IT recruitment agencies facing a crisis
At the beginning of the year, we saw layoffs in Big Tech and in IT recruitment agencies that relied heavily on the RPO model (‘lending’ the agency’s recruiter to their clients’ internal recruitment departments). In the second quarter, agencies based on the Success Fee (payment by results) model and software houses also started to cut recruiter positions. The difficult situation is confirmed by dozens of posts by jobseekers on HR groups and Linkedin and freelancers making up for the shortfall in recruitment revenue by offering services to support candidates such as CV consultancy. Job offers in IT recruitment are scarce (up to a 6-fold decrease in the period 11.2022-05.2023) and the competition for each vacancy is huge.
Problems in internal HR departments
After the recruiters from IT recruitment agencies, it was time for recruiters from in-house HR departments over the summer. It was apparent that the boards of large companies wanted to preserve the hard-won in-house IT recruitment teams they had built for as long as possible, but they too recalculated their future needs in the context of a decelerating economy and began the process of downsizing. From the perspective of recruitment service providers, this painful step is necessary so that demand for their services can increase when the economy improves somewhat. After all, when there are barely enough vacancies to fill for the in-house talent acquisition departments that expanded during the post-covid rush, there is little left for external providers. The final link confirming the shrinkage of the industry as a whole is the layoffs at IT job portals and HR-tech product companies.
What’s next for IT recruitment?
There are more and more questions on social media about what’s next for the IT recruitment industry. Although no one knows what the future holds, at Team Up we try to draw conclusions from historical data and build the most likely scenarios in our opinion.
At the time of preparing our report, it is the summer of 2023. The holiday period has always been associated with the least intense season of the year. Underneath the layer of seasonal frolic is a layer of poor economic activity, which is now difficult to assess other than through the prism of macroeconomic indicators and pre-holiday trends. The situation in the financial markets in the United States seems to be quite optimistic, and inflation is getting closer to its target every month. We are keeping a close eye on how the IT labour market reacts to the financial markets and the Fed’s decisions, as the often persistent trends on the US trading floor are over time reflected in employment growth in US companies. The Polish IT sector is closely linked to what is happening overseas, as a large proportion of our IT services are exported to this country. It is also a huge market for entities from Europe and the rest of the world.
Is a strong rebound like after the COVID crisis on the horizon?
It is worth distinguishing between the situation in 2020 and what we are seeing today. Back then, the emergence of a pandemic led to forced lockdowns, disruption of the supply chain, and uncertainty about what would happen tomorrow. Most companies ‘held their breath’ for several months freezing their IT recruitment. However, the relatively rapid adaptation of consumers and businesses to the new, almost fully remote world of e-commerce has brought an unprecedented pace of technical recruitment, and the consequent swelling of the industry bubble. Riding the wave of pandemic printed money could not last forever and galloping inflation along with rising interest rates effectively cooled the global economies. Companies realised that the structures and strategies built on the bull market were unsustainable and needed a quick correction. As long as restructurings continue and macroeconomic factors are unfavourable, IT recruitment will not be a priority for most companies, as evidenced by the latest PMI readings (43.5 points – 08.2023).
Our forecasts for the IT labour market
In our opinion, if the observed trends continue, we will see some improvement in the business climate in the fourth quarter after the holiday season. We do not expect spectacular increases, but rather a return to indicators from around the end of the first quarter. The recovery is likely to be slow and it will be difficult to say clearly when it will happen, similar to the recovery in 2008. Assuming that IT recruitment in the US will start to grow more dynamically again early next year, and that the IT market in Poland usually reacts with a delay of about six months, we can expect more noticeable increases just before, or after, the 2024 holidays. Until then, our industry needs to go into “eco mode” and, in fact, restructure itself permanently, because the levels of IT recruitment numbers from 1.5 years ago are unlikely to be reached for the next few years.
IT recruiters, what can you do?
In the period 2019-2022, we have seen tremendous growth in the IT recruitment industry. Many of the recruiters who started their careers then in IT recruitment agencies and in-house HR departments grew up in a strong bull market and know no other world. In our opinion, it is not worth waiting for the favourable winds to return. Instead, we recommend that you revise your beliefs about the profession and the skills you need to be successful and get down to reviewing your competencies.
Here are a handful of tips for IT recruiters who want to use this time to become a crisis-proof recruiter.
- Recruiting is sales. Selling is about being curious about the other party’s problems, building relationships and influencing the status quo. Recruiters (like salespeople) going for quantity, mechanically sending the same message for the hundredth time, will first be validated by the market and then replaced by AI and next-generation chatbots in the first place. Develop good sales skills, this is much more important than other sourcing and boolean training.
- Identify ‘moments of truth’. In IT recruitment, it can often seem like we have no control over the final outcome. So many factors play a part in the success of the recruitment process that it’s easy to grow indifferent to them all and focus on a spray-and-pray strategy of shooting CVs until ‘something sticks’. Act with the intention of closing every vacancy, not with the intention of sending out candidates. Remain vigilant for the KEY moments where missing an opportunity to make an impact will statistically reduce the amount of success you achieve in the long term, e.g. over a year. Such a moment is at least the offer stage, but without a well-built relationship through active and valuable contact at earlier stages you will limit your impact at the candidate’s decision moment.
- Don’t be a passive recipient of the process like an NPC. Listen carefully, but also inform, educate and influence the hiring manager’s expectations, and act in the same way with the candidate. YOU are the hiring expert.
- Move away from focusing on ‘must haves’ in your IT recruitment. This may have been enough in recent years, but today your candidates are competing with dozens of such candidates who have applied themselves through the careers page. What will you do to make your candidates LEVEL? Don’t just ask HMs ‘How many minimum years in Java must a candidate have’. Ask about the ideal profile and start your search with such people. You can ask questions like “Which candidate, if you see in your mailbox, would you schedule an interview with first?”
- Build relationships through authentic communication and a focus on giving value to all parties in the process. Good relationships mean greater trust in you and your skills. Greater trust gives you access to deeper hidden information and motivations, and this gives you more tools of influence in ‘moments of truth’.
To conclude – things are not easy. Neither for IT recruitment agencies nor for industry professionals. However, the IT job crisis is a good time to work on both company processes and recruiter competencies. If you are looking for sources of knowledge to strengthen your craft, take a look at our other posts, from which you can learn, for example, how to overcome the nightmare of rejected offers, or which plug-ins and applications can improve your work.
Is the state of the IT job market an important topic for you? Are you looking for more information? Download the free IT market report where you will find:
- Comments from experts with years of experience in the IT industry, adding depth to the analysis
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- Expert advice for HR professionals in the IT industry
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