Quenching the Skills Drought – MIS Magazine, April 2006

Quenching the Skills Drought

By Sarah Stokely

The changing nature of the local IT industry is making it increasingly difficult to find and keep skilled staff.

The people responsible for hiring information technology staff in your organisation will be keenly aware of the difficulty of finding the right person for the job.

If you’ve looked at graduate talent for entry-level positions, you know that there have been fewer students coming out of IT courses for the past several years.

And if you’re seeking senior or executive staff, you know that people with in-demand skill sets are able to job hop with relative ease and command higher salaries.

The shortage of skilled workers is a symptom of the complex problem of the changing demographics of the IT industry.

The Australian industry has rebounded from the global dotcom slump of 1999-2000. Information communications technology accounted for 13.8 per cent of total investment in Australia in 2002-03, eclipsing traditional industries including agriculture, forestry and fishing, research released in March by the Australian Bureau of Statistics showed.

Overall, ICT accounted for 4.6 per cent of gross domestic product. Several recruitment agencies estimated the sector’s growth at 2-5 per cent, which in turn boosted IT salaries slightly in 2005.

However, the available workforce is struggling to keep up with the demand generated by the growth in the IT sector. Recruitment firm Candle ICT recently released its jobs forecast for the Australian IT industry, predicting that salaries will increase by 3-5 per cent this year, with larger gains in sought-after niche areas.

All up, it looks like 2006 heralds pretty good times if you’re an IT worker. So why are staff so thin on the ground?

Most in the industry agree a lack of available people isn’t really the crux of the IT shortage – it is indeed a “skills” shortage.

“There are a lot of people with plenty of skills but the question is whether their skills are in demand,” Australian Computer Society chief executive Dennis Furini says.

He points to an ACS survey last July revealing that ICT jobless rates were consistently higher than the national average. ICT unemployment was 7.2 per cent in 2004, more than two percentage points higher than the national average of 5.1 per cent.

NSW Candle ICT general manager Peter Zonnevylle says the Australian IT sector lacks personnel in the general areas of security and compliance and in more specific technology areas such as 3G.
Demand for skills around SAP, .NET and Java (particularly J2EE) is high, just as it is for business analysts, project managers and those with strong experience in the
banking sector, he says.

Compliance with Sarbanes-Oxley, Basel II and the Australian Prudential Regulation Authority will continue to be a major driver of demand in 2006.
“The only way to reduce the cost of compliance is by improving your IT systems,” KPMG’s head of information risk management, Edge Zarella, says.

He cites the example of one global KPMG customer who had estimated their cost of compliance at $300 million per year – and increasing by 20 per cent per year.

“Right now, individuals who can configure systems, and understand the controls and risks, are commanding a premium,” Zarella says.

Security is another growth area in which the supply of skilled workers is expected to remain tight in 2006. A report released by Ambition Recruitment & Contracting says the supply-demand gap for IT security workers widened in 2005 as the need for security spread into the small to medium business sector.

An Ambition survey found that 67 per cent of technology managers had tried to overcome the security skills shortage by building on skills in-house.

Key hotspots in IT are already feeling the shortage of skilled staff and there are several longer-term trends that may further restrict the supply of skilled staff.

The director of executive IT recruitment firm Alt-U, Edwina Low, says that although the decline in students entering IT courses has been evident for a couple of years, the shift towards outsourcing has offset the effect of fewer graduates on the workforce.

However, the flow-on effect of the decreasing number of IT students will begin to bite. “I think within a year you will see a shortage because the students aren’t coming out of university,” she says.

Educational institutions from Victoria, Queensland, South Australia and NSW have suffered from declining enrolments for IT courses in recent years. The Queensland Tertiary Admissions Centre says IT enrolments at its universities have slumped by 31 per cent over the past few years.

South Australia’s chief information officer Grantly Mailes says that the state’s universities have suffered three to four years of double-digit decline in enrolments.

“That for us is not so much a ‘now’ issue,” he says. “But if the output of students this year is 50-60 per cent less, we’ve got quite a bad skills gap.”

Another pressure beginning to affect IT recruiting is the changing role of the CIO and the internal IT department.

