Index Insider: Hiring Slows Sharply in 1Q25 as Uncertainty Lingers

Friday, May 30, 2025

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Stanton Jones

Stanton Jones

Sunder Sarangan

Sunder Sarangan

Hello. This is Stanton Jones and Sunder Sarangan with what’s important in the IT and business services industry this week. 

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Hiring 

IT and business services headcount growth slowed significantly in 1Q25, reflecting the wait-and-see approach many firms are taking in the face of continued business uncertainty. We believe this will be the case for the remainder of 2025. 

Data Watch 

Index Insider - Hiring Slows Sharply in 1Q25 as Uncertainty Lingers

 

Background 

In the second half of 2024, the IT and business services industry saw two consecutive quarters of headcount growth for the first time in over a year. That trend continued in 1Q25 – headcount growth for the industry was positive – however, just barely, as you can see this week’s Data Watch. 

The Details 

  • The industry added approximately 4,300 employees in 1Q25.
  • That’s in comparison to over 23,000 in 4Q24 and 52,000 in 3Q24.
  • 70% of providers have reported a slight increase in attrition in 1Q25.

What’s Next 

As we discussed a couple of weeks ago, discretionary IT spending slowed again in 1Q25 (after starting to recovery in 2H24) which is one of the drivers for the slowdown in hiring that we saw in the first quarter of 2025. And, when you look at quarter-over-quarter growth for the IT and business services providers in this analysis, revenues declined sequentially by 3%. 

Our scenario-based forecast for the industry for 2025 ranges from 1.3% growth to a decline of 2.4% (depending on how quickly trade policy uncertainty subsides). And when we look at that in conjunction with the continued push for GenAI-led productivity improvements in IT services delivery, we’re likely to see limited headcount growth in 2025. 

And speaking of GenAI-related productivity, I encourage you to join us at our AI Impact Summit in Boston next week where we’ll dive into how AI will reshape both enterprises and technology providers over the next 24 months. 

Have a great weekend! 

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About the authors

Stanton Jones

Stanton Jones

Stanton helps enterprise technology leaders, IT service providers and buy- and sell-side professionals make sense of the global IT services sector. Stanton's weekly briefing - the Index Insider - is read by thousands of industry stakeholders each week.
Sunder Sarangan

Sunder Sarangan

Sunder Sarangan is focused on the success of the provider ecosystem at ISG. He leads various programs and products as part of the leadership team for ISG Research. Additionally, he is responsible for new products that address the specific needs of niche and specialized providers and their market success.

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