Positive Momentum Continues in CompTIA 2Q 2014 IT Business Confidence Index

Positive Momentum Continues in IT Industry Business Confidence Index Q2 Release | April 2014

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IT Industry Business Confidence Momentum Continues

44.0

49.0

54.0

59.0

64.0

CompTIA’s IT Industry Business Confidence Index is calculated on a 100-point scale, using an aggregation of three metrics: 1). Opinions of the U.S. economy, 2). Opinions of the IT industry, and 3). Opinions of one’s company.

Source: CompTIA IT Industry Business Confidence Index, Q2 2014 | Base: n=305 IT industry executives

Economy Rating Narrows Gap with Other Index Components

36.0

40.0

44.0

48.0

52.0

56.0

60.0

64.0

68.0

72.0

Economy IT Industry My Company

CompTIA’s IT Industry Business Confidence Index is calculated on a 100-point scale, using an aggregation of three metrics: 1). Opinions of the U.S. economy, 2). Opinions of the IT industry, and 3). Opinions of one’s company.


NET Positive Ratings at the Highest Level in History of BCI

Worst BestWorst Best

U.S. Economy Today

Worst Best

IT Industry Today Your Company Today

Net Negative Net Positive Q4 ‘12 71% 29% Q2 ’14 50% 50%



midpoint midpoint midpoint

Distribution of opinions about the economy, the IT industry and respondent’s firm. Q2 ‘14 Q4 ‘12

The Q2 2014 line indicates a shift towards more positive sentiment


IT Industry Executives Express a Number of “Keep You Awake at Night” Concerns

5%

9%

15%

22%

23%

23%

23%

25%

32%

35%

40%

49%

Weak export market

Input/commodity price inflation

Access to credit/capital

Competition from new firms entering our space

Labor costs/availability of skilled workers

Lengthy sales cycles

Disruptive technologies or business models

General lack of confidence/paralysis

IT industry squeezed by decreasing margins

Unexpected shock (e.g. financial or Intl crisis, etc.)

Government regulation and/or gridlock in Washington

Price sensitive customers hesitant to spend

Access to credit/capital has improved, but is still a serious concern among the smallest of firms (33% vs. 15% overall)


Concerns Roughly Unchanged During Past 3 Quarters

3%

6%

12%

20%

27%

24%

15%

26%

30%

32%

42%

49%

5%

9%

15%

22%

23%

23%

23%

25%

32%

35%

40%

49%

Weak export market

Input/commodity price inflation

Access to credit/capital

Competition from new firms entering our space

Labor costs/availability of skilled workers

Lengthy sales cycles

Disruptive technologies or business models

General lack of confidence/paralysis

IT industry squeezed by decreasing margins

Unexpected shock (e.g. financial or Intl crisis, etc.)

Government regulation and/or gridlock in Washington

Price sensitive customers hesitant to spend

Q2 2014

Q4 2013


The biggest change since Q4 comes in the area of concern over disruption (+8 points)

25%

42%

33%

Fully staffed; no hiring plans

Fully staffed, but want to hire in order to expand

Understaffed

IT Firms Grapple with Understaffing

10%

12%

5% 6%

by 5% by 10% by 15% by 20%

Degree to which IT Firms are Understaffed

To put into context, an IT firm with 100

employees reporting understaffing of 10%

is short 10 workers.


