The money's good, the jobs are plentiful - so why does New Zealand's growing IT industry find it so hard to attract skilled staff? Anthony Doesburg reports

With the unemployment rate nudging 7 per cent for three years now, many employers can pick and choose from scores of job seekers.

But not in the world of information and communications technology (ICT). A chronic shortage of ICT skills is forcing software companies to carry out development overseas because they can't find local programmers to do the work.

With one website showing 1300 ICT vacancies in Auckland alone, pay rates of up to $1500 a day are being offered for some specialist roles.

"Recruitment is one of our big challenges," says Natasha Hubbard, general manager of human resources at accounting software company Xero.


"We've got lots on the go at the moment."

While the six-year-old Wellington company has yet to make a profit, it is in growth mode and hired 200 staff last year. Xero will be looking for a similar number of recruits this year.

Xero typically takes about two months to sign up a new employee, Hubbard says, despite having three in-house recruiters and the advantages that come from being a high-profile, fast- growing business.

"It is a challenge to find suitably qualified, experienced and savvy people who also fit our culture.

"Our philosophy is hiring the best - not just getting people who can do the role but finding recruits who can do it exceptionally well and who aspire to future roles."

There's just one problem: lots of other organisations are competing for the same recruits.

Among them is Orion Health, which provides software for the medical industry. Although it is 20 years old, the Auckland company is also growing quickly, hiring more than 50 people since mid-November and needing another infusion of staff to handle new projects.

"We're competing in a small pool of graduates, of job candidates, and we're all after the best we can get," says Orion Health chief executive Ian McCrae.


"Some of those end up going overseas as well, so it is a tight market."

Both Xero and Orion are resorting to hiring overseas staff for jobs they would rather fill locally. When Xero's search for New Zealand candidates for software quality assurance positions last year drew a blank, it found one overseas, and of last year's roughly 200 hires, 70 came from outside New Zealand.

"We will take people from offshore if they're the best candidate for the role," Hubbard says. With development centres in Melbourne, Canberra and San Francisco catering to the Australian and US markets, hiring locally is a deliberate policy.

At orion health, two of its four software development centres and half its 725 employees are overseas.

McCrae says the skills shortage means opportunities are going begging in this country.

"If we could find people it would mean more of our development would occur in New Zealand. If we can't find the resources here, we have no choice but to hire people elsewhere."

But that's not the best answer for the country, which is missing out on jobs, nor for the company, because of the difficulty of managing a dispersed software development team.

"We can do it, but it is advantageous to have people clustered together," says McCrae.

Other ways around the skills shortage - "repurposing" people who have science and engineering degrees - aren't ideal either.

"What we have to do is take people with other qualifications and repurpose them for IT, which seems a real shame, because they've spent many years studying something else. They find there is no work for them in that field, so we move them into IT.

"At one point we had three people with fantastic PhDs in our documentation area, and while there they learn about our products and ultimately they'll go into other parts of the business."

The opportunities for IT workers were highlighted last month by the Ministry of Business, Innovation and Employment. According to the ministry's Occupation Outlook report, job prospects in ICT are among the best in the country, along with engineering and other professional roles.

The report says strong growth in jobs for ICT and business analysts - of whom there are about 9500 earning an average of $76,700 - can be expected in the medium term.

Similar growth in software development jobs is also forecast. There are about 17,000 software developers earning an average of $76,600.

The pay and prospects for ICT and telecommunications technicians are slightly less rosy: average earnings are just under $50,000 and their numbers fell slightly last year to about 10,100, although they are forecast to pick up.

Jobs in ICT were the most abundant of any category on the job website in the middle of last month, the second-most numerous on and the third biggest category on Trade Me's jobs site. More than 100 jobs were listed on Seek at pay rates of $200,000-plus and one 12-month contract for someone with SAP financial software experience was offering $850 to $1500 a day.

That may sound an astronomical sum but it's not unusual for the sector, says Paul Matthews, head of the Institute of IT Professionals, and is partly a symptom of the scarcity of experienced workers.

