IT Staffing Industry Market Trends

Staffing industry

Last Updated on February 5, 2024

It’s no secret that the IT industry has been booming over the past decade. In just one year, the tech sector created 193,000 new jobs, with more than 300,000 open positions waiting to be filled at the start of 2023. It goes without saying that IT staffing is in demand.

While this demand might be obvious, what’s less apparent is what lies ahead for the IT staffing industry. How big could the market actually get? Will the growth continue at the same pace? And what are some of the most important market trends on the horizon that all industry leaders and professionals should be prepared to handle?

This article will answer all of your questions about the possibilities of the IT staffing industry along with highlighting the market’s most paramount trends. With that being said, how big is the IT staffing market?

What Is the IT Staffing Market Size?

As of the end of 2022, the IT staffing market in the U.S. was valued at $41.5 billion, while its value at the end of 2023 is estimated at $41.2 billion. While this marks a slight year-over-year decrease, its value is still projected to grow to $58.3 billion by 2028. Bear in mind, that minimal decrease can also be attributed to back-to-back years of record-breaking growth.

Interestingly, the Southern U.S. accounted for a notably large portion of the market size, with 38% of agencies based in this region. The best explanation for this regional dominance is that many of the top states for tech employment are within this region, such as Florida, Virginia, and Texas.

Is the IT Staffing Industry Growing?

The IT staffing industry saw significant growth in 2021 and 2022, and its growth is forecasted to continue through 2030. According to Staffing Industry Analysts (SIA), the IT staffing market in the U.S. had a 17% growth in revenue in 2021 and 16% revenue growth in 2022. The market is expected to grow at a CAGR (Compound Annual Growth Rate) of 5.5% from 2023 to 2030.

However, IT staffing growth stagnated in 2023. In fact, in September 2023, SIA estimated a 3% decline in IT staffing revenue in 2023. This isn’t particularly worrisome considering that the record-breaking growth in the previous two years was not sustainable and some form of leveling-off was expected. Plus, much of this is chalked up to staffing and recruiting businesses being forced to lay off employees because of national inflation. This trend is not isolated to staffing.

Small to Mid-Sized IT Staffing Firms Outperforming Large Firms

The SIA’s survey indicates that larger IT staffing firms are suffering more from revenue reduction than small to mid-sized businesses. This is evidenced by the fact that median revenue has remained steady year-over-year while aggregate revenue is down 9%. Smaller staffing agencies have been outperforming larger agencies in most other staffing industries as well, not just IT.

Who Are the Largest IT Staffing Companies in the United States?

The three largest IT staffing firms in the U.S. are TekSystems, Insight Global, and ASGN. Some of the other large and most instrumental IT staffing agencies across the country include:

  • Randstad NV
  • KForce Inc.
  • Pinnacle Group
  • Toptal
  • Aerotech
  • Robert Half
  • Express Employment Professionals
  • Synergie
  • Adecco
  • AppleOne Employment Services
  • JobSpring Partners

In 2021, a total of 71 U.S.-based IT staffing agencies reported a revenue of more than $100 million. These 71 firms alone reported $36.4 billion in revenue.

IT Staffing Industry Market Leaders

Unsurprisingly, TEK Systems, Insight Global, and ASGN are considered three of the top five IT staffing market leaders. Randstad NV and KForce Inc. round out the top five.

Research shows IT staffing is a relatively fragmented market, meaning it’s considered highly competitive, yet there isn’t much separation between the industry leaders and the rest of the market.

Other Staffing Industry Market Statistics

SenseHQ, an AI-powered talent engagement platform, surveyed staffing agency owners across the country to gauge their thoughts and confidence levels regarding where the staffing industry is as a whole and where it’s headed. The results were mainly positive, though there was evidence that staffing agency owners sensed an incoming economic shift that could impact performance.

The survey reported staffing industry statistics from 2023, including:

  • 96% of staffing firm owners expected their business to grow over the next year,
  • 54% of staffing agency owners expected to add internal headcount over the next year,
  • 98% of staffing firms adjusted their sales process due to the current economy and potential looming recession,
  • 94% of staffing agency owners said the economy has impacted recruiter performance.

The Six Biggest IT Staffing Market Trends in 2023 and Beyond

The IT staffing market is growing, but what are some specific market trends that staffing agency owners should look out for as we head into 2024?

Let’s dive into some IT industry analysis, reviewing the most significant industry trends.

Asia-Pacific Is Becoming the Fastest-Growing Market

From a global standpoint, Asia-Pacific is paving the way for growth in the IT staffing industry. In fact, all of the industry’s fastest-growing markets are countries located in Asia or Oceania, including India, China, and Australia.

Much of this is attributed to the fact that many of these countries and their highest-revenue businesses have accepted and adopted public cloud computing. Therefore, more and more businesses in these nations have turned to cloud-based platforms, which leads to additional hiring needs in the IT sector.

Emergence of Advanced Technologies and AI

Arguably no industry will be affected more by the development of Artificial Intelligence (AI) and other advanced technologies than the IT sector. If you’re in the IT staffing industry, it’s critical to stay on top of these advancements. Industry projections predict an increased demand for IT professionals thanks in large part to new AI-powered systems and machine learning.

