Stealing from tomorrow

The dot-com crash of 2001 had a catastrophic effect on the availability of human resources in the IT industry. Some estimates put the proportion of workers that left the industry in the wake of the dot-com bust as high as 10%. And the number of students taking IT-related qualifications nosedived spectacularly.

“People went off into what they thought were more reliable professions like investment banking,” recalls Alwyn Welch, CEO of IT recruitment consultant and training provider Parity.

The danger facing the IT industry today is that the present recession will have a similar effect.

According to Parity’s research there has already been a reduction in the number of IT vacancies in the UK. This dip in job opportunities is at the moment concentrated in the financial services sector, but the fall-off in demand is expected to spread to other industries.

Counter-intuitively perhaps, Parity has found that this has triggered an up-tick in employee churn. Rather than holding on to their jobs, IT workers seem to be scrabbling to find the safest positions.

“We would encourage businesses to invest in and retain their key staff,” says Welch. “They are going to need them more in the next two years than they ever have done before.”

Training is a key element here, he adds. Not only is it a cost-effective way of attaining required skills, it is also a good way to demonstrate to key staff that the organisation is investing in their future. However, Parity has already seen many training budgets regarded as a non-essential cost and slashed.

Rather than increasing the investment they make in their workforce, many businesses are sure to take the opposite tack and reduce their permanent staffing overheads by outsourcing.

John Cotterell, CEO of IT services firm Endava which has its development resources in Eastern Europe, is certain that companies such as his will benefit from the coming crisis. “Our business is up 15% compared to last year,” he says.

However there is a palpable risk that measures taken today to ensure short-term survival gravely impair the long-term viability of the UK’s IT industry.

Taking the pulse of IT managers, a recent survey by the Chartered Management Institute of 1,118 senior executives shows that just 9% of individuals feel secure in their current job in the IT sector and 37% report that their organisation has already frozen recruitment.

And levels of stress are rising. Over half (63%) admit that ‘work has become more stressful’, with just over 40% saying that fears over the economy have caused them to ‘lose sleep’.

However, indications are that many respondents are dealing with the pressure. For example, 79% in the sector view the downturn as presenting them with ‘greater challenges’.

Indeed, 68% believe that ‘organisations should focus on product innovation and service’ to stay afloat in the downturn, with 45% diverting their attention to developing the skills of core internal staff and 88% arguing that focusing on management and leadership skills will help them survive the recession.

Perhaps that stems from an understanding of previous recessions: 91% in the IT sector say they have experience of redundancy.

Surprisingly, though, many are also not prepared to ‘sit tight’ during the downturn, with 66% of respondents suggesting they would be ‘tempted to move if the right offer came along’ – other surveys suggest the public sector could benefit from a flight to job security. Indeed, 37% of the sample claim to be ‘actively looking for a more senior position’.

Further reading

Crunch time for the IT industry
How the economic recession will reshape the IT business – and force some game-changing investment choices

UK IT skills shortage worst for decade

The evolution of the CIO
The IT leader of tomorrow must have the skills to manage collaboration, innovation and change

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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