What the IT Skills Shortage in Australia Means for Your Business
Australia is currently facing a shortage of skilled IT specialists on a massive scale. According to a report by Deloitte the demand for IT workers is expected to grow from 663,100 in 2017 to 758,700 by 2023 – representing a creation of almost 100,000 roles.
While the IT sector in Australia is growing, it’s not growing fast enough to meet the demand. This is particularly true in the cyber security sector, which is already experiencing a shortfall of 2,300 workers. It’s projected that we will need around 18,000 more cyber security workers by 2026.
We’re already seeing the effects of this shortage on the Australian economy and job market. Telecommunications company Telstra recently announced that they are moving many of their technical jobs offshore as there are simply not enough Australian IT professionals to fill their vacancies.
So how will this skills shortage affect your business over the coming years, and what can you do to combat it?
Why Do We Have an IT Skills Gap?
Australia is not the only country in the world currently experiencing a shortage of skilled IT workers. The UK, USA, and several European countries are also expected to have thousands of IT vacancies over the next couple of decades, with insufficient local talent to fill them.
There are a number of reasons for this skills gap. One major factor is that the IT sector is growing much faster than other industries. Studies show that this trend will continue, with science and technology roles expected to maintain this rate of growth relative to that of many other occupations
In the past, people feared that technology would replace humans and take their jobs. In fact the opposite has proven to be true – even with advancements in artificial intelligence. While machines have made carrying out repetitive tasks more efficient, this growth in technology has created more skilled jobs in areas including hardware development, software engineering, data science, project management, machine learning, and cyber security.
This trend is the same all over the world but Australia is experiencing the problem more acutely than some other countries.
There are several reasons for this:
- Australia’s population is ageing and yet some areas of IT such as AI and cyber security are relatively new industries. This means that a large proportion of our senior skilled workers may not have specific training or experience in the sector.
- There’s a reduced inflow of new graduates into the IT industry. This may be partly due to increased reliance on outsourcing to countries such as India and the Philippines, where skilled labour is much cheaper. This constant threat that IT jobs may be offshored at any time has made a career in the industry less appealing for young people. In practice, of course, there’s still a huge demand for homegrown talent, however the damage to the reputation of the IT industry’s career prospects has already been done. There are currently fewer than 5,000 domestic ICT graduates each year in Australia.
- The performance of Australian students in maths and science – critical skills for working in the IT industry – is also declining. This may be due to the current shortage of teachers in these subjects, which is currently double the national average of 19%.
- Professionals who do have the skills in need are increasingly being lost to businesses overseas. The annual salary of software developers in Australia is only US$53,721, compared to US$92,240 in the US. This figure is also lower than the average in many other countries including the UK, Switzerland, and Israel. Poor financial compensation may be further compounding the skills scarcity, as domestic workers choose to seek better paid employment overseas.
The Scale of the Problem
On the face of it, this is a straightforward problem. Going forward it will be more difficult for Australian businesses to employ individuals with the right skills and experience for certain IT roles.
This means that salaries and benefits packages will have to be improved to make the vacancies more attractive, and ultimately businesses may have to seek talent from outside Australia to make up the short fall.
Ultimately this means that Australia is likely to fall behind on the global stage when it comes to research and development in information and communications technology. Studies show that we’re already falling behind the global leaders such as the US, the UK, and Singapore, ranking seventh out of 16 countries in terms of national digital performance.
IT has applications in more industries than ever before. Emerging technologies including artificial intelligence, virtual reality and the Internet of Things are currently being used across a range of sectors including agriculture, manufacturing, healthcare, and financial services. There’s no sign of this growth slowing down any time soon and yet critical factors to meet this growing need, including ICT employment and STEM skills in schools, have remained stagnant for several years.
Australia is also facing a lack of diversity in the IT sector, with only 28% of the industry roles currently being handled by females, and only 12% by employees aged over 55, compared to 45% and 15% respectively in other professional sectors.
All SMEs in Australia will feel the knock-on effect of this slow growth in the coming years due to its effect on the economy and Australia’s reputation as a player on the global stage. But difficulty in employing individuals with the right skills to fill certain IT roles may also impact individual businesses in a more significant way. Business may experience;
- Inability to adopt new digital technologies such as AI which could improve productivity and efficiency.
- Increase in hiring budget needed to attract the right candidates – cyber security workers are paid a $12,000 wage premium on average.
- Increased vulnerability to cyber attacks and data breaches, which may damage a business both financially and in terms of reputation and customer trust.
- Falling behind competitors with better resources and a more skilled workforce.
- Restriction in taking payments via new technologies such as blockchain, which may mean missing out on potential business in the future.
- An exodus of trained and experienced staff, often “poached” by competitors with more attractive compensation packages. When they leave, they take their knowledge with them and it takes time and money to train up new employees.
- Stunted future business growth in the long term.
Potential Solutions for the IT Skills Shortage
There are several initiatives that Australian organisations are pushing at a national level to reduce the IT skills gap
- Mandatory implementation of the Digital Technologies Curriculum in schools.
- Better careers advice and partnerships with industry to encourage more young people (particularly girls) to go into STEM careers.
- More coding workshops and awareness sessions for females, funded by $8 million in Women in STEM and Entrepreneurship grants.
- Attracting skilled IT talent to Australia by promoting the skilled migration program and introducing new visa options for skilled workers.
- Developing new higher education programs to meet changing industry requirements.
- Attracting more foreign students to study IT degrees via marketing and incentives.
- Business accelerator programs to encourage IT startups and develop digital talent.
- Changing tax policies to encourage digital investment.
As a business owner, it may be several years before these government initiatives have a positive affect on the available IT workforce. So what can you do to fill your skilled vacancies in the meantime?
How IT Outsourcing Can Help
For companies looking to employ skilled IT professionals, offering a higher salary is often the only way to attract qualified candidates. Of course, many businesses simply cannot afford to do this, and there are other downsides to hiring in-house IT staff too.
Not only is it difficult and expensive to find and keep skilled IT staff, but in-house staff require constant investment in the form of training and professional development to keep their skills up to date.
Relying on in-house staff is certainly not a recommended option for those businesses who only have the budget to payroll one IT specialist. Inevitably, computer emergencies happen when that member of staff is off sick or on holiday.
Luckily, there is another option for businesses that have been experiencing difficulties in creating a team with the right IT skills and experience in-house.
Outsourcing to a managed IT service provider offers several advantages to trying to fill vacancies within the company:
- An excellent range of skillsets and talent from various backgrounds and industries which is immediately accessible when you need it.
- More affordable than hiring full-time staff – pay only for what you need.
- Support is available outside of standard business hours.
- A large number of professionals on hand mean that they’ll be able to deal with even your biggest IT issues.
- Benefit from the most up-to-date technology and skills.
- Offer training and guidance to up-skill in-house employees.
- Foster independent knowledge of different software vendors.
- A wide range of experience working in different businesses and industries.
When it comes to outsourcing, it may seem cheaper at first glance to hire offshore talent, but there are several advantages to outsourcing closer to home. As well as the advantage of having IT staff on-site instead of just working remotely, businesses can also benefit from the R&D Tax Incentive when they invest in Australian companies.
While the IT skills shortage may seem alarming, many Australian small and medium-sized businesses can avoid its negative consequences by using managed service providers to handle their IT hardware, software, and management needs.
To find out more about Productiv managed IT services, and to learn how we can work with your existing IT team and managers to provide ideally tailored solutions, contact us today.
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