IT skills: Finders, keepers for Canada’s public sector market
It’s widely accepted that government can’t compete as an IT employer with the private sector for both salary and stock option reasons. And demographics mean that any day now all the baby-boom IT staff will retire.
The collapse of the dot-com bubble in 2000 meant there were precious few replacement workers coming down the pike: any kid with half a brain dropped out of computer science, switched to geology, and is now happily roaring around the Tar Sands in a 4×4. (Oh, and we were only too quick to outsource all the IT jobs to India, ensuring that the up-and-comers knew their jobs were at risk.)
Is there a looming IT staffing crisis for the Canadian public sector? There have been more than a few headlines that sound exactly that alarm; it even makes sense at first glance.
In truth, reality is a bit more complex. For starters, there is nothing remotely close to a crisis at this time. Only last year there were more than 250 applicants for a single IT system management position with the federal government. And based on Deloitte research, we don’t see either demographics or educational enrollment causing a sudden IT skills shortage.
That being said, we also think that complacency in the ranks of public sector HR professionals would be a serious error. There is a crisis coming: slowly. But it isn’t due to the factors that most people think.
It is important to first understand a complicated dynamic that drives IT staffing issues between the public and private sectors.
There is no question that when the technology industry is enjoying frantic boom times, they have a tendency to suck IT professionals out of the public sector. Fuelled by venture capital and booming stock valuations, they can for a limited period of time pay salaries well above government levels, offer the promise of potentially millions of dollars from stock option profits and make employees feel like they are part of the “next big thing.”
The distorting effect on an IT labour market can be significant, especially within a focused geography. The most recent bubble (1999-2000), for example, saw IT personnel in the National Capital Region public sector specifically targeted by employers in the Kanata area.
However, these balmy conditions tend to occur about only three out of every 10 years. The other two-thirds of the time, private sector tech firms are only competitive with public sector employers, if that.
The retrenchment seen following the Bubble and September 11, 2001, meant that even some cash-rich tech firms were letting go of as much as 90 per cent of their work force.
Those employees didn’t (by and large) move to a different city or switch careers; in many cases, they went back to work for the public sector.
This pattern is not unique to the past decade: private tech firms and the public sector have repeatedly acted as offsets to each other through periods of boom and bust. If this dynamic has worked relatively well for decades, why should public sector professionals worry about it now? We think there are four main reasons:
- the nature of governmental IT staffing is changing;
- there is a secular trend that is gradually increasing demand for IT personnel;
- it is becoming increasingly costly to hire staff, lose them, and get them back, ad infinitum; and
- demographic changes mean there is a looming talent shortage that will hit the public sector first.
It is easier and cheaper to retain than to hire
Once upon a time, governments tended to follow sane procurement rules and standardize (and support) a comparatively homogenous set of platforms. There was a mainframe, a bunch of 3270 green screen terminals, some minis, maybe a client-server PC system, a single landline voice provider, and a single wireless provider.
If we arbitrarily imagine an IT staff of about 100 to support that system…and roll the scenario forward to 2007, we are confronted with a radically different IT ecosystem. There are a multiplicity of hardware and software platforms, multiple data and telecom vendors…ever different versions of the same OS running at different locations.
According to one provincial CIO, his entire IT department could spend 100 per cent of their time simply trying to stay on top of the various issues arising from supporting his employees’ PDAs and Blackberries. Meanwhile, of course, IT staffing budgets have been frozen or even shrinking for the last five years.
For decades, economists (led by Robert Solow) puzzled over the “productivity paradox.” Tens of billions of dollars were being spent on IT, all with a promise of high ROIs and higher productivity. But despite continuous and increasing expenditures from 1970 to 2000, there didn’t seem to be any commensurate improvements in productivity.
In the first 30 years of the IT revolution, certain industries were early adopters, and chief among them were the IT industry itself and the public sector. In fact, along with the financial services industry, the largest recruiters of IT staff would be technology companies and governments.
But now that the benefits of IT are being more widely recognized, industries outside of tech and public sectors are starting to increase the resources allocated to IT. This process is only gradually beginning to accelerate, but within a decade we expect that demand for talented IT staff will materially outstrip supply.
Calling it a crisis would be excessive, but there seems little question that, like all scarce resources, the cost of IT staff will go up even faster than it already is.
When you combine the longstanding tech-public sector habit of swapping employees with a secular global trend of greater competition for IT staff, you create the conditions for a very challenging hiring environment for the public sector. They do not want to get into a bidding war for workers, but neither can they let their employees be snapped up.
It is unacceptable for the public sector to resign itself to losing the most senior or valuable IT employees to the private sector. These employees have the critical skills and institutional knowledge and memory. Further, a continual process of employee turnover involves non-trivial hiring and training costs.
Thanks to various authors (with David Foote perhaps doing the most to popularize the phenomenon) we all know about the bulge in the population caused by the Baby Boomers, often defined as those born between 1946 and 1964.