What Labor Market Trends Mean For Innovation Investments
While many industries are anticipating economic constriction in the coming months, for now SIA reports a flat GDP with net-zero growth over several quarters for the U.S. which may actually be a sign of strength. No news could turn out to be good news, as organizations move towards creative solutions that will allow them to press ahead.
Growing Contract Hire Demand
The rise of contingent labor is one area that proves layoffs aren’t necessarily lowering employment overall. News within the IT industry is a mixed bag lately, and can be tricky to parse, but ultimately it is also flat.
On the one hand we have many full-time employees being cut, thousands at once in some cases, frequently taking over headlines in the process. But let’s not forget the flip side, which is alleviation of tightness in the market as IT staffing demand continues and recruiting difficulty eases, plus forecasted IT project revenue growth of 8 percent into 2023, according to SIA.
This loosening of the labor market has been enabled in part by a larger shift towards contract employment. H1-B registrations are one indication that demand continues and is simply growing in new places.
This year alone has seen a 57% increase in applications for H1-B visas, which are awarded to allow non-U.S. citizens with specialized skills to work in the United States. In fact, the number of petitions is so high that the U.S. hit both the 65,000 H1-B visa cap, and 20,000 master’s degree exemption cap for the fiscal year.
Shifting Market Investment
This trend towards an increase in outsource investment is seen in Gartner’s forecast of 5.1% rise in worldwide IT spending for 2023. Software spending and IT services is projected to receive the bulk of investments in 2023, at 11.3% and 7.9% growth respectively. Cloud spending is proving to be especially important as a source of business value, which Aditi Consulting explores in our Increase Confidence In The Cloud white paper.
It appears that solutions will depend on utilizing the growing pools of skilled talent in new areas, including nearshore locations such as those in Latin America. With an increasing amount of our stateside workforce freeing up for new opportunities, this change can be leveraged to allow companies to bring talent onboard with more flexible arrangements, maintaining business continuity with less risk.
Firms are well-aware that tides are changing, but the key message for IT is that those who will be successful need to continue pursuing projects and innovations. Putting a pause on growth may not be necessary and may even set you back as competitors forge ahead.
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