More than 40 percent of the workforce at leading IT services firms was hired in the last 12 months, according to data from ISG, the technology research and advisory firm.
In an advisory note, Stanton Jones, Director and Principle Analyst at ISG, said: “We’ve been discussing attrition in the IT services sector for a couple of quarters now. And rightly so. It’s the number one issue impacting enterprise IT services buyers today. The good news is that the data shows attrition has likely peaked at most IT services firms.
“This week, we look at the implications of the record levels of hiring over the past several quarters in response to exceptionally strong demand. Recall that annual contract value was up 13 per cent in the first quarter – that’s the fourth straight quarter with more than ten percent growth.”
ISG’s research shows more than 40 percent of the workforce at leading IT services firms were hired in the last 12 months. This much hiring this fast has led to a massive “reshuffling” in the IT services industry.
This workforce rotation – “the Great Reshuffle” as it’s being dubbed – has certainly helped to keep up with the surge in demand. But it will also put a lot of pressure on providers to sustain and scale their service delivery, while at the same time instilling their unique culture and value into thousands of recent hires – many of whom have come from a competing provider.
Jones said: “If you look back over the past couple of decades, most providers with revenues over $5 billion have experienced a workforce surge like this before. However, many providers below $5 billion don’t have the same institutional memory. This means that many providers are in unchartered territory in today’s high-demand, high-attrition environment.”
He said that this was not necessarily a bad thing – but it was something important for enterprise buyers to keep in mind.
“Ask questions about your providers’ track record during times of high growth, and what kind of investments they are making in their people, systems and management processes to scale their delivery – and their differentiation – while still achieving expected value”, he said.
