The ICT labour market: Where agendas collide

Companies want cheap labour, universities depend on international student dollars, industry needs key skills, and local graduates just want a job. Mark Wheeler investigates the drama playing out over the ICT labour market.

Companies want cheap labour, universities depend on international student dollars, industry needs key skills, and local graduates just want a job. Mark Wheeler investigates the drama playing out over the ICT labour market.

The debate is sharpening over IT skills in Australia. With deficiencies in certain specialist segments, the industry is facing some problems in addressing the shortfall. Most commentators, however, suggest that despite these evolving difficulties IT is coping -- and by comparison better than most other sectors.

What is apparent is that the IT sector is grappling with rapidly changing supply and demand for skills that are becoming increasingly specialised and diverse. Differing agendas have also emerged, and where solutions have appeared, those agendas have created problems.

Surplus or shortage?
If you ask analysts, IT associations, or recruitment companies, the answers come swiftly and consistently -- there is a skills shortage, but only in key "pocket" areas. In other areas we seem to be in surplus. According to a 2004 Department of Workplace Relations (DEWR) ICT skills survey, there is no national skills shortage. The number of suitable applicants per ICT vacancy actually rose marginally from 5.5 to 5.8 nationally. Bob Kinnaird, a Sydney-based labour market analyst suggests that "the figures are consistent with an IT labour market in general oversupply, balance at best -- certainly not a generalised shortage."

Indeed a common observation is that our universities are "pumping out" graduate programmers and we are having real problems finding work for them all. An Australian Computer Society (ACS) survey released in May highlighted that in 2004, 22.2 percent of programmers were unemployed -- far above the national average. That said, in key skill sets there is a clear shortage of available workers.

The migration programs are contributing to such a dreadful labour market situation for IT graduates that enrolment levels in IT courses have fallen.

Bob Kinnaird

Demand for certain niche skills is particularly evident in Sydney, and most other capitals also demonstrate similar patterns. Demand for programmers and software developers in categories including .NET, Lotus Notes, SAP, Peoplesoft, Siebel, and Linux is noted in the DEWR survey. James Turner, industry analyst for Frost and Sullivan, says that the really good programmers in some of these disciplines have been able to name their price.

Over the past few years, business intelligence professionals and project managers have seen a rise in demand says Turner. "Companies are spending less money on IT than they used to, and so the people who are governing that area of IT -- the CIOs and CFOs -- have to be smarter. They are relying on people who can get in there and start looking for the problems to sort things out.

"IT is much more being viewed as a utility. It is a reflection that the IT community is waking up to the needs of the business. It's all about aligning IT to the business theory. If you employ BA's (business analysts), they can review your internal processes and streamline things," Turner says.

"If you look at outsourcing, where you're re-establishing the way the workflows are happening you need it to be tightly controlled. A good project manager is worth their weight in gold."

Similarly, security technology has boomed over the past few years, and with the expanding niche has come an increase in demand for related skills, particularly in network security, risk management, and certified information systems security professionals (CISSP).

So what's the problem?
In the media, debate has typically focused on these areas, pointing to university intakes, expanding markets, specialisation and "worldwide" IT shortages. Many in the industry have raised concern over dwindling numbers of Australians pursuing IT-related courses at university.

Interest has clearly waned. According to Kinnaird, the starting wage for computer science graduates in 2001 was AU$40,000. This had fallen to AU$38,000 in 2004. The median starting salary for all graduates in all fields of study was AU$35,000 in 2001 and AU$38,000 in 2004. "IT graduates have moved from having a premium of AU$5000 on their starting salary down to being just level with everybody else," he points out.

Kinnaird adds that the percentage of computer graduates still looking for full-time work (a standard indicator used for graduates) "has been at 30 percent for the last couple of years, compared to the national average of 20 percent. Computer science used to be only 12 percent, so it's shot up enormously."

What was once an attractive field appears to be having a few image problems. An Australian Computer Society (ACS) policy statement tackles this situation in a "Work-Life Policy Statement" which reports: as "life-balance issues and a looming skills shortage continue to arouse debate in the Australian workplace . . . ACS is calling on IT employers to introduce a more family friendly work environment and healthy lifestyle options."

