IT recruiters: is it good-bye or good buy?

Stan Beer
Sunday, 03 August 2008 15:23

IT People - Recruitment

Judging by valuations on the stock market, you would think the bottom had fallen out of the Australian IT recruitment industry and jobless IT workers were lining up at the dole office. Yet publicly listed recruiters are still reporting healthy profits, salaries are increasing and it's still hard to find skilled people to fill jobs. What's going on?

Last week, iTWire reported on the share price devastation of Australia's largest IT&T recruitment agency Peoplebank. Yet if one ignored the shared price and looked at the operational performance of the business, including forecast financial results, you would think everything was ship shape.

There are no profit warnings at Peoplebank, the managing director insisted yesterday the financial results to be released within the next three weeks will be on track and that the company is also expecting a strong 2009. Yet the stock price languishes at 55c, less than half its one year high of AUD$1.20.

Peoplebank is by no means alone. Its nearest listed competitor Clarius Group, which derives about 45% of its revenue from its Candle ICT business, has witnessed its share price tank even further. The share price of Clarius, at the time of writing, is $1.41, down 62% from its high of $3.73 exactly one year ago. The company's market cap now stands at a lowly $80.9 million

Yet once again, Clarius has given guidance that it is on track to meet its target half year NPAT of $6 million. This does not appear to be a company in trouble, yet like most listed recruitment agencies, Clarius has been severely punished by the market.

The conventional explanation is of course that these are uncertain times, with the troubled US economy moving into recession, rising inflation, interest rates and business confidence at a low ebb. In times like these, investment money takes flight from small cap stocks to safe havens.

However, nearly all recruiters - even publicly listed ones - insist that there is no evidence of a softening of the Australian IT jobs market. Even in the federal government sector, where IT jobs on offer in Canberra are down 28% from one year ago, according to recruitment tracker Robert Olivier, there is an explanation - the currently underway Gershon Review of government agency staff costs.

Deborah Howard, managing director of Chandler Macleod owned ICT recruiter Diversiti, told iTWire recently that once the Gershon Review is complete, delayed federal government projects are expected to commence and jobs in Canberra will rebound.