Skills shortage: myth or reality?

In this slowing economy and gloomy job climate, Computerworld set out to discover if the IT skills shortage is myth or reality, the results may surprise you. Lauren Thomsen-Moore reports.

The year 2001 is almost at its end and in the last few years we have seen IT professionals fighting each other to land that job with a huge pay packet; now it seems they are fighting just to hold on to their job.

This year has seen numerous IT&T vendor organisations sack, fire, lay off retrench and make hundreds, if not thousands, of loyal staff redundant due to "company restructures" as a result of shrinking budgets and revenue.

So, how are IT professionals holding out and is it all really as bad as it seems?

The Federal Government's IT Skills Hub, a Web portal designed to act as an electronic marketplace and provide an insight into the IT skills shortage. Information on this site states that Australia needed 24,000 additional people to work in core IT&T occupations and supporting roles in 2001 with a further 27,500 required in 2002.

According to the report issued earlier this year, most of the demand, around 20,000 in 2001 and 21,200 in 2002, will be for people with core IT&T skills (software and hardware developers, systems administrators, IT&T managers, technical advisers and consultants).

Additionally, around 25,000 of the 27,500 IT&T people required in 2002 will need to have relevant IT&T qualifications - either a university degree, TAFE or equivalent, or industry or commercial qualification.

Brian Donovan, CEO of IT Skills Hub, believes the skills shortage in the Australian IT&T industry is a reality, with demand remaining high for people with specific IT skills.

"There has certainly been a general decline in the number of positions available in the industry since the economic slowdown, but there is still a strong demand for certain skills in specific areas. These skills are highly valued and in demand because they help grow business," Donovan said.

Despite the present downturn, he said, any economic recovery will happen on the back of the IT&T industry, and at that time people with relevant IT skills will be in high demand again.

"This may be small consolation for people currently affected by the slowdown, but we must keep focused on the future," Donovan said.

The IT Skills Hubs' industry members are forecasting an economic upturn in the next 12 to 18 months and said that, in the interim, the challenge will be to "identify emerging trends and future industry needs and then redirect training efforts towards these areas".

"The ever-present danger is that we produce too many people with similar skills that can't be absorbed by the market," Donovan said.

The Hub's research findings revealed a strong demand for people with skills in Oracle databases, XML, programming, and general security applications, and according to Donovan, technical proficiency aside, there appears to be an ongoing shortage of educators with relevant IT skills and industry experience.

And a piece of good news in the survey was that, despite the round of retrenchments, there are still opportunities at CIO and IT management level, where candidates are still scarce.

"This probably reflects the fundamental change taking place in the industry with many companies now wanting IT managers who are not only technically proficient, but who can offer strong business and communication skills," Donovan said.

Meanwhile, Vincent Teubler, managing director of IT recruitment specialist VTR Consulting, disagrees with Donovan's views on the skills shortage and said: "There is absolutely no IT skills shortage in Australia, quite the contrary."

Teubler said there has not been a skill shortage for more than 12 months and the myth is "starting to rival the unicorn".

"Next time someone says [that there is a skills shortage] I want to see the proof, and they better be careful because I will come armed with an army of IT professionals looking for contract or permanent work to dispel the myth.

"Anyone who is saying there is a skill shortage in the current market clearly has no idea at all about the Australian IT candidate market. None," Teubler said.

Teubler said the skills shortage is a myth and added that there is now a significant oversupply of highly skilled IT labour available for both contract and permanent work in Australia.

"The degree of this oversupply varies between states but there is no doubt at all that NSW and Victoria have a serious over supply of highly skilled contract and permanent IT labour available," Teubler said.

"We should also differentiate here between the difference of a ‘new' skill which is not widely in use, such as WebObjects, where there will naturally be a shortage of people with that knowledge, and common-use skills that are ordinarily in extremely high demand due to a broad user base, such as Java developers and SAP functional consultants and the like.

