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Houston IT Hiring Trends: A 2014 Review and 2015 Projections
Have we reached the top of the cycle?
“Prices for commodities and hiring move in cycles; they have ups and downs. We see a temporary slump in hiring based on oil prices but the basic fundamentals and benefits from innovative systems have not changed,” James Del Monte, President, JDA Professional Services
The last seven years have seen tremendous growth within the Houston employment market, which leads the nation in job growth. Unemployment rates across all fields have been consistently lower than national averages and in spaces such as IT and engineering, unemployment rates have been in the 1-2 percent range.
Of the 30+ years JDA has been in business, this is far and away the strongest market we have ever seen. It even surpasses the boom of Y2K. Last year, we noticed the market beginning to peak, a trend which continued through 2014. And now, going into 2015, we are left with some uncertainty as to what will happen next.
The IT market of the last few years differs substantially from that of the Y2K boom. Back then was an almost universal race to capitalize on an emerging technology. The demand for IT was incredibly high, but once the bubble burst, it fell off severely. This led many to the belief that IT was little more than a fad, and certainly not a central part of business. However, in the last decade, all of that has changed. It began with a demand for a web presence, then social media, then support for mobile devices. And, through this, the role of IT grew progressively greater.
With the Great Recession of 2008, many companies began to rethink their business models. These new developments emphasized more to be done with less, leading to flexible salary plans and, more prominently, a newfound surge in automation. This created a robust oil and gas market which, in turn, spurred a boom with the increased use of fracking technology. However, this growth was not limited to oil and gas. Houston’s economy is more diversified than it was in the eighties. Back then, it consisted of upwards of 70 percent oil and gas. Now, that number is less than 50 percent.
Hundreds of thousands of new jobs have been created in the last seven years with many being in technology. One factor in this has to do with the demand for IT professionals growing far beyond the supply. Because of this, compensation in the IT arena has risen significantly. Another factor is business consolidation. This forces companies to move to a common platform for both infrastructure and ERP. Additionally, small and midsize companies are growing far beyond their systems and processes, advances in supply chain have created opportunities to reduce cost by leveraging new technologies, the increased use of analytics and business intelligence have improved the managing of operations, and web and mobile apps put customers closer to suppliers than ever before. Again, these trends apply to all industries.
Is the slowdown here?
“No doubt. Even non-energy companies are taking advantage of the slowdown to top-grade their staff. We see this in every cycle,” James Del Monte
At this point, we’ve seen that many of the ‘heavy lifting’ projects are done. Companies have completed consolidations, upgrades, expansions, and now, what’s left, is in managing these systems. What this comes down to, ultimately, is the fact that every facet of running a business has a technology component. This directly impacts the need for IT staff to manage and improve these systems. Many companies have been actively building bigger IT departments as they work to improve their methods.
Even with a slowdown, the IT field is not likely to see massive cutbacks. For the reasons listed above, we believe that Houston will retain a good IT market through the upcoming slowdown. This is corroborated by our survey: 39 percent of Houston companies are planning to increase the size of their IT departments in 2015. This figure, however, is the lowest since 2008, when oil prices bottomed out at $30, from $145. Additionally, capex remains strong. 81 percent of companies anticipate their spending to either remain the same or increase in 2015, compared to 92 percent in 2014.
Compensation for IT professionals in Houston has been a feeding frenzy over the last few years. With full employment and new job creation, we have seen good candidates offered multiple options. This causes a lot of churn in the market. Due to this, internal base increases have risen from the standard 2-4 percent annually to 3-8 percent. And, on top of this, many companies have switched to total compensation packages including bonuses, increased personal time, and title changes as incentives to retain staff. At the prospect of changing jobs, we have seen offers range from 5-25 percent above the current base with additional perks such as vacation and sign-on bonuses as companies vie against each other for top talent.
So what will IT staffing look like in 2015?
“2015 is off to a slow start, but will finish strong. There is still a demand for good people and they are hard to find and keep,” James Del Monte
Currently, there is an adjustment going on in the oil and gas industry. We are anticipating city-wide reductions in force, if for nothing else, as a way to top-grade existing positions. Lower costs of energy are good for the rest of the country and for mid- and downstream segments of our energy industry. On the other hand, our medical, transportation, engineering and construction, and technology sectors are poised to do well.
Despite most ‘heavy lifting’ projects having been completed, there is still a significant demand for companies to take advantage of new technologies to further increase revenue and profits. As such, demand for skilled IT professionals will remain high and may even give supply a chance to catch up to demand. As many of our clients indicated in this year’s Salary Survey, base salaries are looking to return to the standard 2-4 percent annual increases, and bonuses don’t appear quite as robust as in previous years.
Additionally, the goals of many companies are changing. There is a much stronger emphasis on long-term growth potential. This has led to a surge of increases in high-value activities, in B/I, Business Process, and Applications Development. Also, according to our survey, the concerns of IT executives suggest that the next few years will see an increased focus on IT security and on better hiring/retention strategies.
And, in the end, this is proof that, despite economic slowdown, it’s a great time to be in Houston.
How JDA Can Help
With over 30 years of experience actively recruiting IT professionals in Houston, JDA is a great resource to identify and recruit the passive job seeker either on a full-time or contract basis. For more information on how we can help you build a great IT department, contact James Del Monte, President, at 713.548.5444 or jdel (at) jdapsi (dot) com.
About the Survey
The information gathered here was compiled from the responses of roughly 100 Houston-area IT managers, 62 percent of whom are the top IT person at their company.
Click here to go directly to the 2015 Salary Survey numbers.