IT sector still stalled as job cuts continue

AUSTRALIA’S IT sector could be six months away from a return to positive growth and good employment prospects, according to industry commentators.

And Perth, traditionally several months behind the eastern states, may have to wait until autumn 2002 before the industry sees an end to IT job losses and staff freezes.

In June this year many IT recruitment consultants believed the market in Australia had reached rock bottom and it was only a matter of time before confidence and growth returned.

But with the closure last week of Gateway stores across Australia and significant job cuts by Toshiba and Fujitsu, analysts believe the market has dropped further and will stay that way for some time.

Olivier Recruitment Group director Bob Olivier believes we are seeing a continuation of last year’s tech wreck.

But rather than the market correction targeting employees, as in 2000, it has now focused on more established roles like systems administrators as international tech firms cut jobs in a bid to improve their bottom line.

Mr Olivier said August Internet job index figures were down 3.36 per cent. But while the numbers still point to a drop, he said the rate of decline had slowed recently.

“It seems to me that the market is going to stumble along the bottom until the first opportunity for growth, which is post-Christmas,” he said.

“You’ve got the Christmas lull and the first opportunity for serious improvement is for February next year, and that’s only the potential for improvement. There’s no guarantee that it will improve”

Mr Oliver said the local IT industry was confident of a return to growth in the near future.

However this may have suffered a setback after US computer manufacturer Gateway closed its Australian operations, resulting in the loss of 219 jobs.

Gateway stores in Hay Street, Perth, and Booragoon shut their doors last week. It follows on from a wave of staff cuts from local and multinational firms that have included Toshiba shedding 20,000 jobs world wide, Lucent Technologies axing 65 Australian positions and Perth online investment house Sanford Securities recently restructuring its workforce.

TMP Worldwide IT recruiter Andrew Jenkins believes the industry is weak in some areas at present but said it was showing positive signs in specific roles.

“Mid range positions such as systems analysts, business analysts, Unix administrators and network administrators are still quite buoyant,” Mr Jenkins said.

“I think the cuts have been at the senior end, the state managers and the IT managers, whose roles are not quite as abundant as they were 12 months ago.”

He said companies willing to recruit now had the advantage of choosing professionals with excellent skills and experience.

“I think companies are in an excellent position at the moment to recruit because going back 12 months ago there was a huge shortage of skilled people,” Mr Jenkins said. “There is a little bit more to choose from in this present time.

“It is good for companies in some respects because those in a recruiting mode have a good selection of employees.”

He said the present economic conditions had led to an increase in IT contracting, an area of the market that had cooled off after Y2K compliance work had dried up in 2000.

“One area we have noticed it picking up is with contractors. Going back after the Y2K exercise there were a lot of contractors who found it difficult to find contracting opportunities and it was quiet for some time,” Mr Jenkins said.

“I also think there was a little bit of distraction when the GST came in and companies weren’t quite sure how to handle contractors. There was a little confusion what was going to happen tax-wise with contractors.

“We might be seeing the projects companies had deferred prior to Y2K and the GST are just starting to come on stream now.

“Normally when you go into that project type environment a lot of companies will use contractors to top up their staff requirements.”

And while the cost cutting and retrenchments aren’t limited to the Internet and information technology industries, Mr Jenkins believes IT may be getting more prominence for its failures after having succeeded for so long.

“These actions aren’t limited to the IT industry but IT has been extremely buoyant recently and when there is a little bit of downturn people tend to notice it,” he said.

Mr Olivier agreed with this assessment.

“This is probably the first time it has experienced a hiccup in its unrelenting growth for two decades and for the first time we’re seeing that it can go the other way too,” he said.

“It is making things more rational to some extent.”

He gave the example of IT salaries, which were remaining static now that the acute skills shortage had eased.

“New employees are more likely to be hired on the same salary as they received in their last position, not 25 per cent more as they might have expected 12 months ago,” Mr Oliver said.

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