Strategies Used to Manage Understaffing Challenges

14%

18%

19%

20%

27%

32%

50%

Partnering with other firms to offset staffing or skills shortages

Outsourcing more tasks or entire functions

Automating more tasks or functions through technology

Postponing or canceling projects

Using more contract or temporary workers

Re-deploying staff from lower priority projects to higher priority projects

Requiring workers to put in more time on the job

Text


52%

48%

Yes No

Half of All IT Companies Report Having Job Openings

18%

47%

75% 76%

Microfirms

Smallfirms

Mediumfirms

Largefirms

Segmentation of Incidence of Current Job Openings that Need to be Filled


11%

9%

12%

15%

19%

23%

28%

29%

33%

39%

48%

Other

Social media expertise

Inside sales staff

Marketing staff

Consultative sales staff

Project managers

Security expertise

Network engineers

Cloud expertise

Application developers

Technicians or IT support/service

Most IT Firms’ Skills/Job Roles Needs Skew Toward Technical Positions


Segmentation of IT Firms’ Skills/Job Roles Needs

Overall Micro IT

Firms Small IT

Firms Medium IT

Firms Large IT

Firms

Technicians or IT support/service 48% 42% 42% 54% 57%

Application developers 39% 24% 44% 40% 48%

Cloud expertise 33% 22% 29% 37% 45%

Network engineers 29% 17% 27% 42% 35%

Security expertise 28% 20% 16% 31% 47%

Project managers 23% 9% 26% 33% 28%

Consultative sales staff 19% 20% 29% 13% 13%

Marketing staff 15% 28% 9% 17% 6%

Inside sales staff 12% 16% 13% 12% 8%

Social media expertise 9% 15% 8% 6% 6%

Other 11% 10% 13% 10% 9%


Micro firm = 1-9 employees Medium firm = 100-499 employees Small firm = 10-99 employees Large firms = 500+ employees

Finding Workers with the Right Set of Skills/Experience

8%

26%

40%

20%

6%

5%

10%

29%

47%

10%

Not at all challenging

Not that challenging

Somewhat challenging

Challenging

Very challenging

Technical positions Non-technical positions

Average Time to Fill Technical Positions*

28% Less than 2 months 34% 2-3 months 14% 4-5 months 9% 6 months+

A NET 57% of firms indicate challenges in hiring technical workers vs. 26% for non-technical workers (e.g. marketing, sales, etc.)

*Don’t know response not shown


Key Summary Points


• CompTIA’s IT Industry Business Confidence Index maintained its momentum, inching ahead 1.1 points. The 3-variable index recorded a rating of 61.3 on a 100-point scale. The forward-looking component of the index is projected to increase 2.7 points, signaling the likelihood of further strengthening of business confidence over the next six months.

• Despite the positive trending and economic tailwinds, IT industry executives express a number of concerns. At the top of the “keep you awake at night list” is concern over price sensitive customers reluctant to spend. This could be, for example, customers in industry sectors that are still lagging in the recovery, or customers still in cost-cutting mode and reluctant to invest in technology. Similarly, executives express concern about downward pressure on margins. Among the smallest of companies, access to credit/capital is a relatively more pressing issue (33% vs. 15% overall).

• With a reasonably stable economy, firms are better positioned to hire. According the Bureau of Labor Statistics, the unemployment rate stands at 6.7% - still high by historical standards, but much improved since the double-digit rate of a few years ago. Among IT firms, the data suggests a significant number have pent up demand. One in three firms report being understaffed to some degree, with a segment short 20% of their ideal staff size.

• Over half of the IT firms in the CompTIA study report having at least one job opening. Large and medium size companies are most likely to have openings, with small and micro size firms to a slightly lesser degree. The top three positions/job roles most want to fill include: technicians/service staff, application developers/programmers and cloud computing positions. For most firms, technical positions are the priority, with non-technical positions such as sales or marketing staff, generally a secondary need.

• For many firms the hiring environment presents a range of challenges – a net 57% of IT industry executives rate it challenging/very challenging. This may stem from a limited pool of candidates, candidates lacking the desired skills/experience, mismatches in salary requirements or simply the wrong fit. Twenty-three percent of firms say it takes on average 4 or months to fill certain technical positions.

Summary of Indicators

Economy According to the Bureau of Economic Analysis, the U.S. economy grew by 1.9 percent in 2013, down from a 2.8 rate in 2012. Looking ahead, the IMF projects growth of 2.8 percent for the U.S. in 2014. In comparison, the group expects global GDP growth to approach 3.7 percent, driven primarily by growth in Asian economies as well as the Middle East and Africa.

IT Industry Gartner recently updated its 2014 global IT industry growth forecast, increasing it slightly to 3.2 percent, from 3.1 percent. Gartner cited strong growth in software and IT services as key contributors to IT industry performance for the year. In January 2014, CompTIA released its annual IT industry forecast. CompTIA’s consensus forecast projected a growth rate of 3.0 percent for the U.S. IT industry in 2014, with upside potential of 5.4 percent.

