Offshoring myths perpetuating IT skills shortage: Westpac CIO

Offshoring myths perpetuating IT skills shortage: Westpac CIO

Summary: IT jobs are not going offshore, IT activities are, according to Westpac CIO Clive Whincup.

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Organisations are being forced to offshore IT work as a result of the skills shortage, but the misconception about the lack of opportunities in Australia is perpetuating the IT skills shortage, according to Westpac CIO Clive Whincup. He was speaking at the Australian Computer Society Young IT conference in Sydney.

Having launched a AU$2 billion IT transformation initiative in 2010, the bank has around 3000 staff working in technology-related roles, and another 3000 outsourced IT workers. Whincup said IT professionals, particularly in the financial services sector, are in high demand, and extolled opportunities in a career in IT.

But many companies, including Westpac, do offshore IT roles to countries such as India, where labour costs are cheaper, and Whincup acknowledged that this may discourage people from exploring a technology-related profession. He claimed the view that companies offshore IT jobs due to cost is a fallacy, as salary gaps between countries like India and Australia are closing at a rapid rate.

"The reason Westpac and most other organisations need to go offshore is because of the lack of availability of skills — there simply aren't enough people locally," Whincup said.

This means that organisations, not just in Australia, but across the developed world, have to respond by changing the way their workforce operates, even if it means engaging in a "global supply chain" of IT professionals, he said, akin to the car manufacturing industry sourcing some parts locally and some from overseas.

"Jobs are not going offshore, activities are going offshore," Whincup said.

But this has created a vicious cycle of people refusing to join the IT workforce, because of the perception that many of those jobs are being shipped elsewhere, according to Whincup.

"The paradox is, because we are doing it, because the media and some elements of society are fixated with the fact this is happening for cost reasons, it's actually becoming a self-fulfilling prophecy," he said. "People are forming the view there are no IT jobs in Australia, and will therefore, not put their children in technology-related degree courses."

"That is the logic we have to cut off."

But in the meantime, as organisations continue to undergo large IT projects, they will have to get used to tapping into international markets to run those projects, the Westpac CIO said.

According to Whincup, it takes several hundred staff to execute a AU$200 million IT project.

"[Offshoring] is part of our industry, and we need to embrace it, understand it, and work with it as such," he said. "But we can't allow it to become a reason for people to not come into the IT profession."

Topics: Banking, Outsourcing, IT Employment

Spandas Lui

About Spandas Lui

Spandas forayed into tech journalism in 2009 as a fresh university graduate spurring her passion for all things tech. Based in Australia, Spandas covers enterprise and business IT.

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11 comments
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  • Spin

    "Jobs are not going offshore, activities are going offshore," Whincup said.

    Translated... Jobs are going offshore.

    No matter what spin they want to put on it, large Orgs outsource for cheap labour.
    cgerke
  • Frankly, I think the "skills shortage" is a bit of a myth itself.

    "Organisations are being forced to offshore IT work as a result of the skills shortage"

    Frankly, I think the "skills shortage" is a bit of a myth itself, at least in the USA. Most employers I talk to claim they have a stack of resumes, not a shortage of them.

    Not to mention we have big unemployment issues - just grab some bodies and start training them, sheesh.

    "as salary gaps between countries like India and Australia are closing at a rapid rate."

    I don't think it's as rapid as they claim, and frankly they're still miles apart. I still hold that it's about being cheaper, not about a lack of skill.

    "'Jobs are not going offshore, activities are going offshore,' Whincup said."

    Translation: Jobs are going offshore. You'd be an idiot to claim they're not related.

    "That is the logic we have to cut off."

    Step 1: QUIT LYING.
    Step 2: Start training.
    CobraA1
  • Perception vs Reality

    Whincup wants us to know:
    1. There are a lot of IT jobs in Australia.
    2. We can't fill all the openings we have with the available personnel in Australia.
    3. There will continue to be more Australian IT jobs available than staff to fill them because people are not taking IT-centric degrees.

    Question 1: If there are so many available Australian IT jobs, why doesn't the Australian public know about them?

    Answer 1: The Australian public does not SEE those IT jobs Whincup is talking about. Most likely because they are not *posted* jobs. The press and the government get their "available jobs" data from job postings. If the jobs are not posted, they are not available. Whincup had an "immediate" need for 6000 IT professionals, so he went to an outsourcing company, placed his order and "DING! Order up!" he had 3000 IT professionals to fill his order.

    Question 2: What is the difference between hiring an over-qualified Australian worker for an open position and a "qualified" off-shore person for the same position?

    Answer 2: The Australian unemployment rate remains unchanged.
    Like CobraA1, I hear in the press and from HR people I know that they have a glut of resumes from all the out-of-work people looking for work. But the employers don't want to hire someone who is over-qualified (or under-qualified) UNLESS that person is off-shore. When it comes to off-shoring, they don't care that the person they are hiring has a PhD in particle physics... they are just hiring them to do router configurations (as an example). But that same PhD on an Australian's resume will make them over-qualified for the job and unhireable.

