The IT staffing market continues to show signs of improvement, but the recovery remains uneven. Revenue and profitability are increasing for many firms, while longer hiring cycles, changing client expectations, and shifts in talent supply are complicating the picture. For IT and engineering staffing leaders, a stronger market does not necessarily mean a return to familiar conditions.
That distinction emerged throughout TechServe Alliance’s September State of the Industry webinar, featuring Mark Roberts, CEO of TechServe Alliance, and Michael Allen, Founder and Principal Consultant at DataMinds Optimization. Drawing on benchmarking data, public company results, and anonymized executive roundtable discussions, they explored what is improving and what is changing beneath the surface.
“It’s not a normal cyclical rebound,” Roberts said.
Growth Is Returning Unevenly
The latest data presented during the webinar showed improvement, but there are substantial differences in performance.
In the Operating Practices Report data covering 2025, median revenue declined 1.5%, while the 25th and 75th percentiles ranged from an 8.8% decline to 8.8% growth, respectively. Among companies participating in BenchmarkPro, median revenue growth for 2026 was 4.6%. At the 75th percentile, year-over-year growth was 21.2%, while the 25th percentile continued to show a decline. These results reflect widely varying performance within the same industry.
For leaders, putting any variance in context is important. A firm may be specializing in high-demand skill sets while another firm’s client base has pulled back from IT projects. The improvement of the median industry firm provides background, but it does not fully explain a particular firm’s trajectory.
Why Are Hiring Cycles Still Taking Longer?
Hiring timelines remain extended. BenchmarkPro data showed new orders and candidate submittals trending upward, while interviews were flat to down over the period discussed. Increased job reqs are not translating into interviews and starts at the same pace.
Average time to fill was approximately 47 days for the year through August, reaching about 51 days in August. Not all reqs are translating into placements.
Roberts connected those findings to what leaders describe in executive roundtables: slow decision cycles and clients continuing to search for “perfect” candidates.
Despite longer timelines, firm financials have improved. Allen reported upward trends in revenue and gross profit per day, supported by improvements in bill rates and spreads.
Allen noted that “the starts… are actually more profitable.”
Winning New Business Is Taking More Effort
Executive roundtable participants described a more difficult environment for opening new accounts. The webinar highlighted reports of more outreach needed to engage prospects, lower response rates, and longer ramp times for new sales hires. Leaders increasingly see a decline in sales efficiency as an ongoing challenge, although the experience will vary by firm and market.
Some participants also reported client payment terms extending to 90–120 days on certain engagements. That can create cash flow pressure even when placements are profitable.
Together, these observations show why improving bill rates and gross profit do not tell the whole story. Leaders also need to consider what it costs to win new clients and how long it takes to collect revenue.
Client Demand Is Changing Alongside the Recovery
Roberts also pointed to growing interest in consulting and outcome-based engagements. Public company results discussed during the webinar offered examples of the tilt toward consulting strength where traditional staffing remained under pressure.
For staffing leaders, this reflects a broader question about changing client buying preferences.
Specialization is another part of that picture. Executive roundtable discussions identified areas of strength in permanent placement, healthcare IT, semiconductor and data center demand, and AI talent. Those opportunities were associated with particular capabilities and markets, rather than a uniform lift across staffing.
In Roberts’ assessment, “we think that undifferentiated staff aug is going to be under pressure.”
That does not suggest traditional staffing disappears. It points to a market in which the expertise a firm brings, the talent it can access, and the client needs it serves increasingly shape its opportunities.
AI and Talent Supply Add Uncertainty
AI was a central theme, but Roberts placed it within a broader set of forces that also includes demographics, immigration policy, and changing delivery models.
He described AI as both a potential substitute for certain process-oriented roles and a source of demand for new skills. The timing remains uncertain: job disruption, new role creation, reskilling, and adoption may occur in different time frames.
Roberts also discussed how a more constrained immigration pipeline could affect access to talent with the potential for second- and third-order effects. Where immigration of foreign nationals is constrained, scarce domestic skills could face enhanced upward pressure on wages, potentially increasing client movement toward nearshore, offshore, or other delivery options.
For leaders, the implication is that demand and talent availability cannot be viewed separately. Changes in where skills are available, what they cost, and how work can be delivered may influence the form that future staffing opportunities take.
Understanding What the Recovery Means
The discussion centered on an improving market with meaningful opportunities, alongside changes that may be here to stay. Industry growth in the mid-single digits is neither a ceiling nor a floor.
The central takeaway is that recovery and structural change are happening together. Understanding both helps explain why firms can encounter very different conditions in the same market. The Operating Practices Dashboard and BenchmarkPro offer many additional insights into what it takes to be successful in today’s market.
TechServe members can watch the full September State of the Industry webinar for the complete data and discussion. Please join us for the 2026 TechServe Executive Summit, November 9–11 in Huntington Beach, California, where we do a deep dive into how to address many of the ongoing industry challenges and take full advantage of the opportunities.
