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ICT operators face catch 22

RECOGNITION of the need for greater industry cooperation among players in the State’s ICT industry led to pledges of collaborative partnerships and a commitment to implement a strategic focus for the sector earlier this year.

But times remain tough for smaller players, which struggle to land the big contracts in an environment where industry consolidation is the trend.

This has had a flow on-effect to the ICT industry and left few opportunities outside of those secured by major players and multinationals.

It is in this environment that local branches of the Australian Computer Society (ACS), the Australian Information Industry Association (AIIA), the Australian Telecommunications Users Group (ATUG) and the WA Internet Association (WAIA) have expressed a renewed ambition to work together – along with government and others – to raise the profile of ICT issues in the State.

Australian Computer Society WA branch chairman Bob Cross said WA had a strong basis for building a vibrant IT industry, including an educated workforce, self-sufficient people, an ideal time zone, a high number of universities offering quality IT courses, and a good lifestyle.

However, he said more needed to be done to ensure the viability and growth of the local ICT industry.

“We as a country are not treating IT seriously, perhaps because we don’t understand it,” Dr Cross said.

“Look at Ireland. They gave tax breaks to bring big multinational companies in to their IT industry. Now they have the second or third largest IT industry in the world.

“They [Ireland] understand what is involved in building a strong IT industry. Australia really hasn’t done that – especially in recent years.

“There has been no thought at all for building an IT industry and yet it is an obvious industry for Australia.”

Dr Cross said the sentiment in the ICT industry in WA was mixed, but he was positive about the long-term future of local industry despite the recent tough economic times and the trend towards a decrease in IT spending.

When there is a downturn in IT in the US it was likely there would be a downturn in IT in other countries, including Australia, he said.

Dr Cross said the downward trend started to turn in the latter half of 2003, as was indicated in the IT job market.

“It’s my feeling that we’re coming out of a slump,” he said.

“I talk to people in industry and people are starting to hire again.”

In the past three years the economy had started to pick up and that was having a flow-on effect in the ICT industry, he said.

Top university graduates were again getting three or four solid job offers.

“Top graduates always got jobs, but we are now back to a situation where they have multiple job offers,” Dr Cross said.

WA branch chairman of the AIIA, Geoffrey Harben, who is also the WA manager of Fujitsu, said WA organisations were refocusing and collaborating to create better opportunities for ICT companies.

“We’ve got to be innovative to ensure that there are opportunities in WA,” he said.

“AIIA, ACS, ATUG, and WAIA all now work very well and closely together.

“We meet regularly, we share ideas and concerns, we have members of each on our committees and we’re currently working together as a group to focus on industry development requirements and education/skilling issues.”

But despite the emerging positive sentiment, some operators were unable to overcome their difficulties.

Software Engineering Australia (WA), for example, starved of adequate funding, was forced to close its doors this month.

SEAWA CEO Stuart Hope said a lack of government support for the resource centre and the current market conditions in the local ICT industry had forced the hand of the organisation, which had played an integral part in the local software development industry.

Formed in 1998 as a separate body to the national Software Engineering Australia, SEAWA’s role was to encourage growth and innovation in the WA ICT sector.

It ran invaluable technical training courses for its 180 members and provided much-needed assistance to 14 local start up companies, including Calytrix Technologies and SigPoint.

SEAWA was also instrumental in obtaining a $10 million Building on Information Technology Strengths (BITS) grant for WA.

In announcing the decision, Mr Hope said: “The SEAWA board has decided that due to current market conditions and lack of government support the concept of a not-for-profit organisation geared to providing practical help to build a WA ICT industry was not sustainable at this time.”

The organisation had been surviving on income earned through its training programs and an annual grant of $300,000 administered through SEA National via the Software Engineering Quality Centres (SEQC) program.

Times remain tough for small and medium enterprises in an environment where multinationals are securing major contracts, a result of consolidation in those industries and its flow-on effect to ICT. This trend has been felt across the spectrum of IT sectors including hardware, web and Internet providers.

WA Internet Association president and director legal services at the University of Western Australia, Kimberley Heitman, said decisions by government not to support local companies has had an enormous effect on smaller players.

“It has been a very, very difficult year for IT due to the decision of both Federal and State governments not to prefer local industry – it has been very damaging to those industries,” he said.

“Multinationals are getting all the best work.

“In my view we are going to need a preference for local IT providers if we are going to see any improvement.

“It’s a catch 22 for these companies.  They are never going to get credibility unless they are able to secure big contracts and they are not going to get big contracts unless they are credible.”

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