Historically, the skill shortage has been attributed to these latter common-use skills being in shortage," Teubler added.

According to Teubler, literally thousands of highly experienced IT people are available in Australia as a result of retrenchments due to corporate cost cuttings, various IT vendors closing branch offices or whole divisions, and from the significant number of corporate collapses.

Add to this a significant drop in IT spending across the board due to global economic conditions and uncertainties, the distraction before the Federal election and significant overspending on Y2K, GST readiness and e-everything, and the result is a huge drop in the number of opportunities for these highly skilled IT professionals to move into.

Teubler said this is without even counting the thousands of IT graduates streaming out of universities into the unemployment queues.

Skills most in demand

Teubler said that, while no particular skill is in more demand than any other, there is an indication some projects getting under way.

Some of the larger company users of IT skills are looking for business analysts, he said, a sign of some IT development projects in the medium term.

"But this is a trickle compared to the flood of people on the market," Teubler said.

However, ask Teubler what skills are over supplied and, "you name it, there is an oversupply", he says.

"Roles that 18 months ago we would be lucky to find a candidate with an 80 per cent fit available in two months we now have the problem of having sometimes dozens and dozens of 100 per cent-fit candidates to choose from.

"Project directors, project managers, developers, IT managers, IT architects, ERP consultants, help deskers level one, two and three, operations staff, systems administrators, database administrators, technical writers... all oversupplied now.

"SAP, Java, C++, HP-UX, Windows 2000 - name a technical skill and there is an oversupply of available IT professionals," Teubler said.

Felix Borenstein, managing director of IT recruitment specialist, Parkside Consulting, agrees the skills shortage is a myth.

"I've never seen so many talented people out of work. While there was some skills shortage a while ago, whatever there was, 95 per cent doesn't exist now," Borenstein said.

With recent events, including the September 11 terrorist attacks on the US coupled with the economic slowdown already happening before that date, companies are taking a ‘let's wait and see' approach", he said.

Borenstein said it is up to the IT managers and CIOs to "get the industry going again".

"They should be talking to CEOs and laying out good business reasons as to why they need to develop new applications internally, or increase customer services on the help desk, or upgrading systems, upgrading to XP... anything but locking down," he said.

Borenstein said although he understands why some companies are feeling the need to "lock down", the industry needs to "lift its game and focus on business benefits".

IT salaries are now realistic and some IT professionals would take anything just to be employed, he said.

"Fortunately, I've just placed someone who had been unemployed for six months; he was at the stage where he was willing to accept anything. He was highly qualified and experienced so we are happy and he is glad he got a reasonable price," Borenstein said.

Brian Youston, CEO, Icon Recruitment, also believes the skills shortage is a myth, adding that skill shortages can be relatively measured by job demand; job advertisements have declined by 40.4 per cent over the last 12 months.

"There have been more skills [becoming] redundant than new skills that have entered the market over the last 12 months and the Icon Trend Index shows 380 new skills were introduced onto the market over the last 12 months, against 431 redundant skills," Youston said.

Youston said "complete IT professionals", those who have a broad range of skills, are in short demand, and added employers know they can get the best, and now demand nothing but the best.

"Where 12 months ago businesses would welcome the thought of just being able to get someone to the interview table, now they know they can take their pick," he said.

Skills upgrade

Youston said multi-tasking is now a key attribute that needs to become part of an IT professionals' make-up.

"A developer must have experience in the total systems development life cycle; input into design, analysis, cutting code, testing and even implementing and supporting the client base. It is the candidates with these end-to-end SDLC (systems development life cycle) experience that are in high demand, and are pulling the dollars. The thought of a programmer supporting or dealing directly with the public three years ago would send shivers up the spines of some CIOs, but now it is a preferable attribute," Youston said.

Youston said there are more professionals available than positions in the key specialities of Visual Basic, Windows NT, SQL, LAN, Novell, Power Builder, Oracle, SAP, C++, Progress and even Java and HTML skills.

