Green shoots emerge in IT recruitment market

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Signs point to increased activity in fourth quarter and 2010

By David Watson | Auckland | Tuesday, 8 September, 2009

Steve Martin, professional and technical director at Kelly Services, says signs of a recovery in employment in the short term are limited, but that “we’re beginning to see some emerging developments that may point to increased activity in the final quarter of this year, with stronger growth in 2010”.

The developments are particularly evident in the telecommunications sector, Martin says, where “a growing number of projects have resulted in an increase in recruitment needs for a variety of roles, from helpdesk support to business analysts”.

Hiring practices have also changed as a result of the recession, he says.

“Organisations are appreciating the importance of carefully evaluating any new employee, to ensure they are making the right decision for their increased expenditure.

“Contract staff also appear to be increasingly attractive to companies, especially SMEs, due to the reduced risk and greater flexibility of hiring a contract employee.”

Kelly Services has noticed “a distinct geographical difference in the effects of the recession on the IT industry”, Martin says.

For example, while dropping about 20 percent from pre-recession levels, “recruitment in Christchurch has remained static in 2009 and overall, IT businesses in the region appear to have weathered the storm better than in other centres.”

The Auckland IT industry “has been hit particularly hard, while the number of IT employment opportunities in Wellington has also dropped considerably.”

The number of IT consultants currently seeking employment is high, he says, but Kelly Services is “still seeing demand for highly experienced specialists throughout the industry.

“This is evident where those IT businesses that are doing well, and there have been a number of them in this environment, are looking to take the opportunity to secure the right talent for the anticipated upswing.”

Some of the best-placed skills for IT recruitment at the moment are web application and online digital media specialists, Martin says.

“Overall, as businesses seek to take advantage of the cost-effectiveness of online selling, and drive sales as a response to the recession, many are focusing on website development,” he says.

Hudson ICT director Brendon Carian says “over the last month or two, Hudson ICT has seen a shift in the market, with growth in the volume of new roles coming in, especially within the contracting space.

“In particular, business analyst and project management skills have increased in demand from a contracting perspective, and in permanent opportunities there’s more interest in developer and architect skill sets.”

This demand has mainly been driven from the private sector, especially financial services, Carian says, “but we are also starting to see movement from within the public sector”.

The effects of the recession are being seen in greater candidate numbers, he says.

“We are finding that many employers are starting to take advantage of a candidate-rich market, where the supply of candidates has built up over the past 12 months.

“The difficulty for employers, however, will be when the market continues to recover and ICT candidates have more opportunities to look at.

“It will then be those employers who have best looked after the talent they have in the lean times that are rewarded by retaining their workforce when the market turns.”

Andy Mardell, director of recruitment firm MTR, says “on the surface, it would appear there has been a slight increase, but not much, in the current market, for projects”.

This is coming off a very steep drop-off in projects and demand for contractors since last year, Mardell says.

“The demand for contracting staff decreased significantly at the end of 2008, when contracts were wound up in a bid to reduce costs.

“Since then, the headcounts of permanent staff have also decreased across many organisations.”

The upshot is that MTR anticipates an increase in short-term contracting in the next six months, following the changes new market conditions have brought on.

“Specific areas anticipated to grow include business analysis and report analysis, as organisations seek to investigate the effects of the recent market changes.”

While a few green shoots in those areas are anticipated, the market overall remains candidate-rich, Mardell says.

While that may be seen as a good thing from an employers’ point of view, “the administration and time demands of matching candidates to the correct skill level has also increased proportionally.”

There has been some “downsizing” of remuneration and job description expectations, he says, and “job stability is increasingly valued above financial and professional development opportunities”.

As a result, many hiring managers are being cautious about hiring over-qualified candidates, as they may leave for jobs better matched to their capabilities when the market improves, Mardell says.

The flood of candidates, caution about appointing over-qualified ones and reluctance to increase headcount means “the net effect is that turnaround time in filling vacancies has actually lengthened”, he says.

CPU Recruitment director Craig Parsons also says recruitment times are getting longer.

“People are taking more time to make selections. That is a luxury of a candidate-abundant market,” Parsons says.

“People are waiting to see more candidates and being a bit more selective about who they bring on board.”

However, Parsons is seeing some green shoots in the ERP functional consultant and developer space.

He says this is being driven by organisations seeking to make maximum use of ERP systems they bought several years ago.

“Many companies buy ERP systems and only go live with, say, core financials and supply chain.

“When things slow down, they’ll focus on other modules that aren’t so mission-critical, but which will add value.

“They may have installed 80 percent of the modules and are using tougher times to get maximum value from their existing ERP systems, perhaps by going live with CRM or other unused modules.”

He says there are “a couple of tier 2 ERP packages that seem to be making headway in the market. There is a lot of demand for them.”

That is driving demand for staff with skills in those areas, both functional consultants and developers, he says.