IT Market Insight: Europe 2014
Over the past two years the IT market has been picking up, albeit slowly. Last year, one source predicted a '1.8%' rise globally on the 'average corporate IT budget'. The estimated growth of mobile application development was '50%' - that's nearly '2% of total IT expenditure'. It therefore comes as no surprise that Mobile App Development is already emerging as one of 2014s hottest IT trends.
Companies are investing in mobile apps to keep up with the market and get ahead of their competitors. Businesses are searching for candidates with the niche skills to innovate in this area – which can be tricky.
We investigate how this and other factors are affecting IT markets in Europe, particularly in the Netherlands, Germany and Switzerland.
The Dutch economy is climbing steadily out of recession, the property market is looking optimistic and consumer spending is on the rise. Business confidence is gaining, with sources estimating growth in the Dutch IT market between 1.5 and 2.5% this year. However, despite the positive outlook businesses are still holding onto a 'recession mentality'.
Across the Netherlands cost cutting and tight budgeting is still evident. Companies are wary of over-committing their budgets at this early stage in the year, and as a result, approval on major IT projects is slow. Those with live projects can be much more selective. For example, rather than hiring a java developer with strong java skills they are looking for multi-skilled experts with high level java, other platforms, front end experience, database, sector expertise and languages.
One area where the market is buoyant is mobile and tablet-based application development, and related skills are in high demand. We predict an inevitable shortage of experienced consultants in this area as we move through 2014, and this is likely to lead to higher costs for the best people.
Big Data is another trend which is having a great impact on the IT market this year. 'Data-Scientists' will be sought after, as will Business Intelligence specialists. Demand for Project Managers and Business Analysts, an area which has seen low demand and falling costs over the past few years, will start to increase.
April sees the start of the financial year for many companies, so we are expecting an increase in project sign off from the second quarter of 2014. Specialists who can offer a range of languages will be in a strong position, as companies find they have to look further afield for the right talent, particularly in niche skills. This will suit many consultants, who are happy to relocate in order to work on better projects and develop their careers. Some businesses though are reporting a lack of suitably qualified native Dutch speakers.
Companies are starting to look more strategically at how they manage their resources – preferring to establish close project based partnerships with consultancies such as Michael Bailey Associates, rather than managing a roster of recruitment agencies who can only offer a limited range of services. We have seen an increase in companies engaging us to set up, manage and run entire projects, reducing their workload, cost and risk. A flexible structure means we can base contracts on a fixed price, monthly service fee or payment on deliverables to suit the clients' needs. We anticipate that this trend will continue as we progress through the year.
The economy in Switzerland is currently performing well with a predicted growth of 1.8-2.4% in the next year. However, ongoing debate about the country's relationship with the EU may have a profound impact on the labour market. Reciprocal agreements about the free movement of people between Switzerland and the EU may be affected by Switzerland's plans to restrict the number of job seekers coming into the country from the EU.
Whilst ongoing debate and uncertainty surrounds this key question, the outcome of which cannot be reliably predicted, there is nervousness about committing to future projects which rely on sourcing talent from the EU. Companies are confident about implementing short term projects, but anything more long term is in the balance. Some businesses are looking at near shoring projects outside Switzerland's borders to combat this.
In addition recent changes to improve transparency in the Swiss banking system have deeply affected the financial services industry. Previously, the secretive nature of the Swiss banks as well as the favourable tax system was a strong competitive advantage. Now the industry is facing increased competition from other nations, as well as fall-out from reputation damaging banking scandals surrounding tax evasion and the Libor rigging scandal in the UK. This has all hurt the banks' profits, and led to drastic cost cutting measures, which has in turn affected the IT skills market.
Banks and other Swiss businesses are looking to reduce their risk, and so are increasingly turning to off-shore outsourcing consultancies at the lower end of the spectrum as a fast, cheap alternative to higher quality locally based consultancies such as Michael Bailey Associates. However, question marks about the quality of work performed by off-shore firms remain.
Despite this uncertainty, there is plenty of good news too. Top quality specialists with plenty of experience and skills in multiple areas are very much in demand. There are many smaller banks that have weathered the financial crisis, and want to gain a competitive edge over the global players. Switzerland has a strong start-up sector spanning several industries, including biotech, e-commerce and technology. Smaller, developing companies require experienced consultants who can have an instant impact on their business.
IT is a mission critical function, and as such, the IT market in Switzerland remains stable. There will always be demand for specialists with a broad skill set who can add value. However, the future of the market is likely to be determined by the political outcome of the debate on Switzerland's long term relationship with the EU.
Germany's economy is growing, and confidence is high. The labour market is buoyant and companies are willing to invest in people. However the regulatory landscape is changing with regard to freelancers, making it difficult for companies to hire consultants for long term projects.
'Scheinselbsständigkeit' is the main issue, an ongoing debate surrounding the definition of a freelancer and a permanent employee. Freelancers have to fulfill certain criteria to be legally viewed as a genuine freelancer rather than a permanent employee. In the past, companies have avoided paying state contributions by categorising permanent workers as long-term freelancers.
Companies are increasingly nervous about the reputational and financial damage that prosecution could bring if they are deemed to be wrongfully hiring freelance consultants. This situation has been exacerbated by sensationalist media reporting of the issue. At the same time, they don't want to lose valuable consultants at a time when there is a shortage of people with the ability to implement IT projects. In spite of this, with the right knowledge, guidance and processes it is easy to legally and successfully work with freelancers, and Michael Bailey Associates can provide support with this.
Mobile technology, IT security and Big Data are the top trends for 2014 in Germany. Security is at the top of the agenda in the wake of numerous high profile hacking cases, such as the Edward Snowden affair and hacks on social media giants like Twitter and Snapchat. Data warehousing and business intelligence skills are in demand with the emergence of Big Data as a key trend.
Within Germany, as elsewhere in Europe, it is no longer enough to be skilled in one area. Consultants need broad experience and knowledge of other related areas. For example, i be a developer skilled in one platform may also need experience across various programmes and platforms, high level certifications, knowledge of databases, languages etc.
The German economy is incredibly resilient, bolstered by strong financial services, automotive and manufacturing sectors. This contrasts sharply with Austria, which has not returned to growth and is struggling to compete with other European countries. With an Eastern European mentality and borders with countries such as Hungary and the Czech Republic, Austrian businesses often favour importing cheap labour from its neighbours.
In Germany, the market is much more confident, but there is a lot of competition, and delivering a high level of service is critical. This is an area where Michael Bailey Associates has traditionally excelled, as a consultancy that focuses on long term project implementation and premium client service.
• Confidence is slowly returning to post-recession Europe, and companies are starting to implement crucial IT projects that may have been put on hold.
• Key trends for 2014 are Big Data, Mobile Technologies, Cloud Computing and IT security.
• Skilled IT experts are in demand across Europe, and a wide skill set with languages are increasingly being sought.
• Companies are looking to work with trusted, well established suppliers who can offer a better quality of service and a broad range of services for their staffing solutions. Michael Bailey Associates is well placed to support companies in project based workforce consulting, with services ranging from payrolling to sourcing skilled consultants.