EU investigate

Offshoring has fuelled IT skills crisis, say UK firms

The practice of offshoring entry-level IT roles is leaving firms unable to find experienced staff to fill more senior positions, according to a forum of major UK businesses.

Outsourcing of entry-level IT jobs has left UK businesses struggling to find staff with sufficient experience to fill senior roles, according to IT professionals at some of the UK's largest firms.

The domestic talent pool has been drained by the practice of offshoring entry-level and junior IT roles to lower cost regions over the past decade, said John Harris, chairman of The Corporate IT Forum, which represents some of the largest business users of IT in the UK.

"We've damaged our own pipeline. If you're a school leaver and you're looking at IT jobs and what you see is all the jobs dribbling away offshore you're not going to be inspired," said Harris, who is also VP for global enterprise architecture at loyalty management specialist AIMIA.

"As a collective industry, we let it go too far. We put some things out there that we shouldn't have put out there and in some instances have done so in a very crude way. I've seen lots of examples where we've just picked up jobs and a process, which wasn't necessarily optimal or working well, and shifted it out and said 'Keep doing that the same way we always did and do it cheaper'.

"We all look dreadfully surprised when five years later we need to find an [enterprise] architect. Where do we grow architects from? We grow them from our analysts. Then we realise 'Ah, we don't have many of those any more because we shifted them out'."

Harris was commenting on the findings of a report for the forum which found that 59 per cent, of forum members have been unable to find people with the right technical or business skills for an IT role.

Offshoring was seen as the biggest barrier to nurturing the next generation of IT professionals by about about one quarter of forum members surveyed.

The hardest jobs to fill appear to be mid-level roles that demand specialists with several years experience. The top five skills that businesses are struggling to find are for enterprise architects, product specific roles, solutions architects, application development and security.

The difficulty in getting on the IT career ladder in the UK is backed up by the report's findings that while the number of computer science graduates has been falling those studying the subject still face above average unemployment rates.

Between 2003 and 2010 the proportion of students learning computer science at university in the UK fell by 27 per cent. Figures released by the Higher Education Statistics Agency (Hesa) last year showed that six months after leaving university 13.9 per cent of computer science graduates were unemployed, higher than the 8.6 per cent unemployment rate among graduates overall. Hesa found that of those computer science graduates in work, 47.3 per cent were employed as IT professionals.

Overall demand for qualified IT staff, while increasing, is still far short of pre-crash levels and far below that at the start of the last decade. The annual Technology Insights reports by IT skills body e-skills UK show there were about 116,000 advertised IT and telecoms vacancies during each quarter of 2011, far fewer than the close to 200,000 IT and telecoms posts advertised in the first quarter of 2008 and the 350,000 posts vacant in the second quarter of 2001.

"There is a chunk of work that has been pushed out and it's going to be very hard to pull it back," said Harris.

But while it would be difficult to bring entry-level positions already offshored back to the UK, there are alternatives to offshoring that businesses should consider, he said.

By offering IT apprenticeships to school and college leavers Harris believes companies could afford to keep certain entry-level IT roles onshore, while also providing essential training and experience to apprentices.

"We need to get smarter at growing talent in a way that hits a certain price point and doesn't make outsourcing appealing," he said.

"There are some jobs and roles that today by default would be outsourced. If you had an apprentice programme and decided we're going to invest a small amount in growing folks out of school so they learn all about the whole scope of IT you could bring some of that work back onshore."

Apart from providing more opportunities for IT workers to get a foothold in the industry, the forum is also calling for a change in how IT and computer science is taught at schools and by industry, to place a greater emphasis on how IT skills can be used by business. The government is currently reshaping the ICT curriculum in England and Wales.

Harris said it was important for businesses and government to realise that improving the domestic IT talent pool should be a priority.

"What I'd hate is to find in three years time that that number [of domestic IT jobs] has dropped again and the reason is it was too hard to find the skills we wanted and we've got folks with the wrong kind of degrees out of work and we're bringing in folks from elsewhere. That would be a fail," said Harris.

About

Nick Heath is chief reporter for TechRepublic UK. He writes about the technology that IT-decision makers need to know about, and the latest happenings in the European tech scene.

36 comments
jkameleon
jkameleon

I'm in this field for almost 30 years. All this time, programmer/talent/skill shortage was touted as imminent, yet, it never really materialized. You can't find experienced staff to fill more senior positions you say? Well, offshore that too, together with management, and skill shotage shouting. Problem solved.

