UK IT Recruitment

UK IT Recruitment

The IT recruitment market has experienced a rollercoaster journey in the past decade, from the peaks of demand in 1999 through the turbulence of 2000 to 2003, before rising again to recovery in 2004 and continued steady growth in 2005 and 2006.

In 2004, the computer industry entered a new phase of growth, characterised by steady annual budget increases. As a result, the period 2004 to 2006 witnessed a recovery for the IT recruitment industry. Since early 2004, there has been a significant improvement in the market for permanent, and temporary and contract recruitment, spurred by new projects from firms to enhance their systems, in terms of both applications and infrastructure. Consequently, there was an increase in demand for developers and project managers throughout 2005 and 2006.

However, growth has not come without challenge, and the future will see the continuation of challenges for the industry that have emerged in recent years. In this period of growth, an IT skills shortage has remained a problem for the UK market. Agencies have found the need to build strategies for the recruitment of older workers and women as well as to operate across international markets. This has opened up new service areas, such as international recruitment and employment consultancy.

Legislation continues to be tough as demand increases. Agencies are faced with a diverse legislative environment, needing to be aware of issues related to such things as age regulations in the UK, as well as international initiatives, including the EU's Agency Workers Directive, which, although frozen in 2006, could have a marked impact on the recruitment landscape in the future.

Key Note forecasts that between 2007 and 2011, the industry will continue to see steady growth as a result of various factors, including projects scheduled for the next few years, the strong presence of IT-intensive industries in the UK and the continued trend of outsourcing human resources (HR).

Skills shortages are set to continue in the next 5 years: the demand for IT professionals will increase at the same time as the flow of younger workers into the industry will fail to keep pace with the demand. Agencies will therefore need to become increasingly creative in their recruitment and must convince clients of the value of older, female and foreign workers. Agencies will also face the problem of their client base moving away from end-user companies and towards large outsourcing operations that have stronger buying power and will increasingly look for a wider range of services from agencies.

In order to remain competitive, agencies will have to improve the range of services that they offer to their largest clients, and continue to improve their productivity to protect their margins.

1. Introduction
THE IT RECRUITMENT MARKET
DEFINITION

2. Strategic Overview
MARKET DYNAMICS AND SEGMENTATION
Increasing Demand
Table 1: Number of People Employed in the UK in ICT Occupations and Computer-Related Activities (000), April-June 2005 and 2006
Table 2: The Number of Quarterly IT Vacancies Notified to Jobcentres in Great Britain by Type, May, August, October 2004-2006
Job Advertisements
Salaries
The Market Rollercoaster
Table 3: The IT Recruitment Agency Market by Invoiced Sales at Current and Constant 2000 Prices (£m), Years Ending December 2002-2006
Staff Retention Remains an Issue
The Skills Shortage Issue
Table 4: E-Skills Vacancies by Type (number and %), 2005
Table 5: Actions Taken to Combat Skills-Shortage Vacancies (%), 2003 and 2005
The Legislative Environment Becomes Tougher
The Conduct of Employment Agencies and Employment Business Regulations 2004
IR35
Review of VAT
The EU Agency Workers Directive
The Services Directive 2006
The Data Protection Act 1998
Money-Laundering Legislation
The Employment Equality (Age) Regulations
`A Day'
CHANNELS TO MARKET
Jobcentres
Table 6: Channels other than the Internet Used to Look for Jobs (%), 2007
Contacting Clients
The Growing Use of the Internet
COMPETITIVE STRUCTURE
Table 7: The IT Recruitment Market by Estimated Share of Revenue (%), 2005 and 2006
Figure 1: The IT Recruitment Market by Estimated Share of Revenue (%), 2006
Table 8: The Major UK IT Recruitment Agencies by Estimated Market Share (% of total revenue), Year Ending 31st December 2005
New Systems and Techniques for Attracting and Tracking the Best Candidates Move up the Agenda
THE CONSUMER
Business Customers
Individual Customers
Table 9: IT Jobseekers by Sex and Age (%), 2007
MARKET FORECASTS

