If your IT staffing company is feeling the impact of uncertainty among clients, prospective clients and other stakeholders, you’re not alone and you’re not imagining it. Faced with a murky macroeconomic picture and disruptive technologies advancing at a breakneck pace, the industry is feeling the effects with fewer job requirements, slower decision-making, and elongated sales cycles.
TechServe Alliance CEO, Mark Roberts recently spoke with Ceipal CMO Andy Weiss to discuss the state of the industry and explore strategies firms can use to make it to the other side of the current market.
The State of the IT Staffing Industry
A quick temperature check of participants during the recent exchange reveals their impression of the industry that is far less buoyant than a few years ago, using words like “Stagnant,” “Slow,” and “Disruptive.”
“There’s a disconnect between some of the data and what our industry is experiencing,” Roberts said. “The overall employment picture doesn’t suggest weakness or that we’re on the verge of recession, but our industry is seeing a lot of firms whose businesses are flat or generating anemic results.”
This squares well with chatter that Weiss has heard within the industry — “Choppy,” “Uncertain,” and, again, “Stagnant.” It’s not just your firm, it’s industry-wide — everyone seems to be holding their breath, not sure what comes next, and hesitant to make big moves.
“It seems like the theme isn’t whether we should continue playing in this market, but rather how we should play,” Weiss said. “We need to ensure that we ride out this uncertainty and, as staffing firms, avoid turning it into a trough. Instead, we should focus on making it a dip—something we can ride through by taking advantage of the opportunities it presents.”
Operational Efficiency – More Important Than Ever
When the next move is uncertain, it’s never a bad play to focus on operational efficiency and productivity. Cutting costs can make all the difference when margins start to narrow. Weiss noted that higher-profit, better-performing firms tend to have lean expense structures. They also tend to emerge intact from rocky markets.
“The brands that succeed through a downturn and come out more profitable and more successful are the ones that have maintained and grown that value piece while managing their bottom line,” Weiss said.
But operational efficiency has its limits. “It’s not about cutting to the bone,” Roberts said. “Smart firms balance operational efficiency with being prepared for the upswing.”
AI – The Elephant in the Room
There’s no doubt about it — AI’s potential has a lot of industries concerned about its long-term impact — the staffing industry is no different. While some see AI replacing people, others see it as a tool to make their existing workforce more productive.
“Whether we like it or not, [AI is] impacting our businesses positively and negatively,” Weiss said. AI has in some cases begun to replace financial performance as the reason for layoffs and the reason for not hiring.
Of course, no technology in recent memory has seen such a media buzz. AI has a role in cutting costs and automating repetitive tasks to help firms do more with fewer resources. Weiss was quick to point out that despite all of the hype, AI’s impact is still limited so far — but with extraordinary potential in the future.
Strategies for Navigating the Uncertainty
So what’s an IT staffing firm’s leadership to do? Weiss discussed several potential strategies staffing firms could adopt to address an uncertain industry landscape.
Embrace Technology and Innovation
Companies and industries that fight disruptive technologies tend to lose. History has shown that the best way to weather an innovative disruption is to embrace the innovation, to become an early adopter. Firms that become early adopters of AI can leverage the technology to offer higher-value services than competitors.
“If you remain static and don’t embrace AI, you’re at risk,” Roberts said. “It has to be on every executive’s agenda. Your competitors will be leveraging it, so you need to too.”
One of the best reasons to be an early adopter is that with a new technology, no firm has a clear historical advantage. “We’re all kind of on this level playing field where no one really knows, no one has the crystal ball,” Weiss said. “The experimentation, the willingness to try things, is really where the opportunity lies.”
“We’ve seen this before—firms that adopt and adapt to new technology, like AI, thrive,” Roberts said. “It was true with job boards, and it will be true with AI too.”
Leverage Industry Downturns
Opportunities hide in every economic slowdown. Weiss suggested that firms use the lull to thoroughly examine their value chain and look for opportunities to optimize, trim fat, up their game, and open up new service vectors.
“There’s opportunity baked in here,” Weiss said. “This downturn provides an opportunity for firms to re-evaluate, recalibrate, and position themselves for the upswing.”
“Smart firms look for opportunities,” Roberts said, “like internal talent that may not have been available before or finding ways to diversify their services and move up the value chain.”
Cyclical or Structural?
Weiss noted that many forces impacting an industry are cyclical — a temporary blip on the way to a return to business as usual. Other disruptions represent permanent structural industry changes.
“We’re seeing anemic demand driven in large part by uncertainty,” Roberts said, “but there’s also structural changes beginning to happen with technologies like AI. It’s likely a combination, and we need to respond to both.”
Every industry faces periods where growth slows and there appear to be disruptive forces on the horizon. This isn’t the first time, and it won’t be the last. But that’s no reason to sit on your hands. In the face of uncertainty, successful firms remain proactive. They move fast, embrace innovation, and sometimes break things and put them back together differently. While investing in the future, they also focus on efficiency and productivity in the near term — two mainstays of successful businesses.
“You got to play,” Weiss said. “Sitting on the sidelines is not the route forward. The more we try, the more we stay in the game, the better our chances are of riding this on through” and being one of the winners on the other side.
View the full webinar here.
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