The Growing Clout of the Channel

Based on some of the latest data from the Bureau of Labor Statistics there are about 861,000 IT professionals working in the IT services space today. In total, some 1.4 million people work for IT services companies so a little more than half the people working for IT services companies are actually IT people.

But what’s really astonishing about that number is that it represents almost 25 percent of the 3.8 million people that the government recognizes as being IT professionals. And despite all the issues with the current state of the economy, the government reported last month that the number of people on the payroll of IT services companies increased by 10,200 in the month of April.

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This growth in jobs in the IT services sector conclusively shows that the IT services portion of the industry has become a lot more recession resistant than in years past. Back in the old days the first thing that customers did when they come under economic pressure was to cut the IT services budget. But over the years it’s become a lot clearer that customers have become a lot more dependent on IT services delivered by third-parties. The simple fact is that most customers no longer have the internal people resources required to deliver their own IT services so their ability to cut back on those services is severely constrained, especially as more of those services have become mission critical to the customer’s business operations.

And given the rate of growth in payroll for the month of April it’s pretty clear that dependency on IT services provided by third parties is increasing rather than decreasing. The two immediate trends that are driving this increased dependency are the outsourcing of routine IT tasks to service providers as customers opt to focus their internal resources on IT tasks that provide unique, differentiated value for the business. The second element of this trend is the rise of managed services and SAAS (software-as-a-service) applications. The former is making it easier to deliver more IT services to a broader range of customers. The latter is essentially moving some people from the application development category to the services category.

As managed services and SAAS evolve into a cloud computing model that is a superset of on-demand utility computing, it’s pretty clear that not only will the actual number of people working in IT services increase, but the percentage of the total IT worker population that they represent will increase as well. It would not be surprising, for instance, to see the total number of IT people working in IT services represent about 50 percent of the total before the end of the decade.

What makes this even more interesting is that the amount of influence and purchasing authority that these people will be able to exert on behalf of their customers is going to expand dramatically. Alas, the only folks who have not seemed to cotton on to the fact that the purchasing influence of the channel is rising exponentially to the growing raw numbers of people in the IT services space are the vendors themselves.

But like with all great realizations, this day will come sooner for some than others as it finally becomes a lot easier to directly equate investments in the channel with the total share of the market each vendor actually holds.

Michael Vizard is Strategic Content Expert for Ziff Davis Enterprise. He can be reached at michael.vizard@ziffdavisenterprise.com