A looming skills shortage in Australia’s technology sector is threatening to derail projects worth billions of dollars. The squeeze is putting renewed pressure on the federal Government to relax immigration rules. Investment in technology is back on, after a year of inactivity during the global financial crisis.

By PAUL SMITH – AFR – Stuff.co.nz

A looming skills shortage in Australia’s technology sector is threatening to derail projects worth billions of dollars.

The squeeze is putting renewed pressure on the federal Government to relax immigration rules.

Investment in technology is back on, after a year of inactivity during the global financial crisis.

But recruiters say businesses will be forced to compete with higher salaries for in-demand workers or risk delays due to staff shortages.

The chief executive of Australia’s largest provider of technology contract workers, Peoplebank Australia’s Peter Acheson, says signs of a skills drought are becoming apparent in Victoria, New South Wales and Canberra.

Mr Acheson says Melbourne is being “sucked dry” by ANZ Bank as it looks to upgrade its 30-year-old Hogan banking platform and by National Australia Bank, which is spending A$1 billion (NZ$1.31b) on its NextGen core banking system replacement project.

The market in Sydney is being stretched to provide staff for numerous projects including Commonwealth Bank’s A$730 million upgrade of its core systems and Westpac’s upgrades, which constitute the largest information technology investment in its history.

An upsurge in hiring activity for the construction of Australia’s national broadband network (NBN) may follow, now the government-established company leading the initiative has hired consultancy Accenture to hire staff.

“I am absolutely convinced we will be in the midst of a severe skills shortage by the middle of the year,” Mr Acheson says.

“We are already starting to see that most job candidates for important IT jobs have got multiple offers, and workers with high-demand skills in specific areas are exerting pressure for salary rises.”

The looming shortages come as the Rudd government is under pressure from the federal Opposition to cut the immigration intake, which is running at just under 170,000, after the government cut 22,000 from the target last year.

A partner at executive head-hunting firm Robertson Search, Paul Rush, says he has been inundated with searches for senior IT executives since late last year.

Along with the big four banks, businesses across all sectors are concurrently looking to undertake hugely expensive technology change programmes that require matching skills that are rapidly running out, he says.

“For every short-list I am presenting, I am losing a candidate before they get to the interview because they have taken another job.

“We now have a perfect storm in terms of transformation and change led by Westpac-St George integration and the other bank projects, closely followed by the growth in NBN Co and the tech growth at organisations including Origin Energy.”

One chief information officer from the local arm of an international finance group says he plans to resign in the coming months to take advantage of the sky-high pay packets that would be on offer to contractors. “There is a bit of work to finish on a project, but after that I will be off.”

Commonwealth Bank chief information officer Michael Harte says the skills shortage is not putting the bank’s core systems upgrade at risk, and his department was fully resourced. But he says this is largely due to it investing early.

“The war on talent is probably alive and well, but people that have trained to get certain skills and invested in their education and worked hard to get good experience want to get the highest reward for that and they naturally get drawn to larger, more exciting projects.”

Skills Australia this month handed the government a report urging it to adopt a A$390m workforce strategy to offset skills shortages.

Mr Acheson says recruiters and technology companies are advocating a more open approach to skilled migration and expected the government to take action.

“The federal Government only needs to get a phone call from a couple of large Australian corporates telling them that they need to open up the skilled migration market and it will happen. So it is inevitable that there will be an increase … by the end of this year.”