Few suffered like the IT sector in 2001. Job losses in IT have been pretty
horrific, both domestically and on a global scale. High profile players
like Hewlett Packard and Compaq, for example, have discussed (though not yet
cemented) a merger that has already signalled the death knell for 16,000
jobs in the sector.
Others, such as Baltimore Technologies in Ireland, have lurched from crisis
to crisis - shedding jobs as they went along.
Sucker punch
It is estimated that job vacancies fell by half in 2001 compared to the
previous 12 months. While everybody in the industry recognises that the Y2K
years fuelled something of a halcyon period for the sector, the last year
has certainly been a sucker punch for IT recruiters.
Not surprisingly, a significant minority has gone out of business and those
that have stayed afloat have done so with tightened belts. But this
month's REC/NTC Report on Jobs offers perhaps more hope for the future than
at any stage in the last 12 months.
Before we get carried away, the decline in the demand for IT staff has
fallen yet again. However, the rate of decline for both temporary and
permanent placements has eased significantly. Thus, while demand is down by roughly
two-fifths on last year, the slower rate of decline is giving recruiters in
the field some cause for optimism.
Elan Computing's regional sales director Mike Berry says: "There is demand
for both contract and permanent staff across most offices, but it is still
relatively low."
Chair of the Recruitment and Employment Confederation's specialist IT
division Toni Cocozza - also the founder and managing director of IT
recruitment firm DP Connect - was similarly hopeful. She said: "Confidence appears to
be returning slowly. The contract side of our business has experienced the
most significant upturn since January 2001."
Has that led to IT agencies looking again at their IT consultant needs?
Recruitment-for-recruitment firm Hunter Handley's director Karen Dunwoodie
told Inside Recruitment: "I don't think the market ever came to a grinding
halt, even in the last quarter of 2001. But definitely since the New Year,
we've noticed people wanting IT consultants again. It's tentative, and it's
certainly not a flood, but we'll only really be able to assess the market
properly at the end of the second quarter of 2002."
CD Sales managing director Jeff Dale was also boosted by the New Year
performance. "The IT sales division had its best month ever in January and
it
does seem that companies are looking again at IT needs. But in comparison to
last year, they are being far more choosy than they were this time last
year."
Some agencies have actually flourished, despite the downturn. Just last week
RDL Group, which generates 97 per cent of its business in the IT contract
sector, announced excellent results for 2001. Turnover for the year was up
by 169 per cent to £43.6 million and profits before tax and amortisation
for goodwill increased by a staggering 145 per cent to £2.7 million.
Geographical spread
Chairman and managing director Andy Richards attributed much of RDL's
success to its geographical spread, particularly following the acquisition
of Sevenoaks-based M3. He said: "M3's business is approximately 60-70 per cent
based overseas - so that geographical spread through Europe, and the
development of our skills in niche areas like SAP and Oracle House, has
helped. This year will be challenging though because Europe, which escaped
the worst of last year, is starting to get hit.
"In the UK, things have been different," continues Richards. "We had an
awful pre-Christmas but there's been a tentative, but definite pick-up. You
couldn't call it buoyant, but corporates are thinking again about updating
and implementing new IT systems.
"I'm not sure if it's a pick-up in demand. A lot of IT recruiters have gone
out of business, and much of the competition has gone. So, although demand
is probably the same, there are fewer agencies in the market.
"The reality was that there were a lot of agencies that were doing low
margin business, or simply did not know the market well enough."
RDL proves money can be made in a difficult market. The key over the next
two quarters will be the attitude of the corporates to their IT needs.
Elan's Berry says: "Most major clients, including those in the financial
sector, are revisiting IT projects with a view to starting within the next
quarter. Managers are being told to work with existing IT headcounts, but
this will invariably move to recruitment needs in the future."
Difficult times ahead undoubtedly. But 2002, nevertheless, appears to offer
the prospect of some improvement for the IT sector.
This article first appeared in Inside Recruitment: www.insiderecruitment.co.uk