Gartner’s Asia-Pacific vice-president in research and business development, Mark Hollands, says there are trends towards unrolling the technology from IT management, and that the very nature of IT departments is changing.

As IT departments become driven by business rather than technology, the ethos of maintaining technology systems and responding to user needs will shift to supporting strategic initiatives and engaging in driving the business, he says.

Recruits will require a very different profile to their predecessors.

“In five years’ time, IT departments will measure their value by information and the processes they’ve been able to automate,” Hollands says.

“By 2011, we predict that 10 per cent of IT departments will disappear. Three quarters of them will change their role, 20 per cent will have fewer employees and 40 per cent will have [fewer] internal applications.”

So who will staff these changing IT departments?
Hollands identifies four key areas in IT: technologists; workers who understand
business processes; staff who understand information management; and relationship managers.

Staff who have expertise in relationship
management will be essential, he says: “Any IT department [that] doesn’t do this is risking failure.”

Australian universities need to respond to the growing demand for IT graduates to have business skills, Zarella says.

“The skill sets of people coming out of universities are good but they need to change a bit to get into the business side,” he says.

Looking at the bigger picture, Zarella says the IT industry needs to ensure that the CIO’s desk remains a desirable goal for its best and brightest.

Without nurturing business and IT skills, he predicts a shortfall in the executive space. “We’re not going to have enough C-class executives who know about IT,” he warns.

Critically, the “soft” skills that are needed increasingly are not being nurtured by employers, the latest ACS training survey reveals.

The survey identifies a range of non-
information communication technology areas, including general business expertise, communication and presentation skills and dispute resolution, where training is lacking.

Across the board, employers are not giving staff enough time to upgrade their technical and business skills, Furini says.

The survey finds that Australian IT staff are typically granted between one and five days for training each year, a figure which Furini says is far too low.

“In this industry, they should be getting 10 to 15 days,” he says.

The CIOs surveyed say that they believe their staff should receive five to 10 days of training each year.

Another trend within Australian organisations that is affecting the IT workforce is the move away from single-source outsourcing. The South Australian government’s severing of its contract with IT provider EDS is one example.

“One of the things we … have seen over the past 10 years of our EDS outsourcing contract [is that] we have deskilled ourselves in some important areas,” Mailes says. “We’re finding that as we move from a single source to multi-source arrangement that we have an emerging skills need.”

For Mailes, the challenge of addressing the skills gap is in the hands of both state governments and educators.

“Each of the states now has a form of state CIO and we’re beginning to act at an Australian level to identify what a national response might look like,” he says, adding that the issue is percolating in forums such as the Cross-Jurisdictional Chief Information Officer’s Group. Educational institutions are also beginning to listen to industry calls for changes to IT curriculum, Mailes says.

With most university courses averaging three to four years in length, these institutions have found it hard to be responsive, he says.

“We’re working with government and the university sector to get an image of what a graduate needs to come out with.”

Public perception
While seeking better co-operation between governments, industry and education
providers in the search for a solution to the skills shortage, Cummins says IT also needs to address the public perception of the opportunities it offers graduates.

“Greater awareness of the career opportunities within IT would help overcome the lingering dotcom-bust perception among mums and dads,” he says.

How can CIOs and IT managers best cope with the shrinking availability of skilled workers?

The changing nature of our workforce means that Generations X and Y don’t expect or necessarily even want a “job for life”. This increasingly transient work culture is even more apparent in IT, where the pace of innovation is so fast.

Zarella says that in an environment where skilled people with business savvy are in short supply, poaching is a fact of life. “Some of our guys get job offers on a daily basis,” he says.

Zarella admits that without “big projects and excitement” it is going to be a challenge to make people want to stay. “And it’s worse in IT because they love to see the next new buzz,” he says. “To me it’s about what is going to make you different to other CIOs and big vendors.”

Furini says headhunting has always been a problem: “But if people are getting looked after and getting their skills honed, they are less likely to leave.”

More flexibility on conditions could also help. Providing options such as job sharing and encouraging mothers to return to work could help stem a loss of talented staff.

“You basically need to communicate to people that they have a long-term career path within the company,” Zonnevylle says.

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