Hired 77%

Permanent Hires Recent or Expected Company Layoffs

53%

Budget Restraints Company Hiring Freeze in Existence or Expected

78%

47% 16%

Fifty-three percent cited recent or expected company layoffs, while 47% were responding to budget restraints and 16% to an existing or expected company hiring freeze. This means that overall, IT hiring is decreasing while the need for IT staff is not necessarily diminishing. In this atmosphere, companies that understand the changing IT hiring trends will discover new ways to benefit. Fewer hires and cut budgets mean that hiring correctly the first time is more important than ever. Companies need to hire smart, rethink their workforce composition, and explore new ways of getting work done.

Categories of Staff One of the most striking changes between 2008 and respondents’ expectations of 2009 is a dramatic upswing in the anticipated hiring of temp-to-perm IT staff. While the demand for permanent and contract staff remained steady, the number of respondents who plan to hire temp-to-perm staff more than doubled, from just 27% to 56%. This indicates that more companies are seeing tempto-perm strategies as effective solutions to cuts in budgets and in staff. Companies that adopt a “try before you buy” approach with temp-to-perm staffing can make the most of limited hiring dollars by reducing hiring risk and ensuring better matches between employee and company.

45%

Contract or Temporary

Temp-to-Perm. Staff

50% 27% 56%

2008 Expectations

Respondents were asked to select all answers that applied.

2009 Expectations

Hiring Challenges As we enter 2009, the single greatest staffing challenge respondents face remains finding qualified candidates: those who provide specific skills in toughto-fill areas. Even though the IT hiring market has cooled somewhat overall, hiring leaders are still finding it as difficult to find qualified employees as they did in early 2008. In both Q2 and Q4 of 2008, 53% of respondents named finding qualified candidates their biggest IT hiring challenge. Offering a competitive salary remained the second most common challenge, and was faced by many more respondents at the end of 2008 (36%) than earlier in the year (16%). This indicates that overall, the new challenges caused by budget and salary cutbacks are canceling out any advantages resulting from a less competitive labor market in 2009. In fact, 66% of respondents said that their IT hiring challenges remain the same despite the changes in the economy; and in both quarters, only very few respondents (11% and 15% respectively) indicated that they face no hiring challenges. The shortage of qualified candidates remains the fundamental obstacle to effective IT staffing. Successfully dealing with this key challenge requires a two-fold approach. First, companies must work to

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Have IT Hiring Challenges Changed with the Economy?

Top IT Hiring Challenges Finding qualified talent (skills, cultural fit, etc.)

53%

Paying salary and/ or bonus expectations

No 66%

Yes 24%

36% 9%

Retention Internal recruiting processes Office location

Not Sure 10%

6% 2%

No challenge

15%

Respondents were asked to select up to two answers.

increase retention among skilled IT staff. Second, companies must deploy IT recruiting expertise— either cultivating it in-house or using outside help— to increase access to hard-to-find IT skills and make recruiting faster, easier, and cheaper.

Hard to Find IT Skills 37% 30% 36%

IT Skills in Demand

30%

The availability of difficult-to-find skills, as well as those skills most in demand, have also remained consistent over time. Eighty-five percent of respondents report that the availability of difficultto-find skills has either remained the same (49%) or has changed only slightly (36%).

18% 7% 15% 30% 5% 17% 2%

The top IT skills in demand for 2009 (i.e., those that are most difficult to find in candidates) are Business Intelligence skills and Enterprise Solutions skills, which is consistent with early 2008 demand for businessfocused, strategic IT. Programming Language skills (C, C++, C#) were in low demand in Q2 of 2008; by end of the year, however, they have emerged as a highly desired skill set, being cited as “in demand” just as often as Business Intelligence and Enterprise Solutions skills.

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7%

2008 2009 (anticipated)

Positions in Demand The IT positions in highest demand have also remained relatively consistent, with project managers and database administrators still among the IT positions most in demand. Demand for software engineers has increased somewhat (27% to 32%)—a change consistent with increased need for Programming Language skills.