    I'm pretty sure part of every "C level" position training is learning how to find a way to put a positive spin on ANY negative about your company.
    gevander65
  • Nice spin

    The CIO has an agenda. And it is putting a positive spin or excusing offshoring.

    Interesting fact is the Westpac, like a lot of banks now have a hiring freeze. Go online and have a look how many ICT jobs are being advertised by Westpac.

    If there are plenty of positions but not enough people you would expect to see heaps of job ads, wouldn’t you? Why is it Mr. CIO that aren’t any job ads?

    I think it is simply because those jobs have gone straight offshore, without even attempting to hire here in Australia
    Dilbert_Man
  • Not in my experience...

    Going back about 5 years, I devoted my time to study IT (tech support and network management were my primary focus). I excelled in these, and enjoyed them immensely. During my time, I posted an average of 50 resumes a month trying even to get into entry-level IT. Of these, one or two would choose to interview me for an application, and I'd get the same response (when they actually responded...): "You don't have the relevant experience for the job".

    I ended up going into physical labour, just to be able to make a wage. Now who would want to hire someone like me?
    dmh_paul
  • Very contradictory, And unbalanced.. cough cough.

    Interesting to note he's drawing comparisons to the australian non exist car manufacturing industry.

    Can I ask how the ACS responded? I'm sure they are happy to get their name in the article. Does Winccupo get a 10 mil bonus for getting his project in on time and under budget in line with KPI.

    So I'm sure he's not against outsourcing.

    Start localsourcing people.


    And seriously is journalism just a matter of writing about one persons subjective perspective?
    Ryan Todd
  • Should we be surprised that this is happening?

    Most people that start their career in IT do so in a technical role, whether it be in programming, systems/network administration, etc. Most large organisations such as Westpac consider these roles to be lower down the value chain and have taken the decision to outsource them. The remaining "higher value" roles such as Technical Leads, Architects, Managers and the like, require experience in the IT industry. This creates a valid perception among prospective graduates that:

    1. people who actually like programming and want a career in programming will have difficulty finding a job.
    2. most of the jobs the jobs that they would qualify for are being sent offshore and therefore the salaries and contractor rates for these roles are coming down
    3. technology people are perceived as a commodity and heading towards the bottom of the value chain


    ...so who would want to start their career like that?

    Many parents who would be listening to the media and their friends/relatives in IT and hearing about the technology jobs being outsourced would be thinking twice before recommending a career in IT to their kids - and who can blame them?
    hawkfan36
  • Ready to Rock in Twenty Thirteen

    Dear Mr Whincup

    As you are probably aware, Perpetual Ltd (another financial institution) is currently in the process of outsourcing its whole IT department. This will be completed early next in 2013.

    This means that you will be able to pick up around a hundred IT professionals, seasoned in the finance industry.

    I understand from this article that you are in need of IT staff.

    Please let us know to whom we should send our CVs.

    regards
    (Looking forward to working at Westpac next year)
    KnickKnack
  • The reason Westpac is going offshore

    "The reason Westpac and most other organisations need to go offshore is because of the lack of availability of skills — there simply aren't enough people locally," Whincup said.

    Well if that is the case, then why is Westpac making people "roles" redundant and having these people train/handover to the offshore companies so that they can do the EXACT same thing as those people who's role they made redundant ???
    o1998
  • IT jobs are not going offshore, IT activities are, according to Westpac CIO

    "The reason Westpac and most other organisations need to go offshore is because of the lack of availability of skills — there simply aren't enough people locally," Whincup said.

    What a load of croc. That is why he is in management.

    I have half a dozen mates in IT who cannot get work for the last 2 years and when i catch up with them and ask why....their answer is always the same - "everything is being outsourced" you cant compete with an offshorer who is getting paid 1/2 the daily rate of a local IT person.

    Three months ago i rang my exboss at Westpac in Adelaide and asked him if there were any IT opportunities. His reply... "Forget it..Everything has changed since you were last here - The whole BUILD team is being outsourced to India... only 1 or 2 permie staff will be retained to oversee the changes'.

    Last month i rang my exboss at Mitsubishi and asked the same question...any IT opportunities...His reply was surreal...." Mate the whole IT dept is being outsourced to India. I dont know if I will have a job within 12 months"

    Why dont they offshore the Westpac Board as well ??? ...Get the job done for a fraction of the cost......Oh NO...you couldnt possibly have an australian ICON being run by an offshore company...think of the risks !!!!. Well, maybe think of the risks that are there NOW !!
    pppumper
  • Winchup - Mr Self Fulfilling

    "Outsourcing.....it's actually becoming a self-fulfilling prophecy".
    Certainly is if your Winchup, your the one fulfilling it.

    If Australian firms continue to offshore technology and call centre jobs, they'll end up offshoring their customers as well. Nobody in Australia will have any money to shove in their banks or pay back their loans. Nows there's a vicious cycle.
    Braunt