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  • Industry, Opinion - Written by on Wednesday, December 4, 2013 14:24 - 1 Comment

    The Australian IT sector needs a stronger voice


    This article in relation to Delimiter’s call for an Australian technology policy think tank is by Matthew Griffiths, chief executive of Broadreach Services, a leading Australian dedicated video conferencing and digital media managed services provider. Griffiths has been an active participant across the tech sector in Australia for the past 10+ years, with involvement in the Commercialising Emerging Technologies (COMET) Program as well as in Commercialisation Australia.

    opinion The Australian IT industry has an image problem.

    The biggest issue we face is the misconception about the whole industry, particularly its size and impact. This is because it is largely hidden from view … the majority of employee in IT work as micro businesses, start-ups, and independent contractors, or in departments in other businesses (such as banks, miners, and government departments).

    The Australian Computer Society suggests that the ICT sector employs over 540,000 people in Australia, working inside over 30,000 businesses. Of the 500,000 employees, approximately 250,000 work in IT support functions in other industries.
    By way of contrast, the Australia automotive industry is easy to measure, highly visible, and easy to access (Ford, Holden, Toyota and then some parts suppliers). It is also extremely effective at lobbying, with measurable success.

    This is important with regards to government policy and thinking.

    Anecdotally, the government will pay approx. $30,000 to $50,000 to create or save each sustainable job. Thus 1,000 job losses in the Illawarra converts into a $30m Regional Investment Fund. Saving 3,500 jobs at Ford equates to a $103m subsidy on new product lines. On a larger scale, saving an 80,000 person auto industry (45,000 direct employees – including approximately 3,000 at Ford) justifies over $6 billion of subsidies over time.

    The IT industry in Australia is over ten times the size of the automotive industry.
    In terms of challenges and existential threats, there is also no contest – the challenges facing individuals and companies in the Australian IT industry are far larger.

    IT jobs can be outsourced (and offshored) at very little cost; efficiencies and new technologies cut swathes through the industry every few years. Skills become obsolete in years not decades, and to create a sustainable competitive position requires true innovation and competition in a global market. Partly as a consequence, the average IT worker is highly skilled, and retrains constantly … even so jobs are constantly under threat from new technologies and cheaper resources.

    In a recent ACS employment survey, almost 25 percent of respondents had experienced some form of unemployment in the past five years (9 percent in the past 12 months); over 75 percent worked over 40 hours per week; and almost three quarters believe they will need further significant professional development in the next one to two years.

    Just based on these ACS statistics, possibly 100,000 Australian IT jobs are “under threat” at any given time, with outsourcing, short term contracts, market testing, efficiency gains, and the uptake of new technologies all creating uncertainties in the market.

    As an industry, we have significant structural issues, and are also affected by a lot of the same issues Australian manufacturers care about; from a strong dollar, expensive labour, and cheaper competitors. In the face of this, the Australian IT industry innovates, retrains, and continues to grow — all without significant government support and subsidies.

    However, there are many areas for improvement; from under-writing angel investment and employee stock ownership plans in technology start-ups, and helping SME’s to access bank credit, through to accelerating technology innovation and adoption in the public sector (cloud computing, etc.) Australia could do a lot better.

    The call for a technology policy think tank is opportune and probably long overdue. The Australian IT industry is a massive industry, a huge success story for Australia, and well deserving of its own voice.

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    1. Peter Carr
      Posted 05/12/2013 at 10:37 am | Permalink | Reply

      I like the sentiment but hyper competition for every dollar (driven by our industry demographics) means we have driven our own cost-based grave. The collective “we” of IT are cannibals. And who trusts a cannibal?

      That doesn’t mean there isn’t money, investment, value and growth to be found. The fact that IT is in every industry also doesn’t mean there is a ubiquitous threat.

      It therefore also doesn’t mean there is a collective sector to support as the existence of multiple and disparate codified IT associations suggests. By their very charters they are self-serving to subcategories of “IT”.

      So which parts of the complex supply-chain need saving? Which parts get the investment funding? The part with the loudest lobby groups? How do you means-test an IP-based sector? Just blue collar IT jobs (typically those targeted for sourcing)? Why? Isn’t it white collar IT jobs that “create” value and long term economic benefit?

      And what’s wrong with sourcing whether its here or overseas? Doesn’t that ultimately help the organisations we serve? In terms of sourcing is it the value created by Australian IT workers for their employers or the high labour costs that is the bigger challenge for Australia?

      I’m not convinced any of the GMs, CEOs or other significant influencer roles I do or don’t support in business have ever differentiated. And the fact that there are only about half a million IT workers supporting all the companies in Australia means we are very short-staffed and resourcing will get even tighter. There is an equal argument to welcome outsourcing in order to drive economic growth by freeing up the valuable resources we have.

      Free market economics has always defined the sector and I think the debate will always be philosophical. Occasionally it drifts towards the ethical during low economic cycles. I also think a national IT think tank is a conceptually flawed idea, especially where “investment” generation would be its focus. We have bigger problems than finding money.

      Adoption of IT and not innovation is a far greater challenge for most companies today.

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