Across all groups of members that we spoke to recently, leaders reported cautious optimism heading into Q4 following a difficult third quarter. While revenue and requisition volumes remain below pre-2022 highs, September showed signs of recovery, marking one of the strongest months in nearly two years. Firms are seeing early indicators of renewed client spending, particularly in technology, infrastructure, and project-based work.
Market Conditions and Business Outlook
The consensus: the market is stabilizing, not rebounding, with steady improvement rather than explosive growth. Leaders expect gradual acceleration into 2026 provided economic and political uncertainty—tariffs, energy volatility, and election-related pauses—does not stall decision-making.
At the same time, regional and sectoral performance diverges: energy and public sector work remain soft, while consulting, AI-adjacent roles, and nearshore/offshore business continue to expand. Several firms are exploring multi-service models (staffing + consulting + project delivery) to capture higher-margin opportunities and build client stickiness.
Talent Supply, Pricing Pressures, and Client Behavior
Firms continue to operate in a candidate-driven but cautious hiring environment. Clients are taking longer to decide—often stretching interview cycles to five or six rounds—and extending current contracts instead of replacing talent. Many report rate pressure from clients alongside rising candidate pay expectations, compressing margins and requiring creative retention tactics like proactive wage adjustments and broader candidate marketing.
Meanwhile, H1B and immigration policy shifts are influencing workforce strategies. Increased visa fees and prevailing wage reviews are raising costs and pushing firms toward offshore and nearshore models, especially in Canada, Mexico, and Latin America, where aligned time zones and currency advantages offer cost relief. India remains a major hub, though rising competition and attrition are prompting interest in northern cities and hybrid on-site/remote setups.
Technology and AI Integration
AI is transforming staffing operations and client expectations—but not yet simplifying work. Nearly every group cited rapid experimentation with AI for candidate sourcing, screening, and data management. Many firms have implemented or are piloting tools to reduce manual recruiting workload, detect candidate fraud, and improve resume quality.
However, leaders cautioned that AI also introduces new challenges—notably fake candidates and inconsistent tool performance. Firms are responding by reinforcing multi-step validation (e.g., video verification) and cleansing legacy databases to improve AI accuracy.
AI is increasingly viewed as a competitive differentiator in both operations and client delivery. Some firms are building internal AI agents for sales prospecting or lead generation, while others explore fee-based pricing models for AI-accelerated project delivery, signaling long-term business model evolution.
Sales, Business Development, and Service Diversification
Several groups discussed tightening sales accountability and reinvigorating new business generation. Firms are instituting structured performance metrics—such as required meetings, placements, and pipeline growth—to combat complacency among long-tenured reps.
Others are experimenting with scrappier sales tactics—like submitting candidates before contracts are signed—to win new logos in a competitive environment. There’s renewed interest in retained and container models to secure upfront commitments, improve predictability, and elevate perceived value.
Collaboration is another recurring theme: partner co-presentations and cross-firm initiatives are emerging as cost-effective ways to expand reach and strengthen credibility with clients. Leaders agree that relationship-based sales, grounded in transparency and flexibility, remains the most resilient growth lever.
Emerging Trends and Strategic Shifts
- Nearshoring acceleration: Latin America and Canada are becoming preferred regions due to cost, time zone, and skill alignment.
- Multi-service models: Firms blending staffing, consulting, and SOW/project delivery are seeing stronger margins and client engagement.
- AI governance: Increased awareness of data security, privacy, and responsible AI use in recruiting and client work.
- Retained/Container hiring models: Gradual shift toward upfront-fee models to improve stability and client commitment.
- Candidate fraud mitigation: AI screening tools are valuable but require human oversight and layered validation processes.
- Sales culture reset: Leadership focus on accountability, diversification, and balancing “hustle” with structured process.
- Community learning: Peer networks and events remain vital—offering real-time insight and morale in a changing market.
Overall Sentiment
Overall, the tone is cautiously optimistic but pragmatic. Leaders recognize that the IT & Engineering staffing industry is evolving structurally, not just cyclically. Adaptability, transparency, and collaboration are the defining traits of firms’ positioning to thrive in the AI-enabled, globally distributed future.
As one member summarized:
“This isn’t about waiting for the market to come back—it’s about evolving fast enough to meet the one that’s emerging.”
