Skills shortage to hit IT industry in 2010

The IT industry will face a skills shortage next year due to a decline in the number of foreign workers on 457 visas, a new report from IDC Australia has revealed.

But one industry expert says the shortage will provide a benefit for SMEs, which can offer businesses struggling with a lack of skilled labour outsourced alternatives.

The study, commissioned by Microsoft Australia, has found the IT industry will generate $21 billion for GDP by the end of 2013 but any potential growth could be stifled by the shortage of skilled labour.

The report found that employment growth will be three times faster than the total employment growth of 2.4% per year for the broader economy. It also predicted the creation of 1,000 new IT businesses with a total spend of $36 billion in 2009.

While the report states Australia’s IT employment is expected to grow by 10.7% by 2014, besting North America and the European Union at 1.6% and 1.2% per annum respectively, industry experts say more must be done.

Bruce Mills, chief executive of IT consultancy firm 3W, says as more IT work becomes available, such as the National Broadband Network, companies will struggle to grow and obtain new projects if the number of skilled workers remains flat.

“What has occurred is that everything that was done to avoid the global financial crisis has sort of spilled over, and so by the time any of the results were felt any issue that caused the crisis is over, and that is what has happened with the tightening of 457 visas.”

“They have tightened up these restrictions, which was good because there some very poor practices going on around that…but now we have a skills shortage and something needs to be done.”

The number of 457 visas approved during 2008-09 dropped 13% from the previous year, with all occupations except nursing experiencing a drop in skilled labour.

Additionally, while domestic student enrolments in IT tertiary education courses increased by just 2.6%, foreign enrolments rose 14.8% by 30 June 2008, according to figures form the Department of Education.

Mills says there is a large opportunity for the IT industry to target foreign workers, but the Government must adopt a new set of skills for its “priority” list, by which it determines which professions are given priority for obtaining workers from overseas.

“The skills list needs to be reviewed, that is the list which the Government adopts from the Australian Computer Society’s recommendations. It is completely out of touch, and has been so for years, and needs to be reviewed… to help obtain foreign workers and address the skills shortage.”

But Paul Hauck, who runs IT consultancy firm ICT Strategic Services, says there is an opportunity for some companies to obtain new work during the skills shortage by obtaining outsourced projects.

“One group of businesses which is likely to benefit is the outsourcers. The more people cannot do work internally, the more likely they are to run it to an outsourced company, many of them quite small, and there are companies which are doing that quite well now.”

“Companies like AWA have been capitalising on that need, and I think as you see a skills meltdown occur you will see companies offer these types of services.”

But Hauck still says the skills shortage is a problem for the industry unless there is more growth and investment in new training courses and foreign workers.

“It seems like we are getting back to where we were before the global financial crisis when people were concerned about the lack of skills. The industry has bounced back quite well, it wasn’t really affected at all, but it will be if the number of 457 workers continues to decline and resets to where it was before, when this problem was around.”