According to Youston, if you specialise in the latest versions and releases of these same skills, you will be far more marketable, even if the employer does not specifically request them. The skills he nominated are Visual Basic 7, C#, Windows 2000, SQL Server 7, JSP, EJB, XHTML, 3G, CXML and ebXML.

"Employers will take comfort in the fact that because you have the latest skills set; they in return will have the best candidates with the right skill sets to take them forward," Youston said.

Meanwhile, Youston claims the average IT salary is $80,681 in the IT industry, which is a 4.8 per cent increase, and is the lowest percentage increase in salary recorded since Icon/Gottliebsen Research has been analysing the IT industry over the last eight years.

Steve Tucker, IT manager, National Jet Systems Group, also feels that the IT skills shortage is somewhat of a myth, but adds that perhaps for specific skill sets it may be more of a reality.

"What I feel is the issue, is that employers have expectations that IT workers can be employed and plugged in to their company and start providing value straight away. With any technical trade, there surely has to be some degree of adaptation to the working and culture of a company. With IT positions, it should be reasonable for employers to accommodate new IT staff in taking some time to be trained internally, and in getting up to speed on the company's workings and procedures," Tucker said.

Joshua Sparks, IT director, Robert Walters, agrees that today, the skills shortage is a myth and points out that there was a point 18 to 24 months ago at the height of the dotcom boom where there appeared to be an excess of demand for all technology skills.

"Technology is changing so quickly that there is always a gap between when new technologies come onto the market and when staff are trained to use them. As a result, there is always a shortage of staff for about four to six months after a new technology has been released," Sparks said. During the height of the Internet boom, when companies needed Web developers to get Internet sites up and running, Java developers were in short supply.

A reality?

Bob Olivier, director, Olivier e-recruitment, said while the skills shortage is still a reality it is less severe than last year, adding that demand still outstrips supply.

Olivier said how long the shortage lasts will be driven by global events - economical and political.

"The earliest opportunity for improvement in employment locally will be February after summer holidays, but I think this will remain in the doldrums for six to 12 months at least," Olivier said.

Meanwhile, VTR's Teubler said vested interests in some IT recruitment agencies are fanning the fires of the so-called skills shortage myth.

"That any IT recruiter can claim there is a skill shortage in the current market is downright insulting to the huge numbers of highly skilled and highly experienced IT professionals that are currently seeking both contract and permanent employment. It is also a patent lie to their clients in trying to promote the shortage myth that does little more than justify their efforts and fees," Teubler said.

Andrew Milroy, director of consulting, software and services, IDC, said there is a skills shortage although the size of it is lower than previously anticipated.

"Skills which are in particularly short supply are those centred on networking products such as routers and switches. Although there have been many redundancies, these have typically not been in areas where skills shortages exist," Milroy said.

Milroy believes until the labour market responds, the skills shortage is probably going to last about five years in the networking area, by which time a skills shortage is likely to exist in a new area.

Milroy also said that in most areas, IT salaries have never been higher.

IDC's Natasha David, senior analyst software, said the shortage is reality, although this reality is a moving picture.

"As skills need to be updated there will exist a shortage for a short period. As IT staff realise they can command more money if they have these skills (economic theory: when demand outstrips supply, it is a seller's market), they will train up on these, and as the levels are slowly rectified, the balance of power shifts back towards the employers," David said.

Meanwhile Youston - who thinks it's all a myth - said the skills shortage will again reappear in line with the improvement of business confidence.

"IT is no different to other industries or commodities. If the average Joe Blow consumer is not spending, business cuts back, and so does IT development, maintenance and support is also put on ice. The high demand for IT skills has been under false pretences for many years.

"From Y2K, GST, to the dotcom burst, the demand for IT skills has been declining for most of the year; September 11 only exacerbated the situation.

With all these factors combined, IT is currently feeling the pinch of the current downturn more than any other industry," Youston said.

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