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Report: Executive IT Recruitment Is Slowing Down

Courtesy of TechCareers

Executive searches in the tech industry were down more than any sector in Q2 of 2007, according to a new report by the Association of Executive Search Consultants

AUGUST 16, 2007 | Executive searches in the tech industry were down more than any sector in the second quarter of 2007, according to a new report by the Association of Executive Search Consultants. The tech industry had nearly 14% fewer executive searches in the second quarter of this year, compared with the first quarter. In general, executive search activity is an economic growth indictor and a barometer of hiring trends, said the AESC report, which analyzes activity of about 1,200 executive search consultants in 42 countries. "In general, when companies see the bottom line in danger, they slam on the brakes," in terms of hiring and adding other costs, AESC president Peter Felix said. Felix adds, however, that he doesn't necessarily think the slowdown in quarterly tech sector executive recruitment as a sure sign of an industry-wide slowdown in the making, but rather a possible indicator of steadier job hiring activity settling in. "It's tricky to predict," he said. "The tech sector isn't frothing right now, but it could be more of a reflection of stable conditions" and less executive churn, Felix said. In the first quarter of 2007, executive recruitment activity in the tech industry grew 19% from the fourth quarter of 2006, according to AESC. Kirsten Smith, a partner at executive recruitment firm Battalia Winston International, said she's also noticed a recent deceleration in executive hiring among tech companies. "It has been a little slower than I had expected it to be; we're not seeing as much demand in tech as we had earlier this year and last year," she said. The summer -- especially August -- does tend to be slower for tech-industry hiring in general, she adds, although this year it's been a bit quieter than last summer, she said. Smith expects that the recent slowdown in hiring is more of a "precautionary" trend with tech clients, "not a real downturn." The semiconductor industry earlier this year warned that sales were slower, so other tech companies are becoming more cautious as well, she said. "Since the 2001 downturn, tech companies are much more responsible in their spending, including the money they spend in searches," she said. "We'll see what September brings." The slowdown in tech industry executive recruitment is "a yellow flag," said John Challenger, CEO of executive recruitment firm Challenger, Gray & Christmas. "Layoffs [in tech] are down, but we're not seeing a lot of hiring right now, either in the tech sector," which indicates a cautionary mode, he said. "Corporate profits are strong, but there's less risk in spending." The uneasiness in the mortgage and real estate sectors is also tempering the mood in other industries, like tech, he said. However, that slowdown "is not happening in health care, energy, or defense," he said. The consumer sector, which fell 6.6%, was the only other industry that saw a quarterly drop in executive recruitment activity, according to the AESC report. While the total number of executive searches globally in all industries was flat for the quarter, there were several sectors, as well as regions, of the world that saw hikes in executive recruitment. The busiest sectors for executive recruitment were nonprofits, which were up nearly 7%, followed by the industrial sector, which was up 3.6%. Also on the rise were life sciences and health care, which grew 2.6%; financial services, which was up 2.5%; and professional services, which inched up 1.6%. In terms of global regions, North America and Europe both saw executive recruitment activity dip 3.1% in the second quarter. However, both of those regions had seen 15% spikes in the first quarter. The most activity for the quarter occurred in the Asia-Pacific region, which increased 8.1%, followed by the Central-South America region, which rose 5.1%. — Marianne Kolbasuk McGee, TechCareers