The UK is creating a skills abyss that could deepen the
recession and slow the next upturn by sending IT work
offshore.
Last week mining company
Rio Tinto said it would stop or postpone new projects and speed up
its programme to offshore and outsource IT work. It is
following a well-trodden path. Scores of large IT employers such as
Tesco, British American Tobacco and the telecommunications
companies have sent work to India and the Far East.
While developed countries are plunging into recession, newly
industrialised countries are still growing and creating demand for
IT skills, especially software development, outside the UK.
The effects on the UK economy are predictable. This week credit
vetting agency
Experian revealed that some
600 IT firms
have gone
bust this year. This is almost 7% up on last year. It fears
what might happen next year.
Charles Ward, chief operating officer at IT suppliers
association Intellect,
said 2009 will be tough.
He says the hardware market will be static, but expects
"moderate" growth of 2% to 3% from software and services.
David Roberts, chief executive of the Corporate IT Forum,
expects the industry to suffer "a quick vicious hit". He isworried
that suppliers may be underestimatingthe depth of the economic dip.
"The frequency of market changes is increasing and making the
troughs deeper and the peaks higher," he said."We are going to see
firms running on skeleton [IT] staffs. Any supplier who doesnot
have a big customer to provide subsistence income is going to be in
trouble."
This was a common sentiment at a Computer Weekly 500 Clubmeeting
this week. It was held under
Chatham House
rules of confidentiality to facilitate free discussion. One
delegate said his PC supplier hadtold him that it was raising
prices 15% due to the economic climate. "They just don't get it,"
he said.
The recession is already putting more IT staff on the streets.
This will create an illusion that there is no skills shortage. An
E-Skills
UK
report published in January showed that 65% of UK IT jobs are
for managers and senior professional roles. Moreover, too few young
people are joining the industry. The proportion of IT workers aged
16 to 29 has dropped from 32% to 21% as outsourcing and offshoring
have taken their toll. Lars Lindstedt, a Microsoft software
economist, said, "The lower runs are being taken out of the
careerladder."
Several Computer Weekly 500 Club delegates expected employment
levels in IT to drop further because of new technologies such as
cloud computing and
software as a service. These boost productivity but need fewer
people, albeit with more sophisticated skills.
In addition, the
Software Barometer published last week by the British Computer
Society, Intellect and Microsoft shows that fewer school and
university graduates have good computer, technology, science,
engineering and maths skills. Together this means there is a
growing shortage of UK-based people capable of becoming the next
generation of IT professionals and managers.
E-Skills UK says nearly 80% of jobs in the UK need IT skills.
There is virtually no business that does not use or depend on IT.
Without a skilled and experienced cadre of IT professionals, the
recession is likely to be longer and deeper.