Resources boom accelerates robust IT services market

Australia accounts for 30 percent of spend in Asia Pacific region

Growth in the Australian information technology (IT) services market is expected to remain solid for the remainder of 2007, with end-user spending forecast to exceed A$14 billion for the year, up 3.6 percent from 2006.

According to Gartner the resources boom in Australia has helped to create robust business conditions that continue to support healthy demand for IT services in 2007.

Details of the Australian IT market will be presented at the Gartner Symposium to be held in Sydney in November.

Gartner Symposium research chair, Michele Caminos, said demand from governments for upgrading IT infrastructure and building new initiatives will remain pivotal to the growth of the local services market.

"Healthy budgetary surpluses are needed to fund big projects like the Department of Immigration's $495 million Systems for People program or the South Australian government's Future ICT project," she said.

According to Gartner's latest forecast, the overall IT services market in Australia will expand at a compound annual growth rate (CAGR) of 3.7 percent from 2006 through to 2011. During this period, business process outsourcing and software support will provide much of the growth impetus for the local market.

In 2006, Australia represented 30 percent of the Asia Pacific IT services market, but this proportion is expected to drop to less than 25 percent in the next five years due to growth in India and China.

"In Australia's mature, comparatively high-labour-cost market, IT skill shortages are creating difficulties," Caminos.

"Not only is it hard to find enough people with the right skills to staff major projects, it is putting pressure on service provider margins, as labour costs continue to rise.

"Acceptance of offshoring is increasing in Australia, and companies are beginning to accept it as just another aspect in sourcing decisions.

"Even though many organisations in Australia won't outsource work offshore directly, their service providers will need to look into the use of global delivery options and staff augmentation services involving overseas IT professionals here on temporary work visas."

Gartner's outlook supports trends in the local job market which show IT contractors in Canberra are the highest paid in the country as they are supporting some of the largest IT projects.

Due to the large scale of the projects, CCS Technology Recruiters claim the length of engagement is also longer, running from six months to three years.

"In other Australian recruitment centres the employer is king, but in Canberra the reverse is true," according Ben Wood, the recruitment firm's managing director.

"The IT contractor holds much more power in Canberra because their skills are in short supply.

"There is greater mobility now in the IT labour market than ever before, with proven performers becoming contractors to take advantage of diverse opportunities that have been created by good trading conditions and a strong economy."

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