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Story URL: http://comment.silicon.com/0,39024711,11031693,00.htm

Is there still an IT skills shortage?
We ask and answer the perennial question...

By Joey Gardiner

Published: Friday 01 March 2002

Forget received wisdom. Forget arguments over green cards and fast-track visas. Forget urgent training to keep this country ahead of the pack in the ebusiness revolution. Forget what you've been told for years. This country no longer has a skills crisis. Joey Gardiner investigates the increasing evidence the skills crisis evaporated with the pop of the dot-com bubble...

Two weeks ago the Professional Contractors' Group launched a campaign to get the government to overhaul the fast-track visa scheme which makes it easy to bring in foreign, non-EU high-tech workers.

The group said it had identified thousands of abuses of the visa scheme, which is designed to address crucial skills shortages in the UK, particularly in the IT sector.

However, as well as specific abuses, the PCG's case was predicated on one issue it said the government had failed to recognise: there is no longer any such thing as an IT skills shortage.

Susie Hughes, chief of communications for the group, said: "The government's scheme is based on Home Office research dated from 1999. It just doesn't apply now. Currently all the evidence we can see points to a sector with no skills shortage."

She says that one in three of the PCG's members are now out of work at any time - an utterly different situation to that even just six months ago.

And the anecdotal evidence seems to support her case. Contractor after contractor confirms the story. One, Colin English, sums up the experiences of many.

He told silicon.com: "I have worked in IT for over 25 years. I have never been without work. I have moved from assignment to assignment with ease, no problems in getting new work ever.

"My last contract was terminated early in December... Since then, there hasn't been even the sniff of a new assignment. All the agents I have spoken to talk about the market being completely dead. How they keep going, I don't know."

And Colin is not alone.

Many other contractors, some renowned experts in their field, are also unable to find work.

Rates have fallen across the board in end user companies and every week more people are laid off from the high-tech firms.

However, these are just the contractors. Admittedly, they were the big winners from the explosion of ebusiness at the end of the nineties. Following demand massively inflated by millennium bug work contractors moved quickly to ambitious dot-com firms with heavy IT architectures.

Naturally the temporary workers have been amongst the first casualties for firms suddenly keen to rein back their costs. Does this necessarily mean the skills shortage is over in the wider industry?

Preliminary results from silicon.com's Skills Survey 2002 seem to support the view there has been a radical turnaround in the last year.

In 2000, in the wake of the millennium bug activity and at the peak for the dot-com boom 48 per cent of firms said they couldn't find the staff for their IT department. Last year that figure fell slightly to 39 per cent.

This year the final figure looks to be in the region of 15 per cent [Ed. final figure = 17 per cent (8.3.02)], a drastic reduction.

However, not everyone believes this necessarily equates to a skills gap. First, the Home Office denies it is using out of date information to assess areas of skills shortage.

It says there are still a number of definite skills gaps and it has regular meetings with industry to ensure it is tackling the right problems. It confirmed it has removed some areas from the danger list.

Andrew Harvey-Price of the e-skills NTO, the industry-government body charged with tackling IT skills problems, recognises the situation has changed but says that doesn't mean there aren't still gaps. "There are definitely still shortages in the techie positions - such as software developers, and managerial positions, such as IT operations managers," he said.

"What we are seeing is not a shortage of people in the industry, but a shortage of the right skills. Almost two-thirds of IT companies report skills gaps in their workforce."

Mike Ryan, director general of the Institution of Analysts and Programmers, agrees. He said: "There are some people that don't have high-level skills that are finding hard to get work at the moment. They just have to prepare to update their skills. The smarter people will never have a problem finding work."

The same message comes from the recruiters.

David Bevan, MD of Zebra managed recruitment services, part of Best International, said: "There is a latent skills shortage. If all the projects were being completed that are being postponed or put on the back burner right now, we'd be back in the same position as 1999."

While he admits the recruitment industry is currently in recession, he says the green shoots are already apparent, and the recovery will be dramatic when it happens: "Contractors particularly are in a prime position to take advantage when the economy turns around. Companies that have laid off permanent staff are not going to want to re-hire permanent staff. They're going to turn to contractors."

However, despite this more positive outlook from the recruiters, it should be remembered these companies do have a vested interest in positively PR-ing their own industry.

And whatever the experts say, the situation on the ground remains grim. As the weekly trade mags get thinner and thinner, with great swathes cut out of their recruitment sections, applicants are regularly complaining of two or three hundred rivals for every job they try.

The question is really whether this downturn is just a temporary easing of an ongoing skills shortfall, due to exceptional economic conditions, or whether something fundamental has happened to the market.

In reality, we will not know until the recovery is complete, and firms are actually implementing IT projects again. It seems unlikely all the skills problems have suddenly faded away into the air.

So despite all the woes out there in the market today, skills shortages are set to recur, albeit to a lesser extent, as quickly as they evaporated when the industry turns round.

However, the one hope is that this time some lessons have been learned and the over-inflated wages of the nineties - that to no small extent contributed to the problems we all face today - can be avoided.

All we need now is for firms to actually start training people, and we could be on to a winner.