Part 2.1 Background - A matter of UK competitiveness

Operating in a truly global marketplace, the IT industry is characterized by tremendous change and growth: a £40 billion industry in the UK, expanding at over 10% p.a. More than a million people are currently employed as IT professionals in the UK; 45% within the IT industry itself, and 55% working in other industries. Soaring growth in the Services sector of the IT industry is driven by the e-business revolution, with employment having risen by 38% in the last year alone. There are no indications that this growth will slow in the near future. IT industry expansion, IT professional employment in other industries rising at around 8% p.a. and normal age-related attrition, mean that between 150,000 and 200,000 additional trained professionals are needed each year. Without UK-wide, industry-wide action to address this need, growth will slow and the UK will fail to reach its potential.

The Computer Services & Software Association estimates that IT skills shortages could cost the UK over £30 billion over the next 3 years, through constraint of the IT industry and in other sectors. 12% of current jobs are vacant, 90% of companies report shortages, and more than 1 in 5 are reporting lost orders as a result. CIOs are complaining that projects are delayed, and service levels compromised. Employee retention is a top issue. Skills shortages are inflating salaries, further impacting competitiveness. Typical salaries of IT professionals can range from £30-50K, compared to the UK average of £23K; salaries in excess of £100K are not unusual. But UK companies are now procuring skills in a global market; for example, certain technical support and software development activities can be delivered from other countries - such as India - almost as easily as the UK, and at a fraction of the cost.

Organisations are desperately seeking those with the skills to integrate existing systems with electronic business-to-business trading and business-to-consumer transactions. They urgently need those with the vision to develop new applications and exploit the Internet to reach new markets. Web technologists, networking specialists, e-business strategists and architects – most particularly those with a blend of technical and business skills - are in the highest demand. Continual development of the skills of existing workers to meet these needs is a top priority, alongside large-scale recruitment into new posts.

Employers' preferred recruitment pool is that of experienced hires – but movement between competitors will not solve the skills needs of an industry in such growth. Expansion of the recruitment pool from all sources is essential, along with rapid on-the-job skills transfer. For example, only 1% ⁴ of the annual 300,000 non-IT graduates enter IT-related careers, with vast numbers believing, often wrongly, that employers would not consider them due to lack of technical expertise ⁵ . Misperceptions about the nature of and skills required to be successful in IT-related jobs are unnecessarily limiting the number of quality applicants from all walks of life. This has led to women in particular being under-represented in the IT world, holding just 1 in 5 IT jobs.

The future of business is e-business. Organisations are grasping the significance of the advancements in mobile computing, wireless communications, and the speed with which everything is going on-line - transactions, content and applications. Pervasive connectivity will be a driving force of the 21st Century, with business competitiveness truly dependent upon e-skills. Success is going to those companies with access to the right people - the people who can make sense of this immensely complex environment, and use it to create and sustain real business value.

The current situation is unsustainable, and is a severe threat to the UK's global competitiveness across all industry sectors. Radical changes are needed to match supply and demand, both short term and longer term. Employers must co-operate to prioritise and articulate skills needs, and must work with government and educators to establish the required policy and skills development environment. Employers need a much larger recruitment pool of suitable staff. Companies and individuals need to be able to assess the value of qualifications and experience much more easily, and they need simple access to quality e-skills training. This is a world where new roles are born every day, and technological advancement demands constant re-skilling. Working together, leading technologists and business forecasters need to convey the implications of this changing world, so that society can be better prepared for the future than it has been in the past.

⁴ HESA First Destination Survey 98-99
⁵ e-skills NTO research into undergraduate misperceptions