Jul 8, 2024
The SAP market has experienced a stop/start period over the past quarter, characterized by the intent among hiring managers but tempered with hesitancy from those controlling budgets. This cautious approach has led to slower hiring processes and a reluctance to commit to new, larger-scale projects. The main driver behind this hesitation is budgetary constraints and a general unwillingness to embark on significant transformations. However, companies that have moved forward are currently benefiting from their pick of top talent.
Current Market Sentiments and Trends
Looking ahead, there’s a sense of optimism mixed with caution. Projects that were previously postponed are slowly resuming, although at a measured pace. The adoption of public cloud implementations and SAP’s “Rise with SAP” initiative is gaining momentum, especially among larger enterprises looking to modernize their systems. Consulting firms are optimistic, predicting a significant project pipeline forming between August and October.
However, many challenges remain. Companies are still grappling with the business case and financial justification for migrating to S/4HANA. Boardroom discussions frequently revolve around return on investment (ROI) and cost-effectiveness, which influences the timeline for project kick-offs. Additionally, cloud-based technologies require a shift in mindset, which can be a significant hurdle.
The Changing Market Narrative
The current narrative suggests a lack of work and opportunities in the SAP market. However, this isn’t entirely accurate. The market is constantly evolving, and while there have been changes, there are still plenty of opportunities available. Let’s take a look at some statistics to get a clearer picture:
- Number of People Changing Jobs Per Year:
- FY21: 5027
- FY22: 9009
- FY23: 7051
- FY24: 5940
It’s also important to note that the market is busier than it was pre-COVID. In 2022, there was a significant influx of new vacancies and optimism due to various factors, including government stimulus, savings in logistical costs, and a push towards online/remote work. While the elevated vacancies remained in 2023, the market has since normalized in 2024.
Candidate Expectations and Market Adjustments
The biggest impact of these changes has been on candidate expectations. The new norm includes remote work, increased flexibility, higher salaries/contract rates, and abundant opportunities. However, some of these expectations were not sustainable in the normalized market. As companies move forward with leaner teams, many individuals are affected by these changes.
We are now witnessing a market correction. Candidates who adapt to these changes, much like they did during COVID, will find opportunities. The message for both candidates and clients is to move away from the thinking of the last two to three years and adapt to the current market conditions. Change is tough, but those who adapt will thrive.
Future Outlook
Looking further into the future, the end of 2024 and 2025 is marked as a target year for many clients to transition to S/4HANA, although progress has been slower than anticipated. The “Rise with SAP” programs are increasingly popular but face challenges due to the relative immaturity of many customers in navigating SAP environments and understanding the full spectrum of available solutions.
In summary, while the SAP market is gradually growing, it remains cautious and complex. Clients are balancing the desire to innovate with the need for financial prudence, making decisions based on clear demonstrations of value and ROI in SAP projects. As more success stories emerge, we expect a snowball effect that will further stabilize and invigorate the market.
Market Snapshot
During the COVID years, resource demands surged, driving up contracting rates accordingly. However, there was a significant 12% decline going into FY2024. Despite a decrease in permanent headcount and placements, the demand for contract resources is showing a slight uptick again. This is typical during economic downturns when workloads persist but hiring approvals slow down.
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