The state of the IT staffing Industry

By Chris Walters, Senior Vice President, LRS Consulting Services

With its final IT Employment Index of the decade, TechServe Alliance painted a frustrating picture: Employment in the sector ticked down in December for the third consecutive month and was down slightly over the prior year.

What’s going on? My friend Mark Roberts, who is TechServe’s CEO, sees it this way:

“In the face of an otherwise strong overall jobs report, IT employment declined on a year-over-year basis,” Mark said. “Unlike the last year-over-year decline in IT employment, which was a demand-based contraction, the weakness in IT employment over the past year has been exclusively a supply-driven phenomenon.” 

Translation: There are not enough IT workers to meet employers’ demands.

At LRS Consulting Services, we see this situation every day as we try to find skilled candidates to fill openings that our clients have. We’ve talked about it on this blog, too. IT unemployment has been 2% or lower for nearly two years, and according to some industry experts, it dropped to nearly 1% last year.

Looking forward, you can find predictions that we’ll see a recession begin in 2020 or we’ll see economic growth pick up, so I’ll leave that to the experts. My focus is IT jobs and talent, though, so I looked at the US Bureau of Labor Statistic’s Occupational Outlook Handbook from last September, which said:

“Employment of computer and information technology occupations is projected to grow 12 percent from 2018 to 2028, much faster than the average for all occupations. These occupations are projected to add about 546,200 new jobs. Demand for these workers will stem from greater emphasis on cloud computing, the collection and storage of big data, and information security.”

Demand is going to be strong, and many companies will continue investing in those technologies that increase efficiency, lower costs, and protect their data. But there are no signs that the supply of skilled workers will increase to fully meet this future demand.

One source of IT professionals are foreign workers who come to the U.S. on  H-1B visas. Obtaining these visas has never been an easy process. I have always fully supported carefully scrutinizing all H-1B visa petitions to ensure they comply with the law. However, over the last two years the government has sought to reduce immigration of all types, including the entry of high-skilled workers who come here legally. For example, last year there was a 46% increase in Requests For Evidence, or RFEs as well as a surge of H-1B visa denials.

Unfortunately, in 2020 we will probably see additional actions taken by the federal government to restrict immigration. In response, some companies may elect to delay their IT projects or move them offshore to avoid dealing with the H-1B visa process. That will hurt U.S. IT workers who would otherwise be part of those project teams and have an adverse impact on the economy.

While increasing the domestic supply of IT talent through enhanced support for STEM education is a preferred option, it is not a near term fix and has proven to be difficult to achieve in practice. In addition to the challenge of attracting a sufficient number of students to the STEM fields, many students fail to graduate with the necessary technical skills sought by companies.

One possible quick fix are coding boot camps. These boot camps are being offered in many areas, but unfortunately they vary widely in quality and effectiveness.

A better solution would be a business-education partnership like the i.c. stars workforce development program based in Chicago. The program is an intense 16-week internship followed by a two-year residency program. The program has an initial placement rate of 90% and a retention rate of 81% for its graduates. LRS is proud to be a partner with i.c. stars, as we’ve blogged about before.

More programs like i.c. stars could be the a key part of the solution to the IT talent shortage.

Let me close with an optimistic view on LRS and the future of the IT staffing industry. In spite of the challenges outlined in this blog post, LRS Consulting Services (along with many others in the industry) is poised for continued growth given our ability to find scarce talent in a tight labor market -- good news for both the clients and the IT professionals we have the privilege of serving.