These AI-driven systems and machine learning-based tools already assist staffing companies by streamlining once time-consuming, mundane tasks that had to be performed manually. For example, AI headhunting has allowed staffing firms to provide an AI-driven system with a list of criteria that they would like candidates to match before the system churns out a list of candidates who meet the criteria. Tools like this will only become more powerful, meaning businesses will have to hire people who know how they work.

However, AI-powered systems may automate tasks and eliminate entire jobs that are currently filled by humans.

Regardless of whether you think AI will have a net-positive or net-negative impact on staffing, it’s beneficial for IT staffing professionals to stay in the loop. Not only will it assist with staying on top of shifts in demand and other IT staffing trends, but it will also reflect well upon you and your business. Being able to hold conversations about these trends with potential new clients and employees will boost your credibility, leading to a reputation as an industry expert.

Growth of Software Development Segment

Software development is the most popular IT skill segment, and it’s projected to remain that way until 2030. Software developers and related roles make up about half of the entire IT staffing market, so it’s critical to have an effective system in place that allows you to efficiently identify, attract, and place software developers and employees with similar skill sets. While it may not be the most niche segment, software development roles are typically positions that every successful staffing firm can fill.

It’s important to differentiate software developers from software engineers. Developers design individual mobile applications, computer applications, and platforms, while engineers are the ones who guide this process on a larger scale, overseeing these projects from start to finish.

Much of the increased demand for software developers is because of the COVID-19 pandemic (and other societal factors) causing a major shift to remote work. For example, when Google’s employees shifted to a work-from-home lifestyle, the company had to ensure their applications, systems, and other technologies were up-to-par and suitable for remote employees. Thus, the demand for more IT employees, specifically software developers rose.

Expected Emergence of Telecom Sector, Further Increasing Demand

Telecom is expected to grow at a higher rate than any other sector in the industry. It leads the charge for the growing demand in the IT staffing market, staking its claim as the highest end-user segment.

Many experts credit the growth in the telecom sector to better connectivity infrastructure. Businesses don’t want to be left behind and have employees using dated infrastructure, so they’ve emphasized hiring telecom professionals to provide continuous improvements to their systems.

IT staffing agency owners should keep this in mind and allocate ample time and resources to exploring the telecom sector.

Skills Shortage for Specialized Positions

IT staffing is a highly competitive industry because of the notoriously niche candidate skill sets required for so many positions. Currently, demand exceeds supply for many of these positions, which poses a challenge for staffing and recruiting agencies. For example, a client might request their staffing agency to find a network architect who is a RedHat Certified Architect (RHCA), SalesForce Certified, and has 10+ years of experience in a certain industry. Finding an employee that checks all those boxes can be difficult. And as society becomes more and more technologically advanced, these skill sets will become even more niche.

This leads to our final IT staffing industry job trend.

Importance of Specialized Skills and Knowing How to Hire for Niche Positions

IT staffing can be especially lucrative for businesses that excel in staffing for niche positions in high demand. This will continue over the next several years and perhaps become even more valuable due to the emergence of new technologies.

Hiring companies see these new technologies and realize they don’t have anyone on staff with adequate knowledge of how new tools and systems work. But they know that in order to keep up with their competitors, they need to be innovative and can’t afford to miss out on hiring people with expert knowledge of emerging technologies. That’s where your IT staffing company can come in. Then, you can leverage your niche knowledge base and connections to skilled potential employees into higher bill rates.

In Summary: IT Staffing Industry Outlook

Despite IT staffing industry revenue stagnating in 2023, the outlook is overwhelmingly positive for the remainder of the decade. The market saw record growth in 2021 and 2022 and is projected to rise from $41.5 billion to $58.3 billion by 2028.

For professionals and business owners, it’s imperative to stay on top of industry trends like the impact of AI in staffing, the importance of knowing how to hire for niche positions, and keeping in mind that common end-user segments such as software development and telecom project to be equally popular in five years as it is today.

IT Staffing Industry FAQs

Is IT staffing a good career?

Yes, IT staffing can be a great career regardless of whether you run your own agency or simply work as a recruiter. In 2023, the average recruiter in the U.S. made $64,832 per year with the upper 25% of earners bringing home $126,425 annually.

The IT staffing market as a whole saw record growth in 2021 and 2022 and is forecasted to grow by 41% through 2028.

How do I start an IT staffing company?

There are seven steps you’ll need to follow when starting a staffing agency, regardless of industry. If you’re planning to start an IT staffing company, you’ll already have the first step down: choosing a specific industry. Next, you’ll have to obtain funding. The average start-up cost for a staffing firm is between $60,000 and $130,000.

After you’ve secured funding for your staffing company, you’ll have to register your business, obtain licenses, permits, and insurance, and create your website before you move on to finding employees.

What does “IT” stand for?

“IT” stands for “information technology.” If you come across an IT staffing firm, that means the firm specializes in hiring information technology professionals.