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Mixed Messages on IT Hiring

Hiring for information technology jobs overall is dropping amid the recession, but ‘temp-to-perm’ hiring of techies is taking off.

February 5, 2009
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Hiring for information technology jobs overall is dropping amid the recession, but “temp-to-perm” hiring of techies is taking off, according to a new study from staffing services provider Veritude.

Veritude’s survey polled 86 executives in the fourth quarter of last year and found that 38 percent anticipated cutting IT staff. That number compared with just 4 percent of respondents polled in the second quarter of 2008.

At the same time, the number of respondents who plan to hire temp-to-perm IT staff more than doubled, Boston-based Veritude said, from just 27 percent in early 2008 to 56 percent by the end of the year.

Temp-to-perm refers to the hiring of a temporary worker who could become a permanent employee.

“While IT hiring is decreasing, the need remains the same,” Veritude said in its report. “As a result, fewer permanent hires and diminishing budgets are driving increased reliance on contract or temporary workers, as well as temp-to-perm staff.”

Although Veritude’s report, published January 29, suggests a silver lining in the economic downturn for staffing firms that provide temp-to-perm IT workers, other data point to tough times last year for staffing companies.

Research firm Staffing Industry Analysts found that in its benchmarking panel of about 100 IT staffing companies, the median firm’s revenue in the third quarter of 2008 dropped 1.1 percent from a year earlier.

Los Altos, California-based Staffing Industry Analysts also found evidence indicating that overall temp-to-perm hiring shrank in the third quarter of last year. Conversion revenue—which refers to fees staffing firms collect when temporary workers become permanent employees—dropped 16.4 percent compared with the third quarter of 2007.

Staffing Industry Analysts is owned by Crain Communications, which also is the parent company of Workforce Management.

Veritude’s study found that in the second quarter of 2008, IT hiring was almost universally rising or holding steady, with 52 percent of respondents anticipating increases and 43 percent planning no change. By the end of 2008, 38 percent of respondents expected an increase in IT staffing, while 25 percent anticipated no change.

—Ed Frauenheim

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