3. Contract and Temporary Staff
BACKGROUND
MARKET SIZE
Table 10: The Contract and Temporary Staff Recruitment Market by Invoiced Sales at Current and Constant 2000 Prices (£m), Years Ending December 2002-2006
CONSUMER TRENDS
Business Consumers
Changing Client Base
The Jobs in Demand
Table 11: Example Skills Requirements of Contract Jobs Advertised on Internet Jobsites (% of job advertisements), 3 Months to 1st December 2005 and 2006
Table 12: The Proportion of Contract Jobs Advertised on Internet Jobsites by Job Title (%), 3 Months to 1st December 2006
Individual Consumers
ADVERTISING AND DISTRIBUTION

4. Permanent Staff
BACKGROUND
MARKET SIZE
Table 13: The Permanent Staff Recruitment Market by Invoiced Sales at Current and Constant 2000 Prices (£m), Years Ending December 2002-2006
CONSUMER TRENDS
Business Consumers
The Jobs in Demand
Table 14: Example Skills Requirements of Permanent Jobs Advertised on Internet Jobsites (% of job advertisements), 3 Months to 1st December 2005 and 2006
Table 15: The Proportion of Permanent Jobs Advertised on Internet Jobsites by Job Title (%), 3 Months to 1st December 2006
Individual Consumers
ADVERTISING AND DISTRIBUTION

5. An International Perspective
MARKET DEVELOPMENTS
Global IT Services Continue to Grow in Demand
Offshoring is also Transforming the Market
Onshore-Offshoring is Adding to the Market Dynamics
The Services Directive 2006
COMPETITIVE ENVIRONMENT
CONSUMER BEHAVIOUR

6. PEST Analysis
POLITICAL FACTORS
Employment Laws
Skills Task Force
E-Government
Promotion of IT
Terrorism
ECONOMIC FACTORS
Economic Growth Impacts on IT Budgets
Different Sectors are more Vulnerable than Others
A Long-Term Influence
SOCIAL FACTORS
The Growth of Part-Time and Flexible Working
Teamworking
Changing Demographics
The Growing Importance of Women and Childcare Facilities
The `Sandwich' Generation
`Portfolio Careers'
Human-Resource Outsourcing
Business Environment Drives Demand
Businesses Lack Internal IT Skills
Exploiting Computer Resources is a Key to Business Success
TECHNOLOGICAL FACTORS
IT — A Competitive Weapon
Software Solutions
The Internet — A New Media Opportunity
The Internet — A Potential New Media Threat
The Internet Changes How Agencies Must Operate
The Technology Cycle
The Technology Upgrade Cycle Influences Demand
New Technological Trends
Shifts in IT Budgets
E-Business — A Driver of Demand

7. Consumer Dynamics
EMPLOYERS
The 2006 Recruitment and Retention Survey
Table 16: Methods Used to Attract Applicants by Industry Sector (%), 2006
Table 17: Methods Used to Select Applicants (%), 2006
THE RECRUITMENT PROCESS
Recruitment Responsibilities
The Growing Importance of Vendor Management
IT Workers Improve Elasticity
THE JOBS DEMANDED BY EMPLOYERS
Table 18: The Top 20 Geographical Locations of Contract IT Jobs Advertised on Internet Jobsites by Average Daily Rate and Average Hourly Rate (£), 3 Months to 1st December 2006
Table 19: The Top 20 Geographical Locations of Permanent IT Jobs Advertised on Internet Jobsites by Average Salary (£), 3 Months to 1st December 2006
Table 20: The Proportion of Jobs Advertised on Internet Jobsites by Job Title (%), 3 Months to 1st December 2006
IT WORKERS
Table 21: The Occupational and Vacancy Profile of Employment in the Computing and Related Industries (number and %), 2005
Table 22: The Profile of IT Jobseekers using Recruitment Jobsites (% of visitors), 2007
IT Workers' Expectations

