Market Insight Q2 Technology

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Market insightTechnology

2015 Quarter 2

04 Introduction

06 Information security

08 Infrastructure

ContentsTechnology

0f 10 Market Insight Q2 | Technology | Badenoch & Clark Market Insight Q2 | Technology | Badenoch & Clark Page 5 0f 10

Recruitment market goes from strength to strength Is the good news set to continue?The REC Report on Jobs suggested that while permanent placements were still rising in May, it was at their slowest pace for four months. Anecdotal evidence suggests that this short term slowdown was a commercial response to the impending general election, as businesses and job seekers alike held their breath waiting for the result. More formally, KPMG reported:

The UK job market saw a slight slowdown in May, as those on boards took time to digest the election result and work out the ramifications for their business. This pause did not dampen temporary staff placements, and temp billings rose for a twenty-fifth consecutive month.

KPMG Partner Bernard Brown

According to Bank of England Deputy Governor Jon Cunliffe, employment growth will be unable to continue at the same speed:

We are now getting close to the end of that reservoir of spare labour capacity.

However, our data suggests that there is a little more fuel in the tank with 69.2% of our clients expecting their business to grow in 2015.

Introduction

The professional staffing market has enjoyed a strong first 6 months of 2015 as a fall in unemployment to pre-crisis levels has generated record employment of over 31 million for the first time in UK history.

On the ground, our clients are equally positive. Results from a recent Badenoch & Clark survey of 600 senior managers found that more than one in four (26.4%) felt that business performance has exceeded their expectations so far this year with just one in five feeling it had fallen short.

APSCO (the Association of Professional Staffing Companies) suggests that at the end of H1, placements in the professional job market were 27.6% higher than the previous year, with vacancies growing at 16.0% year on year. Ann Swain, Chief Executive of APSCo, commented:

This sentiment was seconded by Gerwyn Davies, Labour Market Advisor at the Chartered Institute of Personnel and Development (CIPD):

Employers’ appetite for taking on workers shows no sign of abating. This is reflected by the record number of people aged 16-64 in work. Apart from the modest increase in redundancies, all of the employment indicators are moving in the same positive direction.

And it seems that permanent recruitment is the big driver in all of this. According to the REC Jobs Outlook, 74% of employers plan to increase their permanent headcount during Q3 2015, and 81% over the next 12 months.

The UK’s economic dark clouds are now well and truly lifting

BADEnOCH & CLARK’S Own fIGURES STAnD In SUPPORT Of THIS:

78% of our clients surveyed fuelled their growth during the first half of 2015 by boosting their permanent workforce.

Skills shortages threaten to hamper business growth Despite market growth, the elephant in the room remains skills shortages and quality candidate availability: the CBI reported during H1 that for the first time skills shortages were a more significant threat to employers than employment regulation. In fact, a shortage of quality candidates is the single biggest issue facing those of our clients who wish to recruit in 2015; more than half (51.6%) expect to encounter an issue.

So how are employers tackling this? In the short term, more than one in four employers expect to engage a temporary workforce, while 40% will share the workload within the existing team; it is however worth remembering that a heightened workload without the incentive of a pay rise or promotion can negatively impact internal engagement levels, and may even lead to further talent fall out.

In terms of attracting new blood to their organisations, the promise of career development remains the most frequently employed attraction strategy; despite this, one in ten employers fail to offer Learning Development Programmes.

In the midst of these shortages, the Resolution foundation ThinkTank has predicted that in 2015, wages will rise at their fastest pace for eight years. But only 2% of the employers we surveyed are expecting a significant increase in salaries over the next 12 months; the change then may be in new starting salaries, rather than in rises for existing staff.

The other big stumbling block is hiring times: Glassdoor economic research has revealed that UK hiring times have doubled over the last four years to 28.6 days. If employers are going to successfully compete for in-demand professionals, they are going to have to make quicker and smarter hiring decisions going forward. Otherwise, they’ll be left without the skills they need to progress.


Information security

Technology Q2 CommentaryThe technology market experienced solid growth throughout H1 2015. In a recent survey of 600 senior managers within commerce & industry, Badenoch & Clark found almost two thirds (60.7%) of employers across the technology sector to have experienced growth in the first half of this year, with 50.1% increasing headcount to accommodate this growth.

Several factors were identified as the agents for growth: new project initiation (35%), new products/markets/services (35%), and changes in technology (30.2%) being amongst the most prominent. This is perhaps a strong indication that organisations are taking advantage of renewed market confidence and pushing ahead with previously shelved projects and upgrades.

The hiring blend has been dominated by the permanent market, with a huge 81.4% of employers recruiting permanent heads to fill skills gaps in the first half of this year. This is a trend that looks set to continue as 83.3% of the employers that we surveyed expect permanent demand to remain steady, if not to slightly increase, while only 9.5% expect increases within the contract market. Over half of respondents, some 51.2%, indicated that in the short-term, excess workload would be shared out and covered by existing staff; all of which suggests there is still excess capacity in the market that will need to be used up before we see a contractor boom.

