A gloomy global IT scene had knock-on effects in New Zealand, despite the relative health of our domestic economy.
Cost-cutting was the name of the game in 2002, with mergers and job losses commonplace, which in turn impacted on salary levels, as professionals found themselves and their skills in slightly less demand.
ITANZ president and IBM head Nick Lambert recently described 2002 as “challenging”, and that would appear to be the right word for most of the industry.
On the jobs front the main development was layoffs in the telco sector, TelstraClear taking a lead, if that is the right word, by shedding 650 jobs as it merged its constituent companies. First 160 went last December from an initial blood-letting, followed by 490 early in 2002 from the merger with Clear Communications.
IBM New Zealand largely managed to avoid the layoff blues, as did HP-Compaq locally despite many redundancies elsewhere.
Continuing shake-ups in consulting saw the big five change beyond recognition, many losing a tenth of their staff in 2001.
The retrenchment trend continued right until this month, with the Fonterra relocation from Wellington to Auckland, Hamilton and Palmerston North set to cost “some” IT jobs.
Lambert believes most IT and communications organisations in New Zealand will have shed 25% to 30% of staff by the end of the year.
Recruiters confirm this, suggesting that IT was hardest hit out of all sectors, with the telco and contracting markets worst hit.
Rollo Gillespie of the New Zealand Software Association says there is an “oversupply of talent” in the marketplace, caused by fewer large IT projects in both the government and private sectors, but he hopes the “project cycle” should lead to recovery in the coming year.
The global slowdown also led to an influx of immigrants and returning Kiwis. While English language skills have hit the headlines of late, the Information Technology Association points out that, generally, immigrant IT workers have sufficient English skills, so the latest language requirements should not impact too greatly on the importation of people with technical or managerial skills that are still in short supply. While India and China are the top supplier of arrivals overall, ITANZ says Britain, South Africa and Zimbabwe are the main sources of IT immigrants.
The education sector is pumping up its output of IT workers, though certain skills still remain in short supply. NZSA says shortages remain in e-commerce and web-based roles. Recruiters add senior Java, C++ and VB staff, certain telecommunications skills, developers and software engineers. Communication skills are needed more than ever.
The impact on salaries is generally downwards, a trend reinforced by the lower prices employers are having to charge their customers. Some say a senior Java developer could have negotiated a package in excess of $120K a year ago, but $90K is more likely today.
However, relative to other professions, IT remains well-paid, with an NZSA/ITANZ salary survey in August-September showing that software development managers typically earn $75 to $200 an hour, business analysts $100 to $200 an hour, and project managers having a billing rate of $100 to $225 an hour.
Auckland offered the best salaries while “northern provincial” offered the worst.
When it came to looking for jobs, there were fewer around and new technology brought more options. The print media suffered as a result, though online recruitment did also, many ANZ job ads surveys showing a decline in total job numbers on previous years. In place of using agencies, many organisations are switching to direct or online recruitment. Companies such as StaffCV, now based in Auckland, are developing the software for such methods and increasing types of online tests and assessments are being developed in New Zealand and overseas. The jury remains out as to how effective they are and employers of course still need to see candidates and examine many employment factors.
The depleted, merged and reorganised IT recruitment agency sector cries that it still has a role to play. Some now promise extra personal service and related services like testing, while others say they have changed little and continue to offer the specialist skills and expertise employers need to recruit most effectively in the long run. We shall see.