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However, demand for Enterprise Architects has faced notable decline. In Q2 of 2008, 27% said that this position was "most in demand" and by the end of the year only 11% made the same claim. Entering 2009, most respondents seem to have a similar overall view of IT supply and demand as in 2008, with almost all positions ranked as “in demand” far more than “not in demand.” Only Network Engineers do not show a significant increase in being rated “most in demand” (25% in Q2 to 22% in Q4 of 2008). This is partly an indication of companies’ subjectivity in viewing market forces in hiring; but it also indicates that most IT and HR departments continue to see themselves in the midst of an IT talent crunch, with the demand for most positions outstripping the supply.

IT Positions in Demand 26% 28%

Project Manager

25%

Database Administrator

17% 23%

Systems Administrator

11% 11%

Enterprise Architect

36% 32%

Software Engineer

14% 22%

Network Engineer

9% 24%

Systems Analyst

14%

Most in Demand

In this tight market for specialized labor, companies that are able to develop a robust candidate pipeline and solid hiring-market intelligence will be in a significantly better competitive position.

Staffing Partnerships In 2009, most respondents with staffing needs will or may consider using a staffing provider (72%). However, respondents became less certain about their intentions as 2008 ended (49% answered “maybe” in Q4, as opposed to 33% in Q2), but a similarly small number indicated they won’t consider using a staffing provider in Q4 (28%) as in Q2 (27%). At the same time, awareness of the range of advantages offered by a staffing provider has grown. Notably, there has been a significant uptick in those

Least in Demand

respondents who value a provider's ability to manage changing workforce demands (from 8% to 15%) and to allow HR to focus on more strategic initiatives (from 4% to 12%). The cost control a provider offers has grown in importance to equal the advantages of specialized expertise (both 28%). As the economy changes, a staffing provider’s ability to provide more flexible staffing solutions at a lower cost and with less administrative burden is becoming increasingly important to HR. Outside staffing partners can be the key to overcoming the confluence of increasing recruiting difficulty and decreasing budgets.

Considerations For Using a Staffing Provider Maybe 33% No 27%

Maybe 49% YES 41%

2008

No 28%

YES 23%

2009

Recruiting or industry expertise that we don’t have in-house

38% 28% 23% 28%

Better control costs Manage changing workforce demands Allow HR to focus on other, more strategic initiatives

8% 15% 4%

2008

12%

2009 (anticipated)

Multiple answers selected for why you would consider using a staffing provider. VERITUDE.COM 1.866.580.6143

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In particular, respondents see staffing firms as being able to deliver a special value in an uncertain economy by maximizing variable versus fixed costs. A majority of respondents (60%) value having the option of hiring temporary or contract IT workers considering the economically challenging market. This particular value is reflected in the dramatic spike

in anticipated temp-to-perm hiring reported in Q4 (see previous chart on page 2).

Conclusion & Recommendations

Recommendations

Our respondents reported widespread changes in the extent and focus of IT hiring over the course of 2008, but face continuing hiring challenges that have not abated in the wake of the financial crisis.

Given the results of this research and looking forward to continuing challenges in 2009, we offer the following recommendations to IT hiring managers and HR professionals.

Anticipated IT hiring decreased significantly in Q4 of 2008, with an equal number of respondents planning to reduce staff as intending to increase; this is a striking change from Q2, when almost all respondents planned to increase or maintain IT staffing levels. In addition, temp-to-permanent or contract hiring has emerged as a major component of future IT hiring strategies. The trend toward shrinking IT staffing is a response to outside financial pressures, and does not reflect diminished need or criticality of IT skill sets.

1. Understand Evolving Challenges and Opportunities

The confluence of reduced budgets and continuing IT needs means that this general hiring slowdown has not made finding qualified candidates any easier. HR leaders and IT hiring managers are finding it just as difficult to find necessary skill sets in hard-to-find areas as they did at the beginning of 2008, though the skills and positions that are most sought after have shifted somewhat. There is a widespread understanding of the value of the temporary workforce in times of economic uncertainty, with growing awareness of the advantages of cost management and time savings that a temporary staffing partner can bring. 2008 brought fundamental changes to the IT hiring landscape, and understanding how it has changed will empower HR to respond proactively to the shifting demands of the new economy.