8. Company Profiles
INTRODUCTION
SPRING TECHNOLOGY STAFFING SERVICES
Corporate Strategy
Strengths and Weaknesses
Product Developments
New Business
Profitability
Table 23: Financial Results for Spring Technology Staffing Services Ltd (£000), Years Ending 31st December 2003-2005
Future Company Developments
ELAN IT
Corporate Strategy
Strengths and Weaknesses
Profitability
Future Company Developments
COMPUTER PEOPLE
Corporate Strategy
Strengths and Weaknesses
Brand Development
Profitability
Future Company Developments
STHREE PLC
Corporate Strategy
Strengths and Weaknesses
Profitability
Table 24: Financial Results for SThree PLC (£000), Years Ending 30th November 2003-2005
Future Company Developments
HAYS INFORMATION TECHNOLOGY
Corporate Strategy
Strengths and Weaknesses
Brand Development
Profitability
Future Company Developments
VEDIOR
Corporate Strategy
Strengths and Weaknesses
Profitability
Future Company Developments
MODIS INTERNATIONAL
Corporate Strategy
Strengths and Weaknesses
New Business
Profitability
Table 25: Financial Results for MPS Group International PLC (£000), Years Ending 28th December 2003, 2nd January 2005 and 1st January 2006
Future Company Developments
ALEXANDER MANN GROUP LTD
Corporate Strategy
Strengths and Weaknesses
Profitability
Table 26: Financial Results for Alexander Mann Group Ltd (£000), Years Ending 30th September 2003-2005
Future Company Developments
XANSA RECRUITMENT LTD
Corporate Strategy
Strengths and Weaknesses
New Business
Profitability
Table 27: Financial Results for Xansa Recruitment Ltd (£000), Years Ending 30th April 2004-2006
Future Company Developments
LORIEN RESOURCING
Corporate Strategy
Strengths and Weaknesses
Profitability
Table 28: Financial Results for Lorien PLC (£000), Years Ending 30th November 2003, 28th November 2004 and 27th November 2005
Future Company Developments
OTHER COMPANIES

9. The Future
A POSITIVE ECONOMIC ENVIRONMENT
KEY DRIVERS FOR FUTURE GROWTH
Ongoing and Scheduled Projects
The Strong Presence in the UK of IT-Intensive Industries
Outsourcing HR
Changing Demographics
Globalisation of the Industry
THE FUTURE DEMAND FOR IT WORKERS
Table 29: Employment Projections in the Computer-Services Industries (000), 2004, 2009 and 2014
Table 30: Projected Employment in the Computer-Services Industries by Occupational Group (000), 2004, 2009 and 2014
Employment by Status and Gender
Table 31: Forecast Employment in the Computer-Services Industry by Status and Sex (000 and %), 2004, 2009 and 2014
FUTURE RECRUITMENT PROBLEMS
FORECASTS 2007 TO 2011
Table 32: The Forecast IT Recruitment Market by Sector by Invoiced Sales at Current Prices (£m), Years Ending December 2007-2011
Figure 2: The Forecast IT Recruitment Market by Sector by Invoiced Sales at Current Prices (£m), Years Ending December 2002-2011

11. Consumer Confidence
METHODOLOGY
KEY FINDINGS THIS QUARTER
THE WILLINGNESS TO BORROW
Confidence Rebounds
Table A: The Average Amount Consumers Are Willing to Borrow in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), August 2005-2006
Fewer Adults Wish to Borrow
Table B: The Number of Adults Willing to Borrow in Order to Purchase Expensive Items (000 and %), August 2005-2006
SPENDING FROM SAVINGS
Strong Recovery in Spending from Savings
Table C: The Average Amount Consumers Are Willing to Spend from Savings in Order to Purchase Expensive Items at Current and Constant November 2004 Prices (£ and £bn), August 2005-2006
Savings Grow in Relative Importance
Table D: The Average Amounts Adults Are Confident Spending to Purchase Expensive Items (£ and %), August 2005-2006

12. Further Sources
Associations
Publications
General Sources
Government Publications
Other Sources
Bisnode Sources