Contractors glimpse light on the hill

Author: Beverley Head
Date: Tuesday, 16 November 2010 05:25
Appeared In: ITWire - www.itwire.com

It’s been a rough year for Canberra’s ICT contractors – but it looks as though the market’s on the move with figures tracking contractor demand reaching a three year high in July. Government departments however may find themselves forced to offer more to lure back to Canberra contractors bruised and battered by the Gershon reforms.

The Peoplebank Intermedium Federal ICT Labour Hire Index tracks skills demand by measuring the cost of an average unit of labour hire paid by the Federal Government to ICT contractors. In April that index reached an all-time low of 763.

But results released today for July show the index back at a healthier 1600 – which Peoplebank claims as a three year high.

According to Peter Acheson, Peoplebank CEO, many federal government departments have driven initiatives during the last year to convert contractors to permanent employees, especially in the lower end help desk or service roles. This had led to a skew in the contractor market where roles were now predominantly for specialist skills in the $100,000-$500,000 range which is influencing the index.

“I think 09-10 was the toughest year in terms of the Federal Government’s implementation of the Gershon review. It was the second full year and CIOs knew they were being measured and scrutinised,” said Mr Acheson.

According to the Peoplebank survey around $200 million has been driven out of the Canberra ICT contractor market as a result of the Gershon initiatives.

Mr Acheson described the race to convert contractors to permanents as a “pretty blunt but effective instrument” to drive costs down. The problem now though is that it might leave Government departments challenged to find high quality IT staff when they launch new IT projects.

“We hit the GFC in late 2008, then there was the Gershon review and a lot of IT people who had come from interstate went back home. If the federal government were to scale up I think there would be a real challenge to attract high calibre staff to those roles,” said Mr Acheson.

Not that staff aren’t looking. In its recently released 2010 Salary Survey recruitment firm Robert Half Technology uncovered evidence of itchy feet among ICT staff who have over the last two or three years been largely content to sit out the economic downturn rather than agitate for a rise or promotion.

It found that 43 per cent of technology workers were unhappy with their current salary package and 74 per cent were prepared to switch jobs in order to negotiate a better deal.

Whether they’d be prepared to move to Canberra is moot, although Peter Acheson is predicting the Federal Government will have to pay more to find key staff it needs for its IT projects.

Canberra’s nascent skills shortage was being exacerbated he said by major IT programmes underway in the finance sector, and in energy where there were a number of smart grid projects underway demanding IT skills. “And then there’s the NBN which hasn’t ramped yet – although we expect that by February or March.”

Duncan Thomson, general manager of the Finite recruitment company said that demand for IT skills was presently quite strong right across the country, and he expected that demand to hold up until Christmas. He added that the contracting market was also quite buoyant at present, suggesting that job seekers have multiple options to consider.

According to Mr Acheson the States and Territories compete fiercely for IT staff, and people who had been scarred by their recent Canberra contracting experience would have “long memories” and be unlikely to wish to return. This could have a medium to long term impact he warned.

To ameliorate the problem the Government needed to accelerate its development programme targeted at federal IT workers, which was also a Gershon initiative. While some elements have been rolled out Mr Acheson said there needed to be a concerted effort and investment in this area.

Nevertheless he warned that in those areas where skills shortages were emerging Government would have to be prepared to offer “reasonably high rates” in order to compete, and also accelerate the skilled migration programme in order to access scarce skills.