U.S. IT Staffing Market - Industry Outlook & Forecast 2024-2029

MARKET INSIGHTS

The U.S. IT staffing market size was valued at USD 37.89 billion in 2023 and is expected to reach USD 52.21 billion by 2029, growing at a CAGR of 5.49% during the forecast period. Although the IT staffing industry experienced a period of revenue decline in 2023, the outlook for the coming years remains positive. The surge in demand for cloud computing, data analytics, the Internet of Things (IoT), artificial intelligence (AI), machine learning (ML), and Robotic Process Automation (RPA), among others, has resulted in an increased need for skilled professionals across these technological fields and supported the U.S. IT staffing market growth. The digital business transformation in the IT industry draws attractive investments in diverse technological projects and workforce, which raises the demand for tech professionals with specialized skill sets and knowledge in the United States. The demand for IT professionals is increasing, with IT departments anticipated to drive significant growth for numerous businesses. Various areas within IT, such as software development, IT infrastructure, project management, and security, require skilled talent. With the ever-evolving nature of the IT staffing industry, it's crucial for companies seeking to recruit top-notch IT professionals to stay abreast of the latest trends. In recent years, there has been a surge in demand for IT specialists with specific expertise, alongside a heightened emphasis on fostering diversity and inclusion in work environments.

MARKET TRENDS & DRIVERS

Rising Adoption of Artificial Intelligence
The IT sector is poised to undergo significant changes with the advancement of Artificial Intelligence and other emerging technologies. For professionals in the IT staffing industry, staying informed about these developments is crucial. Projections indicate a rising demand for IT professionals, driven partly by adopting AI-powered systems and machine learning. AI-driven tools and platforms transform how businesses attract, assess, and onboard IT talent, making the process more efficient and insightful. These sophisticated systems can process large datasets, pinpoint top candidates, and forecast their suitability for specific roles. Furthermore, companies adopting AI-driven IT staffing solutions stand to benefit from time savings and reduced bias in hiring decisions, leading to more diverse and skilled IT teams. Recruiters can optimize their resources as AI handles many aspects of recruitment, such as identifying candidates who closely align with an organization's needs.

Skill-centric Staffing Solutions
The evolving landscape of technology necessitates IT professionals with specific skill sets and expertise. The focus of IT staffing will increasingly pivot towards skill-centered solutions. Rather than simply matching candidates with job titles, leading IT staffing firms prioritize connecting clients with professionals with the exact skills required for a project or role. One positive aspect of skill-based hiring is that it encourages aspiring candidates to commit to continuous learning and remain updated on emerging technologies and trends, thus attracting better career opportunities. The demand for IT professionals with specialized skills is steadily increasing. Companies seek professionals with expertise in specific technologies like cloud computing, big data, and artificial intelligence. Furthermore, there's a growing demand for professionals with industry-specific expertise in the healthcare, finance, and retail sectors.

INDUSTRY RESTRAINTS

Shortage of Skilled Labor
The IT industry in the U.S. has remained under pressure due to an acute shortage of skilled workforce. IT staffing firms have been facing the problem of a lack of skilled professionals for quite some time now and are looking for options to tackle this challenge strongly and quickly. The U.S. IT staffing market faces intense competition due to the specialized skill sets required for numerous roles. Currently, there's a scarcity of candidates with the specific qualifications sought by clients, presenting a challenge for staffing agencies. Also, the issue is currently enacted as the major headwind restricting the growth of the IT industry across the United States. IT staffing firms can consider taking a more proactive approach to tackle this situation, which can be done through maintaining and updating the database of candidates frequently.

SEGMENTATION INSIGHTS

INSIGHTS BY SKILL SET
The software engineers/developers/DevOps/architect skill set segment holds the most significant share of the U.S. IT staffing market in 2023. Software engineers and developers have remained at the core of any organization operating in the IT industry over the years. The demand for software developers in the U.S. is expected to grow by almost 23% by 2028. This, in turn, is expected to increase the number of software engineers in the United States. Professionals with these skill sets often receive several emails from recruiters thrice compared to other professionals in the industry. Moreover, DevOps is another crucial skill set for IT staffing firms to target, owing to the ability of such professionals to enable businesses to drive real value. With DevOps growing significantly over the past few years, organizations that are quick to embrace this opportunity are performing considerably well. The market for DevOps is expected to attain new heights owing to the effective changes it develops in its processes, security, cultural shift, and compliance aspects of the DevOps platform.

