The IT recruitment market has experienced a rollercoaster journey in the past decade, from the peaks of demand in 1999 through the turbulence of 2000 to 2003, before rising again to recovery in 2004 and continued steady growth in 2005 and 2006.

In 2004, the computer industry entered a new phase of growth, characterised by steady annual budget increases. As a result, the period 2004 to 2006 witnessed a recovery for the IT recruitment industry. Since early 2004, there has been a significant improvement in the market for permanent, and temporary and contract recruitment, spurred by new projects from firms to enhance their systems, in terms of both applications and infrastructure. Consequently, there was an increase in demand for developers and project managers throughout 2005 and 2006.

However, growth has not come without challenge, and the future will see the continuation of challenges for the industry that have emerged in recent years. In this period of growth, an IT skills shortage has remained a problem for the UK market. Agencies have found the need to build strategies for the recruitment of older workers and women as well as to operate across international markets. This has opened up new service areas, such as international recruitment and employment consultancy.

Legislation continues to be tough as demand increases. Agencies are faced with a diverse legislative environment, needing to be aware of issues related to such things as age regulations in the UK, as well as international initiatives, including the EU's Agency Workers Directive, which, although frozen in 2006, could have a marked impact on the recruitment landscape in the future.

The author forecasts that between 2007 and 2011, the industry will continue to see steady growth as a result of various factors, including projects scheduled for the next few years, the strong presence of IT-intensive industries in the UK and the continued trend of outsourcing human resources (HR).

Skills shortages are set to continue in the next 5 years: the demand for IT professionals will increase at the same time as the flow of younger workers into the industry will fail to keep pace with the demand. Agencies will therefore need to become increasingly creative in their recruitment and must convince clients of the value of older, female and foreign workers. Agencies will also face the problem of their client base moving away from end-user companies and towards large outsourcing operations that have stronger buying power and will increasingly look for a wider range of services from agencies.