Lack of local ICT skills will drive wages up in 2010: SMS Management & Technology

Professional services firm to turn again to 457 visas to solve skills shortage

Businesses will continue to import skilled staff for some time to come in order to meet the needs of the Australian ICT sector, according to the chief financial officer of of SMS Management & Technology, Steve Kelly.

Speaking at an ASX investor briefing, Kelly said that after a five year review of the business, SMS had determined key issues for professional services companies were wages and sustaining margins.

“It is still a sector, even through the last year, in which it is difficult to get good graduates,” he said. “There have been no graduates coming out of the institutions in Australia to fulfill the demand for IT people… we are going back to the UK in March next year to open up the pipe for some more 457 [working visa] people to come in.”

To help address the issue of a local skills shortage, SMS had brought in close to 50,457 staff over the past few years, Kelly said.

“They are very sticky, are great employees, are very skilled [and] I think it is a good time to go over to England and Ireland and attract people, particularly at the end of their winter and with their economy at the moment,” he said. “Yes it is opportunistic, but it also gives people a great opportunity.”

Despite the option of bringing in skilled overseas workers, Kelly said the market for good people was still very competitive and that wages pressure in the order of 4-5 per cent for base salaries in the $50-60,000 range, and 2-3 per cent for the over $100,000 range was likely.

“I think the biggest challenge we have in our business is to try and maintain our margins as we will get wages pressure, and I think that will start early next year” he said.

“I think that, as people get confident in the economy and are looking to move jobs, they are asking for more money so the next two or three years for us is about sustaining margins and making sure we manage the expectations of our client base. Managing margins is not necessarily only about pricing; it’s what cost you are putting people into projects for.”

The comments follow the recent release of the company’s year to June 09 financial highlights which include a revenue of $230.6 million compared to $237.9 million the previous year.

Earnings before interest depreciation and amortisation was $35.1 million, compared to $33.2 million the previous year.

The company brought in about $245 million in new contracts during the year and recorded a net profit after tax of $24.3 million over last year’s $24.8 million.

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