Information Security

The Information Security market has continued its steady growth this quarter with a quarter on quarter increase in vacancies of 20%. There has been a very sharp increase in permanent roles across the entire security spectrum, from traditional GRC roles through to Penetration Testing and Architecture around the UK, specifically in the London and Midlands markets. The SME market continues to use contractors to fill short term and urgent skill gaps, although our larger clients have been slower on the uptake in this area.

with a shortage of quality candidates, the InfoSec market has seen increased market rates across both permanent and contract hiring, which has made an already talent-led market slightly more challenging for employers, as more candidates are presented with numerous opportunities. To counteract this, many employers are promoting clearly defined career paths, rather than just stronger benefit packages and higher bonuses, to attract and secure top talent.

Time to hire is as important as ever, and this has shown no signs of changing. Due to the in-demand nature of the industry, top end candidates are able to dictate timeframes around interview processes and hiring, meaning that employers need to be flexible to secure their first choice.

Skill sets

Technical skill sets have moved to the top of our clients’ shopping list in Q2; something we expect to continue for the remainder of 2015 at the very least. Security architecture is the on-trend expertise, with employers ranging from technology to financial services firms eager to on-board talent with a stronger technical background mixed with business acumen. Often not just assigned to architect roles, successful candidates are being deployed across various internal technology and business related projects.

Penetration testing has also been a growth area amongst end users, no longer purely relying on system integrators or consultancies to provide this skill set. This in itself is a challenge as the new recruit will often be ‘first on the ground’, but the scope and career opportunities are greater when moving to an internal role.

Technology market continues to grow

The Information Security market has continued its steady growth this quarter with a quarter on quarter increase in vacancies of 20%

of employers recruiting permanent heads to fill skills gaps in the first half of this year

of the employers that we surveyed expect permanent demand to remain steady

81.4%

83.3%


Attraction and retention

with growth being of paramount importance, it is clear that organisations need to compete to both attract and retain their top talent. In recognition of this, employers are investing in training and development programmes (50%), career progression initiatives (48.8%), and flexible working (38.2%) — all of which have proven successful. Two thirds (35.7%) of the employers that we surveyed also rated their organisation's Leadership Development Programmes as above industry standard, and whilst this can still be improved, it is a stronger response than in other core markets (A&f c25%). with investment in these programmes, it is no surprise then that retention is expected to improve by a fifth of our customers.

Infrastructure

Infrastructure

Since the turn of 2015, the IT Infrastructure market has continued to grow at an aggressive rate, creating huge demand for candidates. 2015 is by far the most candidate-led market the industry has seen for the last eight years: in Q2 alone permanent placements were up 54% YoY, and permanent job flow in Infrastructure up 44% on Q1.

Recruitment for desktop and service desk analysts has been most affected; it is increasingly difficult to secure these candidates unless salaries paid are in line with the market. The average salary of a service desk analyst has been steadily rising the past two years, with market rates at £30,000 - £32,000 compared to around £25,000 - £27,000 in 2012. Companies paying in excess of this are moving quickly to secure top talent.

The mid-level infrastructure market has also been affected by this, the average salary for an infrastructure engineer rising from £45,000 to £50,000 in less than 12 months. Senior level roles (90k+) have not been affected as greatly; although there is more visible candidate movement, salaries have stayed static — to some extent it remains a client-led market, with organisations able to be very selective, particularly for Director level and C-suite positions.

Employers who are not keeping up with market trends when it comes to salary bandings are finding it increasingly difficult to secure the talent they need, and experiencing high turnover within their infrastructure and desktop teams. Many organisations are restructuring salary pay levels to prevent high turnover and to attract the quality of candidate they have expected and received in the past.

As far as technology trends are concerned, there has been a significant rise in firms opting to migrate their MS Exchange into the Cloud utilising Office 365. This has in turn increased demand for service desk analysts with cloud-based software knowledge, and decreased demand for infrastructure engineers with on-premise Exchange experience (once an absolute must). we have also seen an increase in utilisation of Hyper-V, which seems to be gradually gaining market share on the previously dominant VMware product suite.

Whilst interim and contractor job flow has failed to match the same increase as permanent hiring, we have seen average rates rise by 10% across the board YoY. Many organisations are

restructuring salary pay levels to prevent high turnover and to attract the quality of candidate they have expected and received in the past.

of employers are investing in training and development

programmes

of employers are investing in career progression initiatives

of employers are investing in flexible working

50%

48.8%

38.2%

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© Badenoch & Clark 2014. All rights reserved. The information contained in this publication is intended for general purposes or guidance only. It does not purport to constitute professional advice. Badenoch & Clark accepts no liability for the accuracy of the contents or any opinions expressed herein.

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Market Insight Q2 Technology

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