National IT Market Outlook 2010

Peoplebank forecasts that the IT sector – which went from ‘overheated’ in mid-2008 to a sharp correction in 2009 – will rebound in 2010 to near-record levels. In our first review of salaries for 2010, we believe that while salaries are yet to shift significantly on 2009 rates, surging demand suggests an IT skills shortage will be evident as early as mid-year.

Our data indicates that…

- Demand for some skills has risen by up to 218% on last year
- NSW, VIC and WA are leading the way with signs that a long boom is ahead for IT skills
- The skills shortage is likely to be evident as early as mid-2010 with consequences including jobs volatility and salary surges

The consequences of the predicted skills shortage are likely to include upward pressure on salaries and contract rates, as well as rising staff turnover as employees pursue contract and higher-paying roles.

Our January review of salaries and contract rates paid in more than 50 IT job categories shows that salaries have remained unchanged from the figures collected in November 2009.

We have however observed strong growth in the numbers of appointments being made. This is particularly the case for contract roles, demand for which has risen by 20 percent in NSW, by around 60 percent in WA and by more than 200 percent in VIC, compared with January 2009 figures.

At the same time, demand for permanent roles has increased by 20 percent or more in these states.

The slower-growth states – the ACT, SA and QLD – are anticipating a steadier increase in demand, in line with generally improving conditions in coming months.

Peter Acheson, COO of Peoplebank comments: “Peoplebank had an uncharacteristically busy January. In an almost complete reversal of the situation that existed 12 months ago, some 40 of our top 50 clients – Australia’s largest banking, government and enterprise IT users – made new hires in January, as well as flagging their intentions to continue hiring in the coming months.”

Acheson comments that the signs are pointing to a long boom for IT skills: with demand being led by in NSW by the banking sector – with all four major banks investing in core systems upgrades and new projects designed to build competitive advantage. In VIC, demand is strongest in banking and the utilities sector, which is investing in smart metering projects. In WA, major resources projects are generating both direct demand, and flow-on demand from banks and businesses supplying the resources sector.

The nature of many of these projects has favoured contract rather than permanent, IT workers, says Acheson.

Acheson comments that on current demand levels, a skills shortage will be evident by mid-2010, especially for contract workers with business analysis, project management, Web 2.0 skills and experience in the banking, utilities or resources sectors.

“The first consequence of this skills shortage will be upward pressure on IT contractor rates. As these rise, many permanent employees will be tempted into contract roles.

“At the same time, a growing number of permanent roles will provide a plethora of choice for IT workers with in-demand skills and experience.  The likely consequences include upward pressure on salaries as well as rising turnover, as employees opt for better pay or employment opportunities.

“Peoplebank is advising IT employers to have a very clear employee value proposition. And for employees – especially early-stage IT workers – we recommend getting skills and experience in the key demand sectors, which will be offering excellent conditions and career progression in the months and even years ahead,” Acheson concludes.