Investment to suffer as skills crisis deepens

It is time to accept responsibility for counteracting the effects of the continuing New Zealand skill shortage, says IDC

Research and analysis firm IDC predicts the ICT skills market will tighten further in 2008, causing project costs to rise and prompting even more aggressive headhunting.

“It is time to accept responsibility for counteracting the effects of the continuing New Zealand skill shortage,” the firm says in its annual Top 10 Predictions report, which was sent to clients last month.

“Whilst government and industry initiative might assist in mitigating the problem in the long run, companies need to address the most salient issues around attracting and retaining high-performing staff autonomously.”

IDC says this includes providing better long-term career opportunities, “better benefits and, yes, higher salaries”.

IDC says that while there have been efforts by the industry and the government to find a better way to educate youth on the career opportunities ICT can offer, there is little evidence of success from those efforts.

“In fact, it’s time to face the reality that these initiatives will not improve the situation in the short term. Actually, it’s quite the opposite: IDC expects the situation in the IT labour market to worsen in 2008, resulting from increasing IT demand, skills drain to overseas markets, and tighter competition within the New Zealand employment market.”

And that means ever increasing salaries, especially as New Zealand competes for skills in a global market.

“At this stage, New Zealand IT salaries are still approximately 20% lower than in Australia. As a result, IDC predicts the evolvement of more aggressive headhunting practices in 2008 that will further raise salary levels and staff churn rates.”

That in turn could slow ICT investment to the detriment of efficiency and productivity, IDC says.

“Increasing salary levels will inflate the overall cost of IT in New Zealand, which in turn will lift the ROI threshold of IT investments. This will lead to postponed and possibly even cancelled IT projects, in particular, in the SMB market segment.”

The paper says IT staff attrition rates have not improved. Attrition was 12.7% in August 2007, up from 10.2% in 2005.

Companies will have to change their approaches to recruitment and retention, IDC says. Employers currently strive to retain an “elite” class of employees leaving 80% of staff open for other job opportunities, the analysts say. Employers will have to start thinking about the other 80% of employees as elite as well.

Incremental pays rise systems are failing to keep up with the market and risking further attrition, IDC advises. In addition, only a few employees have a clear, long-term career path.

“Most New Zealand companies are years behind international practices around benefit payments. Social benefits significantly increase the loyalty and satisfaction of employees and differentiates employers from competitors,” IDC says.

Benefits that are common overseas include: bonus payments, health insurance, car parking, fully paid mobile phones, contribution to home broadband, income protection insurance, and work-life balance.

On the recruitment front, IDC says candidates increasingly decide which company they will work for.

“It is therefore up to employers to sell their workplace environment and career opportunities in the same way they expect candidates to sell themselves.”

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