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Leveraging the power of the temporary workforce can help HR and IT diversify how work gets done, optimizing the workforce composition to limit cost and increase flexibility.

The key to gaining competitive advantage in the coming year is to understand how IT hiring has changed in the wake of the financial crisis, and how it will continue to change. The IT hiring landscape is constantly shifting, and maintaining a top IT workforce will depend on knowing supply and demand, candidate skills and needs, and when the market is right for expansion and contraction of the IT staff. Outside experts—either hiring experts or industry experts—can be critical partners in maintaining up-to-date market intelligence. They can help identify coming challenges and opportunities, and help HR and IT make the most of changing workforce trends. 2. Apply Rigorous Hiring Methodologies A rigorous sourcing and hiring process is essential for locating and recruiting the hard-to-find IT talent companies depend on. This begins with understanding what is making your own top performers successful, and then focusing recruiting on identifying and attracting those skills sets. Develop recruiting plans to better reach candidates: understand the target recruits—where they spend their time, what channels they respond to, their wants and needs—and then be creative in your sourcing. During hiring, implement skill assessment tools to help streamline recruiting processes, cut costs, and better evaluate candidates’ key skill sets. If you lack this expertise in-house, use an outside consultant to help you. IT and HR must work together, now more than ever, to making the right hiring decision the first time. 5

3. Align Your Talent Pipeline with Future Needs HR and IT leaders must take a hard look at where their organization is going, and what the business’s future IT needs will look like. This calls for discussion and alignment across business lines to build a long-term picture of business strategies and goals, and collaboration between IT and HR to understand how IT will be asked to support company vision. This will create strong alignments with the company's evolving IT needs. Work to understand what kind of talent will be in demand tomorrow, not just today; and develop a talent pipeline and strategy to support this future demand. This long-term thinking and alignment allows HR to move proactively to address future needs— which will result in a stronger talent pipeline. 4. Rethink Workforce Composition In economically uncertain times, rethinking the composition of your workforce can be a powerful tool for enhancing flexibility and responsiveness while lowering your costs. HR and IT leaders should evaluate the cyclical needs of the business and evolving work requirements in order to develop the right workforce ratios between temporary employees, permanent employees, and consultants. In addition, the temp-topermanent strategy being adopted by many companies going into 2009 allows companies to test skill sets and cultural fit before committing, marrying the flexibility and cost savings of a temporary worker with the business alignment and engagement of a full-time worker. Optimizing your workforce to meet coming business and market changes can drive increased productivity, strategic flexibility, and significant cost savings. 5. Establish Retention Initiatives When it comes to meeting company needs in uncertain times, an ounce of prevention can be worth a pound of cure. Recruiting skilled workers is just as difficult now as it was a year ago, and shrinking recruiting budgets mean that money spent to retain top IT talent is money saved on costly recruiting and on-boarding. Training, formal mentoring, and stretch opportunities will keep existing staff engaged and inspired, while flex time and work/life options will appeal to a wide range of workers at all experience and skill levels. These programs have the added bonus of making existing workers more focused and productive.

Our Respondents Veritude contacted human resource professionals and hiring managers across the country and across many industries for their insights into the IT hiring process. > 37% are in HR > 39% are in IT > 24% are in other functions (marketing, operations, finance, etc.) > 64% work for companies with 1 to 5,000 employees > 24% work for companies with more than 20,000 employees In addition, half of all respondents are director-level or higher, with 24% being VPs, SVPs, or above; 71% are either primarily responsible for hiring IT staff or somewhat involved in hiring IT staff; and 45% are located in the Northeast, 15% in the Southwest, and 40% across other regions of the country.

If you would like to learn more about the results of this research or to speak with someone at Veritude about your IT staffing needs please contact us at 1-866-580-6143 or www.veritude.com.

About Veritude Veritude offers a full suite of temporary and permanent staffing services. It partners with a wide range of clients in a variety of industries to develop and deliver workforce solutions that adapt to changing business and demographic realities. Veritude’s unrelenting commitment to outstanding customer support and candidate quality offers competitive advantages to clients and rewarding career opportunities to associates.

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