Clearly this type of approach reflects some fundamental problems that dog the IT field -- not the least its poor appeal to women. But it is Australia's current migration program that gets singled out for particular criticism. A great fear is that if the present situation continues, Australia may become dependent on migration for its IT workforce.

IT is one of the major users of the skilled migration programme -- both long and short term, says Rob Durie, CEO of the Australian Information Industry Association (AIIA). "Something like 40 percent of people come in under these programs. The lion's share of migration to Australia is people with IT skills."

And this broad migration is being questioned. Kinnaird describes current migration practices as pouring oil onto fire. "The migration programs are causing heaps of problems. It's contributing to such a dreadful labour market situation for IT graduates that enrolment levels in IT courses by Australian students have fallen by 36 percent in the space of just three years. It's a case of shooting yourself in both feet," he says.

If the jobs that remain here are more analyst level and require experience, where does a new graduate start?

David Wilson, UTS

The problem has many conflicting factors. Large numbers of students are studying IT in Australia. Universities, squeezed by shrinking budgets, have looked to international students to prop up finances. Many universities rely on these sources for up to 90 percent of their funding and actively court these valuable students. Over past years many factors have played a role in influencing international students to our universities -- a weak Australian dollar and the likelihood that their studies could lead to a working visa are often key.

The universities though, are more recently being accused of pumping out programming graduates, while other sectors where skills are in demand are not addressed or are too new or specialised for these institutions to easily develop course content. Universities are pinched between the traditional idealistic intent to "educate" rather than "train", while industry screams for prepared workers.

Visa "loopholes" embraced by cash-strapped universities and other temporary-visa loopholes are cited by industry groups as key reasons why Australia is suffering a surplus of programmers, why wages are falling, and why IT is failing to attract Australian students -- ominous for the future. And the accusations continue.

There are a number of organisations that profit in times where there is an oversupply of workers, says Edward Mandla, president of the Australian Computer Society (ACS). "It's a way of being able to reduce costs. There is a very powerful lobby saying that there is a skills shortage because they want floodgates open to cheap labour . . . . Any of the big outsourcers these days want to cut costs. The last thing they want to see is any difficulty in getting labour, or salaries increasing."

But he says, "If we closed that migration tap off we would bankrupt our university systems. The Department of Education Science and Training has got such a tight funding model for universities that they have to do whatever they can to survive, so they've taken their courses to the world and said 'well if you come to Australia you'll be a resident'.

So young Australians now see 32 percent unemployment when the reality would be if you took the permanent migrants out you would be down at around 15 percent."

Mandla says ACS research has shown that Australians are very pro-migration on two scenarios­­ -- that the best and brightest are coming into Australia, and that migrants are coming in to fill high-value, short-supply jobs. "I fail to see how young graduates with no experience are the best and brightest . . . .And programming is now less than 20 percent of the industry," he says.

But John Lenarcic, lecturer at RMIT, says: "It smacks of conspiracy-based thinking, forward planning of those kinds of things are difficult to predict. I would suggest that the ACS has an interest in protecting its local members."

David Wilson, associate dean of education at The University of Technology, Sydney, describes Mandla's comments as very short sighted. "I think that many in the industry associations don't really understand what we do at university. Certainly a lot of graduates would start in programming positions and that's been the traditional entry into the IT industry."

Wilson acknowledges that universities are facing numerous challenges -- not least that meeting rapidly emerging demand for new skills is like "turning an oil tanker", however, as many organisations start to move their programming or low level jobs offshore, he asks: "Where are the entry paths? If the jobs that remain here are more analyst level and require experience, where does a new graduate without experience start? I think that is an issue that Edward should be addressing rather than levelling pot shots at the universities. One of the requirements of the ACS's own accreditation is that we have a component on project management, a component on ethics, and on human communication. Given that just about every IT degree in Australia is now accredited by the ACS themselves and all those degrees demonstrate those three components which suggest that we are not really turning out a narrow [group of] technical programmers. I would imagine that most university curriculum cover the full life cycle with analysis, engineering and design as well as pure programming skills."