Jenny_Z
Jenny_Z

I think there is no correlation between outsourcing and local skill set loss if any. sounds like just blaiming someone. IT skill - just like any other skill - can not be tought externally or lost by someone's fault - this is something that depends entirely from each particular person and his decisions like to study new SDK or not, to study new technology or not and why blaiming others in this case?

dbcolo
dbcolo

I agree with the topic, it is what I can see. Good point is that you point it out. However, the article outlines any foreign resources as being "harmful". That should not be so when peoples educated abroad follow their careers in UK. Moreover, please figure-out that travelling time and cost between London and many European cities are close enough, that the sense of off-shore should be rethought for this problem. We are in 21st century, please. Also, some sense of enjoying European neighbourship would be welcome. BTW: the HESA report did not mention Poland, was it so irrelevant there?

&ltDTECH;
&ltDTECH;

This article holds a lot of truth behind the outsourcing story, and organisations. There could be a greater share of representation of the organisations from within by its own employed IT staff, and development would be at a faster paste if the right planning is taking place...to the writer I enjoyed reading this

cstrom2003
cstrom2003

Gee after more than 12 years of outsourcing and offshoring what did they think was going to happen? Seems top management in most companies never plan beyond getting their next large bonus for outsourcing and offshoring jobs. In the end all it does is wreck the lives of workers that are affected and drains the innovation out of countries where these companies are based. Oh well I guess they will be outsourcing CIO and CEO jobs now. All it has ever been is a race to the bottom for the cheapest wages.

Reality Bites
Reality Bites

Remember the corporate scumbags that outsourced and make sure they don't get any help or employee's. They deserve to pay over double for anything they get. The recruiters should double any fee and up all the incomes to make sure the outsourcing scumbags pay double what they would have. That way the cause of the entire mess the stupid accountant will lose his job. This is a chance get even with some of the corporations that wouldn't hire local. Put them out of business.

Snak
Snak

I mean, anyone with half a brain should have expected it. The savvy amongst us could see that as an obvious outcome from day 1. I fear for the future, when your politicians are evil devil-incarnates and your industry leaders are devoid of the brain it takes to sweep roads (no insult intended to road sweepers). Oh well. For the record, my sons are 30 and 28 respectively; one has a degree in Computer Science and they both have IT Skills honed from when they were toddlers. Not in the job market though - they work for themselves. So, with a lopsided, wry smile, I say to UK industry norks, reap what you sow - bleak, innit.

yennhile
yennhile

A dozen years down the line, we will find Object-oriented programmers are a scarcity. Tech support will have to be regionally re-zoned. Computer literates will speak more English than their mother dictionary can provide for a digital language. There will be more "project managers" not knowing technically what they are talking about, talking more and earning more, while the tech savy ppl doing more earning less.

reisen55
reisen55

The outsourcing of IT talent is not confined to the UK. IBM is decimating itself here in the US and why would any student coming into the field EVER consider it when firms such as that and others too - CSC, Xerox etx, will simply brain sweep you for knowledge and then can you for a replacement in Bangalore making $4 an hour. The field at the bottom dries up so growth to the top slows and, eventually, nobody has risen up. And the bottom is also empty.

Tony Hopkinson
Tony Hopkinson

It's bad enough MBA types intruding on techical decisions, now we find out they don't even know their own discipline, never mind ours. You don't need to be Alan Sugar to figure out if there's no demand, there's naff all point in supplying it do you? Course some of it could be addressed by dropping a few of the job requirements. Full head of non-grey hair Easily fooled Will work for peanuts Drop some or all of those and things won't be as crisised...

mjwagner
mjwagner

This is karma for businesses that did not have the vision to understand the long-term implications of outsourcing complex IT work that is often woven into the business via complex processes, workflows, and data integration.

Golfloon
Golfloon

If you look at the tasks performed by entry level staff from your first reference point 2001 changing back up tapes, checking log files, updating anti virus, building PC's and Laptops and first line support of a workforce where IT skills were at best patchy and hardware and software were less reliable. A dozen years down the line back up tapes are largely gone, log analysis aggregation and reporting tools are now at a price point in range of most SME's, any commercial Anti Virus product now comes with a console and management is by exception, desktop virtualisation and deployment technologies mean builds are down to minutes with no intervention from the builder and largely speaking IT literacy has improved hugely over the last few years so are we able to achieve more with less staff? The other thing likely to be impacting demand is the move from in-house IT, which required staff to look after a relatively small amount of infrastructure, to managed services where economies of scale mean that a lot of infrastructure can be supported by fairly small amount of IT staff. So is it the work that has gone offshore or has it disappeared for other reasons?

production
production

I'm glad to see the article. It should come as no surprise that in all aspects of business, having cost savings as the first qualifier results in lower quality performance across the board in every industry. As a freelancer, I've see companies who want jobs done on the wrong parameters and will hire the provider who will deliver for far less than the lowest hourly minimum in the "west". Ive started looking for work and often confront off shore screeners and robots that qualify on irrelevant issues or factors, Its not surprising positions go unfilled. Running business on a formula that doesn't include human capital coupled with an education void is destroying economies.