INSIGHTS BY END-USER
The U.S. IT staffing market by end-user is segmented into tech/telecom, banking/financial services/insurance, healthcare, manufacturing, retail, and others. The tech/telecom end-user segment is expected to hold the largest segmental market share in 2023. The tech/telecom industry is consistently evolving with time and is expected to grow significantly during the forecast period. The continuously evolving technologies and better connectivity infrastructure are boosting the telecom and IT industry, leading to growth in the number of employees working in this industry. Hence, there is a huge hiring requirement in such industries, leading to the rising demand for IT staffing. The year 2023 and beyond is set to witness the domination of 5G wireless technologies across the telecommunications industry. Telecom companies consistently shift their focus to devising business models to capitalize on 5G and other related opportunities. Thus, growth opportunities for telecom operators prevail in expanding the current portfolio through investments in IoT, 5G, and other cross-industry associations, such as mPayments and mHealth.

The technology industry is connected to several other industries, from manufacturing to aerospace, which will face several negative consequences if they do not offer proper services. Therefore, the telecom & IT industry puts immense focus on its existing workforce and on hiring the right talent. Moreover, the population's awareness of technology usage is high. Hence, the country's acceptance of technology-oriented products and services remains high, contributing to the market's growth during the forecast period.

REGIONAL ANALYSIS

The U.S. is one of the most technologically advanced countries in the world. The country witnessed consistent growth in demand for software and other IT-related jobs over the last few years. Another contributor to the growth of the U.S. IT staffing market is the increase in personnel salaries. The evolution of technology and the ever-growing demand for updated, secured, and quick IT solutions push the demand for IT professionals across functions and departments. Southern U.S. dominated the U.S. IT staffing market, which can be attributed to the presence of certain leading states in tech employment. Texas, Florida, Georgia, and Virginia are some of the key states accounting for a high share of the South U.S. IT staffing market. Also, the IT market in Texas is increasingly lucrative for young start-ups and established tech companies.  One of the most significant factors in this rapid growth is the favorable tax conditions in the state. Furthermore, the Western U.S. is also one of the growing markets in the United States. It comprises developed and fast-growing states such as California, Utah, Washington, Colorado, and others, primary hubs for several end-user industries. The increasing awareness about various technologies such as IoT, AI, and ML will further boost the growth of the region’s IT staffing market during the forecast period.

COMPETITIVE LANDSCAPE

IT staffing is among the most highly fragmented markets across diverse staffing verticals. The U.S. IT staffing market has comparatively low entry barriers that push vendors to consider innovation and differentiation regarding their client offerings. Owing to its immense staffing opportunities, IT staffing remains one of the key business segments for vendors within the staffing industry. The key players in the U.S. IT staffing market are ASGN Incorporated, Experis (ManpowerGroup), Insight Global, Kforce, Randstad, and TEKsystems (Allegis Group).

Vendors usually gain an edge over their competitors through differentiated offerings, from updating and enhancing an efficient Applicant Tracking System (ATS) to adopting a region-specific market expansion strategy. With specialization being one of the key focus areas for vendors in the U.S. IT staffing market, significant players concentrating on STEM skill sets continue to enjoy growth and profit. Moreover, a few mid-tier firms too are emphasizing specializations across industries. Key vendors such as TEKsystems, ASGN, and Insight Global have consistently performed over the last few years. These vendors are expected to grow due to their diverse business strategies catering to the U.S. IT staffing market. In the future, the outlook for IT staffing vendors remains positive as more and more IT firms plan to enhance their skilled workforce. The spending across diverse skill sets, especially cloud, analytics, ML, automation, and IoT, is expected to increase the demand for skilled IT professionals nationwide.