Hiring for IT services in the age of Corona
The recent viral pandemic has created significant disruption in business operations across the globe.
There is fear, uncertainty, and a distinct slowdown in businesses, especially those in leisure, hospitality and travel.
In this environment, how do you approach your hiring plans for IT services sales & senior delivery resources?
Impact of the current crisis on businesses
In the immediate term, economies and industries across the globe will be negatively impacted by the pandemic.
If you are in the travel, entertainment or any industry which congregates groups of people together, this is going to feel like the end of the world.
Even if you are not in any of the hardest hit industries, the headlines are scary with persistent negative news of deaths, travel restrictions, stock market crashes, & closures of institutions.
The shock and uncertainty will lead to subdued behavior in the populace. Most will want to be prudent, conserve resources and see how the pandemic plays out and its impact on their lives and businesses. This will hit discretionary spending the hardest.
Slowing of global economic growth is forecasted, especially in the first two quarters of 2020.
Are there learnings from similar events in the past?
The current pandemic is an abrupt shock to countries, economies, and people.
This is not the financial crisis of 2008 or the dot com bust of 2001. Those were structural and systemic malaises which had been building up for years and finally came to a head.
The current situation is more comparable to unexpected and sudden shocks like 9/11, SARS, H1N1 virus, Japan’s Tsunami, and Hurricane Harvey.
Each of these was scary, led to significant disruptions, and had severe economic impact.
The estimated damage from hurricane Harvey was $125 billion and in just South West USA
In 2001, GDP growth in the US was already falling prior to 9/11. The shock of 9/11 aggravated it and GDP fell to 0.2% Two quarters later it rose to 2.2%.
The WHO confirms 18,000 deaths from the H1N1 pandemic and acknowledges that it could have been upwards of 275,000. This also coincided with the banking crisis of 2008-2009 when world GDP was already falling. The year 2009 ended with global GDP at negative 1.7%. It was up to 4.2% in 2010.
18,500 lives were lost, 16000 became homeless in the aftermath of the Fukushima incident. It also changed the nuclear power industry forever. GDP growth in Japan was already falling and after Fukushima, it continued to fall – for one quarter - and then was back on a growth trajectory.
How much of your business comes from discretionary spending
The current pandemic is a shock to the economic and social system. If similar past shocks are a precedent, this will impact economic and spend behavior hardest for one or maybe two quarters and then the economic environment will improve.
In the near term, expect conservative behavior from consumers and businesses and a pullback on discretionary spending.
Hence the first question to ask is how much of your business or employment is linked to discretionary spending by your customers or employer (You might want to also read – Which budget funds your job). Assume that any discretionary spending not already committed will become zero and start to creep back up once there are signs of the pandemic being contained.
Having assessed the potential near term impact, assess how you see your business once conditions start to normalize, likely a quarter from now.
And based on that, what adjustments need to be made to hiring plans.
Hiring cycle times – sales/senior delivery resources in IT services
For sales & senior delivery personnel in IT services in the USA, it took 62 days from when a candidate was presented to when she or he joined. (Ref - Valenco data - Hiring cycle times)
Add to this a 15 - 30 day period from the time when a candidate search starts to when a set of candidates are available for interviews.
This makes it between 77 and 92 days from when the search starts to when a candidate joins.
Therefore, once a hiring requisition is approved, expect to have a joining and hence a cost of payroll one quarter later.
To this add a 30 – 60 day period for the new hire to get assimilated and productive.
A hiring requisition approved today will then yield a productive sales or senior delivery person in IT services 107 – 152 days from now.
Hence when taking hiring decisions today, think of the business outlook for your company two quarters ahead. Any new requisitions approved today will lead to candidate joinings in June and earliest productivity in July or August this year.
In closing
The current health pandemic has shocked the world, led to widespread health and mortality and disrupted business operations globally.
In the near term it will lead to pullbacks in discretionary spending and companies which are most reliant on it will be hardest hit.
There have been similar shocks like this, including 9/11, H1N1, SARS, Fukushima and hurricane Harvey.
Each of them created havoc, disrupted lives and businesses.
The severity of the disruptions lasted one quarter or two and then people & businesses demonstrated resilience and economic growth rebounded.
Assess what will be the resource needs for your group or business if the situation starts to normalize one quarter from now.
If you are thinking of adding sales or senior IT delivery resources in the USA, a requisition approved today will likely lead to a resource joining in late Q2 2020 or later and a productive one in Q3 2020
When taking decisions on hiring of these resources, look beyond the immediate and into what is likely to be the cadence of your business two quarters ahead.
Keep swinging!
References – Data points on the natural disasters have been taken from Wikipedia