Employment According to the Bureau of Labor Statistics (BLS), the U.S. unemployment rate for March 2014 held at 6.7 percent. While the unemployment rate has steadily decreased, labor force participation remains historically low at 63.2 percent. To put into context, the rate today stands at roughly the same point as 1979. Compared to the national unemployment rate, the rate for computer related occupations remains very low. For March, the rate dipped to 2.8 percent, down nearly half a percentage point from the same period a year ago. See CompTIA’s IT Employment Snapshot for more details on IT employment trends. During Q1 2014 there were 589,205 core IT job openings in the U.S., according to Burning Glass Technologies Labor Insights.

Stock Market The Vanguard Information Technology ETF (a mix of publicly traded hardware, software, IT services and telecom firms) increased 26.96 percent for the 12-month period March to March. In comparison, the S&P 500 increased 21.86 percent over the same period.

Confidence The Index of Small Business Optimism jumped 2 points in March, according to the National Federation of Independent Business (NFIB). The ISM Services Index, a measure of activity within the broad services sector of the U.S. economy, increased during March, but fell short of expectations. The index recorded a rating of 53.1, up from 51.6 in February. The March reading marked the 51st straight month the index was above 50; however, the index is still well off its 7-year high of 57.9. The Conference Board's March Consumer Confidence Index release showed an increase nearly 4 percentage points to 82.3. According to the Conference Board “consumers were moderately more upbeat about future job prospects and the overall economy, but less optimistic about income growth.” Note: Confidence indexes are very time sensitive and can fluctuate significantly from week to week. Factors such as gridlock in Washington, international events or stock market volatility can quickly turn positive sentiment negative.

About This Research


28% Executive Management (CEO, President, Owner, etc.)

5% Senior Management – IT function (CIO, CSO, VP, etc.)

7% Senior Management – business function (CFO, VP, etc.)

18% Middle Management – IT function (Director, Mgr, Team Leader etc.)

15% Middle Management – business (Director, Mgr, Team Leader etc.)

8% Staff level – IT function

3% Staff level – business function

9% IT Consultant

6% Business Consultant

13% IT solution provider

18% Software vendor, developer, ISV, SaaS provider

17% IT or business consulting

9% IT support or repair services

7% Managed services provider

8% Hardware vendor, manufacturer or developer

6% Reseller/VAR

3% Systems/network integrator

6% Telecom or communications services

5% Distributor, value added distributor or retailer

7% Other type of IT firm

29% Less than 10 employees

25% 10 to 99 employees

17% 100 to 499 employees

29% 500 or more employees

Participant Job Title

Participant Business Type

Firm Revenue

This quantitative study consisted of an online survey fielded to IT industry executives and professionals during early April 2014. CompTIA’s IT Industry Business Confidence Index is published at the beginning of each quarter. A total of 305 IT companies participated in the survey, yielding an overall margin of sampling error at 95% confidence of +/- 5.7 percentage points. Sampling error is larger for subgroups of the data. As with any survey, sampling error is only one source of possible error. While non-sampling error cannot be accurately calculated, precautionary steps were taken in all phases of the survey design, collection and processing of the data to minimize its influence. CompTIA is a member of the Marketing Research Association and abides by its guidelines for survey best practices and research ethics. CompTIA is responsible for all content contained in this report. This study and all CompTIA research is one way in which the association re-invests resources in the IT channel. As the voice of the IT industry, CompTIA has hundreds of tools, market intelligence reports and business training programs to help IT channel organizations grow through education, certification, advocacy and philanthropy. The full report is available at no cost to CompTIA members to help them develop and hone their business plans. Visit www.comptia.org or contact [email protected] for more information.

Methodology

http://www.comptia.org/

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Tactics Employed by IT Firms to Fill Job Openings

30%

47%

50%

61%

68%

68%

Visiting job fairs or university career events to find candidates

Using a recruiter to find candidate(s)

Recruiting via social networks, such as LinkedIn

Postings job opening(s) to job boards, such asCareerBuilder, Monster, etc.

Posting job opening(s) to company website

Soft recruiting, such as employee referrals