Lenarcic adds, "We have to respect globalisation and the fact that we are not living in isolated communities any more. If we train international students here, then we can expect other universities to take on our students as well. It's a two-fold thing.

"Maybe the problem is that industry isn't quite sure what they want. They almost need to do a group navel-gazing exercise to identify exactly what kind of skills set they demand. If they are saying we can farm out our programming tasks to outsourcing agencies, but for these other things we need to have expertise within the country . . . what other things? People talk about 'systems-based thinking' or 'knowledge management' but they're not clearly delineating what they want in terms of the potential skills an applicant might have."

What now?
According to Kinnaird the situation is currently being made worse through recent migration decisions. "In the last financial year, 2004-5 the government actually increased the number of visas granted to overseas students graduating from Australian universities in IT courses, when common sense -- not to mention their own policy parameters -- says that they should have been cut.

"I think that unless the government makes a firm public commitment to reduce the graduate migrant IT intake, there is no way that Australian students are going to enrol in IT courses. The consequences of that is that the Australian IT industry will become more and more dependent on migrant IT professionals," he says.

Mandla points out that changes are beginning to be made. "We have been working closely with DIMIA (Department of Immigration and Multicultural and Indigenous Affairs) to plug these sorts of gaps, but I guess when all of the offshoring happened, a loop hole was found . . . . Our discussion with DIMIA is that you should be giving people negative points if people are programmers, and you should be getting the level of granularity to look at what skills we need."

The points system is used to assess eligibility for many working visas in Australia, with points being awarded for criteria including age, occupation, English language, and other minor factors. The concept of negative points is often promoted as one possible solution to "handicap" some of these criteria where necessary -- such as skills oversupply.

What a report currently being finalised by DIMIA reveals about employment in Australia for overseas graduates is not yet known, however, it seems likely that several changes, including the removal of ICT from the migration occupation in-demand list and the ACS modifying its assessment procedure, will address findings in the report.

Wilson suspects that the government might get some of the things that it wants. "I think that some universities may reduce their ICT faculties and departments like Bond or Monash University. When things start to recover there will be some institutions left who say 'well there is a market we can fill'.

Whether that will be across the entire sector like there is now, possibly not, and I think that's the kind of competitive world that the Federal Government wants to see in the universities -- with a number of places specialising in particular skills. I guess the punt by the universities such as UTS, is can we sustain ourselves through these times until there is a better market?"

It's extremely difficult to forecast, he adds. "Modern organisations do rely on IT and they've got to protect that investment. With modern network systems and the exposure of offshoring and outsourcing we might well see a reversing of the cycle. Organisations tend to go through these cycles and at the end of the day there is probably no really perfect answer otherwise they'd stay there. We've been through a cycle of outsourcing and so we might start to see a cycle back the other way and that will create more positions here and more demand for graduates."

Eventually, says Mandla, there is some hope that Australia could be an onshoring location. "We need to get a body like Tourism Australia or like the wine industry that stops the squabbling of associations trying to win the mindshare of government. It needs a real CEO and chairman at the board level [so it] can start marketing Australia's capability to the world.

"The next phases of offshoring is analytics, where you require intelligence to solve complex problems. It fits the Australian domain perfectly. We've got to get a market system that is better aligned to the market realities. We need to inspire our universities to start teaching what employers want. Now some are making this change, but only really a small number -- instead of just pumping out programmers."

Whichever way it develops, there are still key skill supply-and-demand problems impacting industry, the universities, and government, not to mention some intricate tangles to undo. Amidst the squabbling appears great enthusiasm to bring Australia under a unified and representative system that can react to these sorts of issues. What is and will continue to dictate the real dynamics of skills supply and demand is economics. If Australia cannot produce and supply skills competitively, they will be sought elsewhere -- a symptom that has already brought to this point.

This article was first published in Technology & Business magazine.
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