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​“What a strange market!”

I hear the above sentence almost daily, across our clients, candidates, and other consultancies.

We knew that there would be a market downturn coming and we have been planning for it for some time. We have also been in the “downturn” for the last 12 months or longer. But, we had not anticipated, in our pre- planning the amount of SAP permanent work that we are seeing.

Perhaps the strangest part of this is that that typically, in a downturn, companies usually “freeze” permanent hiring but now they appear to be hiring permanent resources more than ever.

Brining rise to our most asked question of 2024;

“Why do you think there are so many more permanent positions?”

I have my thoughts on this which I will share below but I would love to hear your thoughts as well.

1.      The unsustainable SAP Contract market

Over the last 10 years, the SAP Contract market grew stronger and stronger. Companies just seemed to prefer hiring Contractors. In my opinion I think this had a great deal to do with the shift away from an old school structure where IT decided what happened in IT – the team structure was simpler - a permanent SAP Support Team and companies would “ramp up” contractors for a Project or Project backfill once in a while!

Then came a global shift in individual’s understanding of technology, people could do more on their smart phone than they could on their companies’ multimillion dollar ERP system. This excelled the business to want and demand more from IT. Cloud products were being sold and bought directly by the business teams and IT were left scrambling to keep up.

The support team became BAU and BAU meant multiple projects all the time, across multiple technologies both Cloud and on-premise. Such a change came almost overnight and it was a real challenge to understand how to structure IT teams who could support the business, evaluate process, evaluate multiple technologies, rein in spend popping up across the business on the same products, ensure governance, integration…etc. The list goes on!

Hence, the years of the restructure… companies seemed to be going through restructure after restructure and finally landed on a heavier Contract workforce to get the specific skillsets required at the time they needed them.

While I may have strayed down memory lane to get to my point here but I think it is relevant in today’s trend. Companies have evolved and learnt. They have processes and governance in place and thus now know what a great team structure across IT and business. They have had the same daily rate contractors for years and now understand there is a permanent position in that role.

2.      We can breathe!

This last 12 months have been the first time many businesses have been able to “come up for air” The IT/SAP market has been running at a phenomenal speed for 3 years, driven by COVID. It’s been the first-time organisations have been able to take a step back and do some planning.

We are seeing the return of “Company restructures” resulting in movement again at the Senior Management level and creating new company and IT strategies. Of course, the move to S/4 being on most companies’ radars. With many companies already being mature SAP users, we are seeing that the move to S/4 is being planned over a longer period of time (3-5 year programs) with the first couple of years laying the foundations for an “easier” shift - looking at Master Data governance, simplification of processes, implementing specific Cloud products such as Ariba or SuccessFactors prior to doing the actual upgrade/transformation to S/4. Resulting in Permanent or longer term “Fixed Term” engagements at the Program Transformation Manager level and other consistent positions.

3.      Legislation

There is also some confusion about whether companies are allowed to even hire longer term Contractors anymore - with the introduction of the new “Fixed Term Contract Legislation” putting restrictions on how long you can engage contractors and how many times you can extend them. The good news is that the exemption’s within the legislation means that this really does not impact the majority of the IT/SAP industry (See blog for more details) however, due to lack of understanding and confusion around the legislation, many HR departments put a freeze on Contract recruitment and we are still trying to educate Hiring Managers that they can hire long term contractors in specialist SAP skillsets and where they earn over the income threshold.

4.      CAPEX or OPEX?

The move to Cloud technologies has driven a whole new topic amongst our SAP customers of late, especially with SAP heavily pushing SAP RISE. Large projects occurring across on-premise solutions have, for the most part, been achieved under Capital spend. However, a project under a “Cloud subscription” model falls under operational spend. In my opinion, money is money and there probably needs to be an update in accounting practices but right now we are seeing the majority of Leaders trying to push against this and work out how they can capitalise a Cloud Project – to little success. Our more mature Cloud customers have already accepted that it truly is an operational expense and have aligned budgets accordingly, which in turn has reignited the question “is this actually a permanent position?” along with giving the ability to lift permanent salaries to a more competitive level for daily rate contractors.

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With all of the above points happening simultaneously, its little wonder that we are seeing a more balanced approach to resourcing SAP skillsets.

What I will leave all the SAP career Contractors with is that history has shown us time and again that on the way out of a “downturn” comes a huge upturn in Contract requirements!