"The skills shortage today is as bad as it's ever been, which is a crazy situation when you consider overall unemployment. But we have a significant problem attracting people with the right skills into the industry."

Matthews says ICT company bosses tell him this is the biggest drag on their ability to increase exports and it pains him when companies such as Orion Health are forced to do software development overseas that could be employing New Zealanders.

Raising awareness of IT's earning potential is part of attempts to change perceptions of the industry so more people are attracted to work in it, he says.

However he concedes that years of work on an image makeover - that you don't need to be a geek to work in IT - haven't made much difference.

"That's true - trying to do something about this isn't new. But we have a major project that is working to change those perceptions."

Called ICT Connect, and sponsored by companies including Datacom, Simpl and Orion Health, the initiative involves IT professionals standing up in front of school classes and telling them what an "interesting, challenging, rewarding and diverse profession" they work in. Matthews says the goal is to speak to 50,000 school students this year.

It's an uphill battle, however. Despite the jobs, and salaries, on offer, the number of students doing IT-related degrees is going backwards, according to the Occupation Outlook report. It quotes Ministry of Education figures that show the number of students completing IT and computer science degrees fell 42 per cent, from 2240 in 2005 to 1300 in 2010.

The fall in numbers has been accompanied by a decline in the quality of graduates, argues Orion Health's McCrae. "The smart people we want who build things, who create things, are not doing IT. So the quality and calibre of graduates may have fallen as well, although I don't have scientific evidence of this."

What he does have is a suggested remedy: McCrae thinks the teaching of IT in high schools needs to be upgraded so more bright students are attracted to it. He would like computer science to have the same academic standing as the other three sciences - physics, chemistry and biology - in the school curriculum.

"At the moment IT is on a par with metalwork and soft materials. It is taught as technology but it needs to become an academic subject."

Rather than a curriculum that teaches the basics of using common software packages, students should be exposed to the fundamentals of software design, McCrae says. "It needs to appeal to the innovators, the tinkerers. New Zealand has a culture of creating things, and IT in schools needs to appeal to those people. Learning to use Microsoft Word or PowerPoint doesn't get them excited."

McCrae acknowledges the work of Tim Bell, the deputy head of the University of Canterbury's computer science and software engineering department, in helping bring this about.

Since 2011 the high school curriculum has been expanded so schools have the option of teaching digital technology as an achievement standard under NCEA, covering topics such as the basics of information management. Achievement standards are graded as not achieved, achieved, merit or excellence.

Previously, the only choice was to take computing as a unit standard course covering low-level skills such as finding information using the internet, at which students would either pass or fail.

"Achievement standards give students the chance to excel and are much more useful for getting into higher education," Bell says. "That makes the subject more attractive to better students."

BUT IT'S a big change for schools to adopt and the bottleneck is the supply of skilled teachers.

About 100 teachers at the country's 400 high schools have "rolled up their sleeves" and begun teaching the new topics to hundreds of students, Bell says.

Teachers have had more support from the industry than from the Ministry of Education, he says, which doesn't have money to train them in the new material.

Not that New Zealand is alone. "Google has put a huge amount of funding into helping train teachers." That's a reflection of the difficulties it, too, has recruiting IT workers, Bell says.

Whether the curriculum change will have an impact on the skills shortage will begin to be apparent next year, when the first achievement standard students leave school.

They might find a fresh hurdle in their way as cash-strapped tertiary institutions consider enrolment caps, although Tertiary Education Minister Steven Joyce has threatened to step in if IT, engineering and science degree places are cut.

Bell sees signs of a reversal in the decline in the number of computer science graduates

"Canterbury's first-year enrolments look to be significantly higher," he says, although the earthquakes did throw a "statistical spanner in the works", making comparisons with past years tricky.

"We're in a skills crunch at the moment, but the pipeline is filling up."


Permanent staff salaries
From: $40,000 (average for bottom quarter of hardware engineers, help desk/support staff, web/multimedia designers)

To: $136,500 (average for top 25 per cent of software architects)

Contract rates
From: $14/hour (bottom quarter of data record management staff)

To: $160/hour (top earning 25 per cent of software architects)