Permanent IT staffing services have a buyer power score of 3.7 out of 5. This score reflects moderate negotiating strength for buyers. Demand for IT professionals has remained strong over the past three years because companies across nearly all sectors have sought personnel to either transition toward newer technology systems or help maintain their current infrastructure. The rapid pace at which IT capabilities evolve, coupled with strengthening employment levels and an ongoing shortage of specialized IT talent, is driving permanent IT staffing service prices higher. Although rising prices have hurt buyer power, buyers have benefited from low price volatility, which has reduced the likelihood of drastic price shifts.
No vendor of permanent IT staffing services has a dominant market share in 2014. “Although established suppliers have made acquisitions over the past three years to bolster their service portfolios, low barriers to entry have continued to allow new suppliers to enter the market to take advantage of the booming IT field,” according to IBISWorld business research analyst Michelle Hovanetz. Large multiline vendors include Manpower, Randstad and Allegis. Suppliers in this market typically have low profit margins. Minimal profit margins and the sustained demand for IT workers have made it difficult for buyers to negotiate lower prices. On the other hand, the fragmented market may provide some opportunity for buyers to leverage multiple bids to obtain more favorable pricing, and low switching costs make it simple and inexpensive to switch among them.
Sourcing candidates for permanent IT placement can be a costly and time-intensive process for buyers. Outsourced staffing services present an alternative for buyers that cannot rely on in-house departments or staff to fill their job vacancies. Still, buyers should be aware that a supplier with faulty or ineffective staffing tactics could also pose a risk for buyers by referring unqualified candidates, which may result in costly turnover. For this reason, buyers should consider entering nonexclusive contracts with multiple suppliers to boost competition and the quality of service. “Buyers should also be aware of other factors that may negatively affect the purchasing process, including the financial risks vendors face during economic downturns,” Hovanetz says. For more information, visit IBISWorld’s Permanent IT Staffing procurement category market research report page.
Source: IBIS World