There is a dip in the IT consultancy industry. The number of IT-related job postings has returned to pre-pandemic levels, representing a substantial drop compared to recent years. Some of the biggest technology companies in the world have laid off staff, and investments in technology projects by companies across all sectors are currently being pursued with caution.

So, what’s happening?

The perception of the IT/technology sector over recent years – decades even – is that it is a juggernaut of growth and opportunity. Fortunes have been made, industries disrupted, and careers built. Why does it now look so uncertain, vulnerable? What can we expect for the future? And what’s the best approach for navigating through this turbulence?

Let’s start by looking at what’s happened in the IT consultancy industry that has led to this dip.

The Current State of IT Consultancy

The current state of the IT consultancy industry can be explained under four main headings, all of which have interconnected strands and elements.

· Pandemic hangover

· Uncertain economic environment

· Tightened purse strings

· The rise of AI, automation, and digital transformation

Pandemic Hangover

The COVID-19 pandemic was awful in most respects, but the technology sector boomed. Over and over again, businesses and individuals turned to technology to continue functioning as close to normal as possible. As a result, existing technology companies scrambled to recruit to meet this surge in demand, while new companies were established to get their piece of the action.

But the pandemic is now well and truly over in terms of how we live and work. Many people have retained at least some work from home flexibilities, but that is one of the few remaining remnants of the policies of social distancing.

So, people are meeting in person rather than on Teams, we’re going to conferences instead of watching webinars, and we’re having drinks with friends in the local pub again rather than watching another series on Netflix.

In other words, the big tech boom of the pandemic era is over, so the sector is currently going through a correction to match resources and, potentially, an oversaturated IT consultancy market, with current “normal” demand.

Uncertain Economic Environment

Think back to the summer of 2019 – it’s only six years ago. What would you have said if it were suggested that the coming six years would involve a global pandemic that would last more than two years?

What would you have said if it were suggested there would be war in Europe, large-scale conflict in the Middle East, and tensions boiling over between India and Pakistan?

Would you have believed it if you had been told inflation would hit double figures in the UK and Europe, and the new US president would embark on replacing the world’s rules-based, multilateral trade system with tit-for-tat tariffs?

All this has happened, and much of it is continuing, creating economic uncertainty across most sectors and industries.

Tightened Purse Strings

The economic and geopolitical uncertainty in the UK, Europe, and around the world (and in some cases, the hard-nosed economic reality of current trading conditions) has resulted in many companies tightening their purse strings.

Budgets are restrained, resulting in high levels of technology project prioritisation. In many situations, only the most critical projects are getting the green light. Others are being treated with caution, leading to project delays and cancellations.

Tech bloat is another factor, with companies unwilling to take on such a complex and potentially costly challenge, especially with the current economic uncertainty.

The outworkings of tightened purse strings are also being felt in other areas. Take recruitment as an example. There is a rise in recruitment functions being brought in-house, even for specialist technology roles. We are also seeing a phenomenon common in other types of jobs, but which is fairly new in the technology industry – job creep. This is where companies add to the responsibilities of existing employees rather than replacing employees who resign.

The Rise of AI, Automation, and Digital Transformation

The IT/technology industry is driving the introduction of AI, automation, and digital transformation initiatives. It is also impacted by these technologies and innovations.

For example, there are some technology roles that are now becoming less and less sought after by companies because AI and automation technologies can perform the tasks better, faster, and with fewer errors than humans. Low-level, repetitive programming tasks are an example.

We are also going through a period where there is an element of skills mismatch. This doesn’t apply across the board. In some areas, however, there is a mismatch between the skills that currently exist in the market (because those were the skills previously in demand) and the skills now needed in this new era of AI, automation, and digital transformation.

What About the Future

We made the point earlier that nobody could have predicted in 2019 all the world-impacting events that have taken place since. Similarly, nobody really knows what is now in store for the future. That said, here’s our take.

· The pandemic hangover – the period of correction we have been going through since the pandemic is probably coming to an end. This could (and should) bring a more settled state to the industry.

· Uncertain economic environment – this one is harder to predict as there are factors at play that are beyond the influence or control of the vast majority of companies and business leaders.

· Tightened purse strings – this one is, of course, dependent on the other areas, especially the uncertain economic environment. However, history tells us situations like this are cyclical, especially given the crucial role that technologies have in business and our day-to-day lives.

· The rise of AI, automation, and digital transformation – from a business perspective, the pandemic era will disappear in our rearview mirror. The economic environment will probably return to a more stable footing at some point in the future, and companies will be more willing to invest in modernisation and growth. What won’t change, however, is the ongoing impact of AI, automation, and digital transformation.

What To Do Now

In terms of what to do now, we’ll look at two areas where we have expertise at Accessplc: recruitment and IT project delivery.

· Recruitment – now is a good time to re-evaluate the digital and technology skills you will need in the future, facilitating the implementation of talent acquisition strategies now to ensure you are not caught short or left behind.

· Project delivery – prioritise projects based on return on investment with an emphasis on quick wins. The most important element, however, is to keep moving forward, as standing still in relation to technology means going backward.

At Accessplc, we deal with circumstances as they are, not how we would like them to be. This puts us in an excellent position to support your organisation regardless of the operational, economic, financial, or technical situation you are facing. We’ll make sure you are optimised for today and equipped for the future, so please get in touch to start a conversation.