Richard Bishop
Richard Bishop

Dyalect's comment reminded me of the quote often attributed to John Ruskin. "There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man's lawful prey." In a dash to the lowest cost model, which incidentally isn't truly "low cost" due to the extra management overheads and the build up of technical debt; we've ended up with truly awful IT systems in some of our largest organisations. Unless something is done quickly to prevent parasitic practices in the IT industry, UK IT will go the same way as cotton, wool, electronics and car manufacturing.

Johny Morris
Johny Morris

Have we already passed the tipping point I wonder? I've not seen any, British, 20 something year old programmers on a client site in the last 5 years. Companies are not altruistic. They will not grow the next generation of workers for their competitors. Mind you they will try to poach the best of the deminishing pool of talent from each other, so good news for those of us already far enough up the ladder.

Dyalect
Dyalect

when you go cheap, you get a cheap outcome.

Tony Hopkinson
Tony Hopkinson

They are saying because they offshored, most people onshore decided that media studies, advertising, and honing their spinning plates routine for the next Britain's got talent series, would be a better career a choice. So far fewer have come through the ranks achieving skilled and experienced. This isn't blaming those who provide offshore IT, even less about blaming the people you provide. This is some day soon, they won't have anyone who knows how to manage and coordinate what you provide. Those of us who struggled through this period, are waiting to be asked, nicely...

Tony Hopkinson
Tony Hopkinson

it's offshore. While what and how certainly have an impact, the real problem is why. For almost all, the reason they did it was to cut costs. They didn't employ furriners because of their skills, knowledge, integrity, work ethic, blonde hair, high cheek bones, dusky skin, or epicanthic fold. They did it because they were cheap. While foreign resources are harmful is an accurate statement in this situation, it misses the point. The only people who get any real use out of it are nationalists and isolationists. The real problem is the UK industry found another supplier, better still they appeared to be cheaper, so they switched. Now they are looking for an alternative, or even just a bit of competition, they just noiticed their orignal one went bust. Don't panic mate, if they start addressing it tomorrow (if you believe that I have this bridge), you've easy another ten years, and all you are going to do is get more valuable.

Tony Hopkinson
Tony Hopkinson

If I cut the wage bill this dramatically, I'll get huge recognition, so share options, bonuses and promotions. Byond this excellent outcome, well who cares. Now I'm a top bloke, I can sell my shares before everyone else finds out it's gone nipples up, have a nice holiday and based on my rep as a highly successful manager, get another job and do it again.

Tony Hopkinson
Tony Hopkinson

You just described 12 years ago, things have got worse since.

Tony Hopkinson
Tony Hopkinson

I mean if the youth of yesteryear had anything about them. They would have worked for naff all for a decade, so they'd be ready and waiting for us old people to die. In fact the greedy unhelpful swines should have done this as a generation, so there would be loads of them giving the left side of the supply and demand it's proper supremacy....

kwickset
kwickset

A few years ago I was temping for a company. After a few weeks I was advised to die my hair to look a bit younger. When I suggested what they can do with their advice I got fired. Age discrimination has its price and this one cost them dearly.

Tony Hopkinson
Tony Hopkinson

If the latter weren't required the former wouldn't be an issue. Guessing you are on the touchy feely side of the job?

aidemzo_adanac
aidemzo_adanac

And I've already copied your quote from Ruskin to my "file of cool quotes". As a side note though, Britain's car manufacturing is a bit misunderstood. As you know every kid and his dad has had a backyard car they have designed and generally failed to bring to mainstream markets. There have been tens of thousands of car companies started in UK garages, while they still exist, the hope just isn't there for them anymore. On the other hand, when you look at major manufacturer's, Ford UK has engineered some of the best vehicles on the market for decades. They've been engineering and building in the UK for over 100 years now, VERY successfully too. I know there were closures and layoffs, but that was across the board for all major companies. When a small firm lays off 5 people because they have hit hard times, it's not news. When Ford lays off 1000 people for the same reason, the market has collapsed and is news worthy. However I think it comes down to size and scale, the two companies are still reacting the same way. The UK car industry is actually very strong again, Ford has FINALLY started bring UK engineering and build quality into North American cars, though at premium prices, but then again you get what you pay for and now we have well made European engineered vehicles in Canada again.

