IT hiring freeze blamed on Gershon

A new survey has found that local IT companies expect to hire less staff in the coming quarter while they await the impact of the federal government's spending reviews and monitor the current crisis in the US financial services sector.

IT job prospects are expected to fall by around ten per cent, according to Hudson's latest quarterly survey of employer expectations, released today.

The recruitment company found that 34 per cent of IT employers were looking to hire additional staff in the next quarter, down some ten points on the previous quarter.

Shane Blandford, director of IT&T sector for Hudson said there were two major buyers of IT goods and services dragging confidence down — the faltering financial services market, and the inertia of the new federal government on major IT spending initiatives.

Agencies aren't sure what the Gershon Review will produce

Shane Blandford

There is a hiring freeze, for example, among those IT vendors expected to be impacted by Dr Peter Gershon's review into federal government ICT spending.

Gershon handed the report in to federal finance and deregulation minister Lindsay Tanner in late August but its contents remain a closely guarded secret.

"The feedback from the ACT market in particular is that while some projects like Immigration's Systems for People are full-steam ahead, many projects are in a holding pattern," Blandford said. "Agencies aren't sure what the Gershon Review will produce. There is some nervousness within IT areas as to whether to proceed with projects and certainly it's more difficult to get new projects approved."

This uncertainty had a flow-on affect for services companies that worked in the government sector, Blandford said.

"Add to that the woes of the financial services market, another key IT customer, which has contracted over two consecutive quarters, and you take two main buying segments tightening their belts," he said. "It has produced a tightening of belts in the IT industry's own spending. Many employers I have spoken to have had a few people left, but are not replacing them for the moment or are only replacing them with short-term staff."

Blandford said that in past quarters the IT sector had remained more bullish than the telecommunications sector while the latter dealt with the fallout of Commander's collapse and delays in the tender process for the National Broadband Network. But uncertainty created by the Gershon Review now had now pulled IT down in line with telecommunications.

"If IT companies know the direction policymakers are going in, they have the confidence to invest," Blandford said. "When they are not sure of outcomes, they can't make decisions."

"As soon as we know the direction of the federal government in terms of its spending and its broadband framework, certainty will come back to the market and IT companies will make decisions as to what business they can win."