Moving Forward in Today’s Economy

On March 5th, IBM’s Chief Economist Dr. Phil Swan was in Dallas to present to The Metroplex Technology Business Council. In Dr. Swan’s role, he evaluates economic data at the macro and microeconomic level, and advises the executive staff of IBM to assist their strategic decision making process.

As you might expect, Dr. Swan’s presentation contained a mix of news about the economic recovery, and specifically some interesting data on Information Technology’s contribution to the recovery. Some of Dr. Swan’s observations include:

• On a positive note, from 1995 to 2008 the U.S. utilized Information Technology to increase productivity growth better than any other country. Better than Japan, the European Union or the OECD. In fact between 2001 to 2008, Dr. Swan attributed 60% of U.S. productivity increase to Information Technology usage.

• In 1980 total Government Debt as a share of GDP was 37%. In Q3 of 2009, total Government Debt as a share of GDP was 69.2%. This current debt level severely constrains both Government and private industry investments in areas that could contribute to growth in a positive manner.

• Between Dec. 2007 to Q4 of 2009, the number of unemployed increased by 7.6 million, the under employed increased by 5.6 million, for a total increase of 13.2 million. Over 7.5 million jobs would have to be created to bring unemployment back down to 5%. The best year ever for net new jobs creation was 1984 in which 4.2 million new jobs were created. So what does this mean? It would take 2 years of unprecedented job growth to create the 7.5 million needed jobs to reduce unemployment back to 5%

• A real time measurement of the health of the economy is the Purchasing Managers Manufacturing Index. From second half of 2008 to Jan / Feb 2010, the index increased from 42 to 58.4 in the U.S. Any number greater than 50 is positive news for the economy although we would like to see an even higher number than the 58.4.

• Increasing corporate profits bode well for rising business capital outlays. The global inventory correction (I.e. moving from limited or a no stock inventory) is turning into production gains due to the need to replenish inventory levels. This production gain is a positive influence on the economic recovery.

So what was the final message? Dr. Swan was somewhat optimistic that the economic recovery will continue with a positive trajectory. The GDP recovery however will likely proceed at a much slower rate than the past decade, and most likely at an average of between 2.0 – 2.5% year over year growth.

Posted by Wayne Rampey, Vice President, The InSource Group

InSource Group awarded Schedule 70

The InSource Group was recently awarded an Information Technology Schedule 70 contract by the U.S. General Services Administration (GSA), the procurement arm of the federal government. The five-year contract streamlines the ability of Federal customers to purchase The InSource Group’s advanced IT consulting, application development, and other IT related services.

Federal, State and local agencies can obtain information about The InSource Group’s GSA Schedule 70 contract services on the GSA web site at: www.gsa.gov (search for Contract Number: GS-35F-0230W). The InSource Group’s services are offered under the Special Item Number (SIN) 132-51, Information Technology Professional Services, and the award is effective February 15, 2010 – February 14, 2015.

DFW Marketplace Changes in 2010

My purpose in writing is to communicate The InSource Group’s overall assessment of how the market in the Dallas Ft. Worth metroplex is changing in 2010. This assessment is potentially significant in terms of our client’s abilities to remain competitive with respect to future hires regardless of whether they are employees or contactors; and it also speaks to the challenges associated with employee and contractor retention that have already arisen in 2010.

Without question, demand for new technical resources is up significantly. We began to see an increase in client requirements beginning in December and that trend has continued unabated through February. This is particularly true in the Dallas market where we have seen a 40% increase in requests for technical contractor resources, additionally; full time requests are also up by approximately 17%. This has resulted in many of our candidates being able to pick and choose between multiple job offers. In terms of new hires, speed of response and competiveness of compensation are becoming more critical to our client’s securing the talent that they need.

With respect to retention, the market has changed. 2009 was a buyer’s market. 2010 is shaping up to be a seller’s market. Contractors will have alternatives available to them that were not options last year. They will all be looking at two factors in assessing whether to stay or leave; rate and length of assignment.

In particular, for those contractors who received rate reductions last year, they will be looking to at least have their pre-reduction rates restored. If this is not possible, another alternative may be to extend their assignments for as long as possible. Some contractors have spoken of their willingness to trade a longer commitment for rate dollars. Please recognize that both contractors and full time employees will be receiving calls from recruiters. Retention challenges have increased; how you respond will dictate the outcomes.