ray777b
ray777b

even for same salary , we spend twice the time in office, we don't complain about no saturday off. and we are 4 times motivated. i don't think outcome is cheap.

blhelm
blhelm

@Tony Hopkinson you and cstrom have it exactly right.  Corporatism, where the Big Government and Big Business collude to ensure monopolies proliferate and build the wealth, power and control in the hands of the few.

aidemzo_adanac
aidemzo_adanac

Don't flatter yourselves, it's not only an IT issue. I remember working as a sales manager in the 90's, when all the kids I used to beat up in school were all of a sudden cool and hip for once. Nerds became the needed elite, and a a result demanded top dollar for their supremacy. I always said that it would come to an end. As more and more people were buying computers at home and becoming more IT savvy, the bottom would fall out of the market if they weren't prepared to work for less. Because IT was initially something nobody knew about and creating new code was like being given a blank cheque, there was no way to determine value of services and thus, geeks were setting the bar, as high as they could. I had a friend who wrote a Python script the banks bought and he made millions INSTANTLY, literally one night begging for someone to buy him a beer and the next day ready to buy the bar. He sailed on for about 6 months until someone (locally) provided new scripts for less. He committed suicide the next day after losing his deal with the bank. It's just like an overnight rockstar sensation, rise and crash. I know this seems off topic but really it's the same thing with outsourcing. When an IT employee used to work for ridiculous amounts of money, the market fell and they weren't prepared to work for less and got laid off because someone else can do the job for less. Whether the quality is the same or not, North American consumers are cheap as hell and don't mind sacrificing quality for price (proof, WalMart, Black Friday riots etc.) People think they are actually being clever by being cheap, not simply wise with money or thrifty but EL CHEAPO ! I've said it here a thousand times, this topic never came up before, eventually IT will be a minimum wage role, like working in the mail room or taking phone orders for $10/hr. Why anyone would invest so much time, money and effort to learn a skill that rapidly ISN'T a skill, is beyond me. I have trades licences, thankfully not everyone at home wants to fix their own car or machine their own parts. When they do, I usually get the repair work anyway after they screw it up. But it's not a field of overnight successes. It's a union field where fewer people have the skills and those who are self taught cause more problem than they began with. You can't just find, copy and paste scripts from the web. IT was a dead end role before it got going. Remember when having A+ got you a job? Then you needed an MCSE, then a CCNA, now you need a degree in computer science to get even a half decent job, even then its a very competitive industry because everyone felt that simply upgrading certs would get them that million dollar start up role. Then again, a great deal of, the people doing it have no concept of business operations because business operations were as new to them as IT was to their employers. CHEAP outsourcing: Because people have decided that buying substandard crap from Asia is better than buying quality from North America for a few percent more, now even Canada is being flooded with bloody WalMarts (which, thankfully, often don't do as well here as in the US or aren't allowed to open at all in many cities). As a result, many good quality Canadian owned outlets are now closing the doors, even The Hudsons Bay company, which dates back WELL before WalMart, is taking a hit and has shut down Zellers (their discount outlets). What does all this have to do with IT outsourcing and lack of quality employees? Everything, because PEOPLE in North America have such standards and only want CHEAP, not good, CHEAP. It's not just an 'IT' problem, it's everything company's make and consumers buy.

Tony Hopkinson
Tony Hopkinson

It's the mantra of all thos compaanies in the too big to fail category for starters.

aidemzo_adanac
aidemzo_adanac

I would have had a field day, followed by a nice holiday, after that one too! Well done.

Tony Hopkinson
Tony Hopkinson

who's that dumb. Given how often age discriminataion comes up, I probably need to get out more... My favourite, quite topically was from a recruiter. They asked me for my date of birth. They were of course well aware of the rules surrounding the use of this information. Apparently though it was nothing to do with wanting to know my age. It was to distinguish me in their records from all the other Tony Hopkinsons. The role was Database/designer programmer. So asked what they would do if they found another Tony Hopkinson born on the same date. Personally I think being able to ask that question and realise it's significance should have made me a shoe-in candidate, but there you go...

Tony Hopkinson
Tony Hopkinson

Something along the lines of amassing enough skills and experience to not have to do this sh&t no more, maybe. PS not my downvote...

Tony Hopkinson
Tony Hopkinson

Despite all the attempts to turn me in to a glorified clerk and pays me f'all since teh late nineties, I'm still here and still earning. Fortunately the people who'll sell you stuff to achieve this are liars and the people they are trying to sell it to, can't spell it, never mind do it.