It’s no secret that the tech industry has been going through some growing pains in recent months. From large enterprises like Amazon and Microsoft, to small startups and privately-held companies, the U.S. tech sector has shed more than 141,000 jobs so far in 2023, according to Crunchbase, driven by broad macroeconomic cooling and headwinds unique to technology in particular. Clearly the effect of multiple banking failures, lending/interest rates, disrupted supply chains, and a degree of ‘over-hiring’ during Covid has impacted the tech sector.
The Professional Services segment of IT is no exception, with firms dedicated to delivering a range of tech-enabled services starting to feel the impact of the uncertain economy. However, given that clients continue to leverage IT Professional Services to augment and offset their full-time staff as a cost-cutting measure, the outlook for the industry remains bullish despite the ongoing downturn in tech.
Case in point: Gartner Inc., has noted that the global information technology industry spending will grow 2.4% this year and Dice is predicting that job postings in IT will increase 25% year-over-year. This is being driven by waves of hiring across industries, such as healthcare, aerospace, finance, and consulting to support both business cost optimization and revenue growth via innovation imperatives.
What’s more, wage growth is expected to continue for in-demand technology roles. From mid-2021 to mid-2022, 60.9% of tech professionals saw their salaries rise, while 7.5% suffered a decrease. With the Federal Reserve currently raising interest rates to control inflation, there will be less pressure on wage increases in 2023, but that isn’t the whole picture for IT Professional Services.
High demand for specialization
Digital transformation is upending companies across industries, as Advanced Analytics, Artificial Intelligence, Machine Learning, and other new technologies revolutionize the ways we live and work. This is on top of the growing threat from cyberattacks and data breaches, which is expected to cost companies north of $8 trillion in 2023.
Simply put: The economy needs experienced IT professionals to augment and drive business initiatives. However, the pool of top technology talent continues to shrink. With demand high and supply tight, tech worker salaries overall will remain steady, although those with niche skills in cybersecurity, blockchain and cloud services in particular could see their 2023 wages jump by as much as 8%, according to Janco Associates.
The most in-demand skills for IT Professional Services right now in go-to-market (sales) roles include candidates with superior client interaction, sales presentation, and data management skills. That’s because IT Professional Services is heavily focused on sales productivity to drive top line bookings that increase revenue and profit margins. In addition, while they may not seem like tech skills on the surface, strong communication and visualization skills, as well as relationship management are essential to great client development.
On the delivery / technical side of the house, there is also specialization occurring. Some top roles we are seeing continued momentum in include DevOps engineers, who work across development and operations teams to manage and implement software deployments. Other roles in particularly high demand include: Data Scientists, Machine Learning and AI Engineers, Cyber Engineers, and IT Project Managers.
Time for hiring managers to adapt
The fact is, both technical and go-to-market / sales talent remain in high demand across IT Professional Services. And the market for hiring managers likely won’t be getting easier anytime soon.
As Lily Mok, VP and Analyst at Gartner, recently told CIO magazine: “Recent layoffs from digital companies will ease but not solve the talent challenge. Based on Gartner data, the overall supply of tech workers has increased only by a few percentage points at most. In key function areas, like data science, software engineering, and security, talent supply remains as tight or tighter than before.”
As the so-called “Great Resignation” slows and high performers become less likely to jump for the next opportunity, alignment between employer and employee is becoming particularly important. For example, soft skills are becoming as important as industry and technical know-how across IT Professional Services, despite the shift to specialization. Strong candidates today want opportunities for career growth, skills development, flexible working arrangements, and a bump in compensation. At the same time, the shaky economy is highlighting the importance of balancing hiring with profit margins to avoid overcommitting to headcount.
As a result, IT Professional Services companies need to adapt their hiring practices to reflect this new reality.
Another dynamic in Professional Services is while technical certifications and college degrees / pedigree is important, we are seeing less emphasis on formal education and training and more focus on applicable, day-to-day skills, no matter where they came from. This is particularly important for younger talent, which often comes with a longer ramp-up time and interest in more soft skills and culture fit. Furthermore, we are experiencing the lasting effects of the pandemic in action, including ongoing interest in remote and hybrid work, a renewed focus on employee engagement and avoiding burnout, and a stronger commitment to DE&I.
Identifying and accessing top executive talent today
As these recruitment trends continue to evolve in 2023, it’s becoming increasingly important for IT Professional Services companies to find ways to both identify and attract top talent. Not only are candidate demands changing, but the market for their skills is shifting with both the emergence of new technologies, as well as larger macroeconomic forces.
Smaller IT Professional Services firms are being impacted directly by the tighter borrowing and credit environment, while their larger competitors are facing potential layoffs after misreading the market and over hiring in recent years. Neither is in an enviable position.
The constant through it all, however, is that every company in the industry wants to hire the best. Whether we’re seeing a great economy, a mediocre economy, or something in between, IT Professional Services firms need top go-to-market and technical talent to continue to compete amid an increasingly competitive marketplace.
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