Building Australian ICT skills
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1 Building Australian ICT skills Report of the ICT skills foresighting working group
2 ISSN Commonwealth of Australia 2006 This work is copyright. Apart from any use as permitted under the Copyright Act 1968, no part may be reproduced by any process without prior written permission from the Department of Communications, Information Technology and the Arts. Requests and inquiries concerning reproduction and rights should be addressed to: The Commonwealth Copyright Administration Attorney-General s Department National Circuit BARTON ACT 2600 Or posted at This report has been produced by the Australian Department of Communications, Information Technology and the Arts.
3 Building Australian ICT skills Report of the ICT skills foresighting working group in order to realise the predicted productivity benefits it will be necessary to support an appropriate level of investment in skill formation and in ICT related R&D The introduction of new ICT technologies involves an extensive learning process that generates significant knowledge and innovation... Forecasting Productivity Growth 2004 to 2024, DCITA, 2006
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5 Contents Executive summary...1 Key findings and recommendations...5 Industry leadership...7 ICT labour market intelligence...7 Upgrade of the IT Contract and Recruitment Association placement data collection...8 Access to information on ICT skills, occupations and careers...8 ICT workforce retention, retraining and up skilling...9 ICT workforce attraction...9 Research on ICT skills in schools...10 Background Building ICT Skills as a Strategic Priority Formation of the ICT Skills Foresighting Working Group...13 The Key Strategic Role of ICT in Australia s Economy ICT as a major driver of economic growth Technology trends The Structure of the Australian ICT Industry...18 Major ICT labour trends and issues ICT Employment The changing nature of ICT employment Demand for non technical ( soft or employability ) skills...27 Role of Education in ICT skills supply ICT skills development in schools...32 Career Advice Australia Role of the VET sector in ICT skills development...33 VET in Schools program...33
6 4.3 Role of Universities in ICT skills development...34 University ICT course enrolments...35 ICT graduate employment Articulation of course pathways between university and VET sectors...36 Skills development in the marketplace The role of employers...39 ACS ICT staff training survey Outsourcing and off shoring Skilled migration...41 Future ICT skills demand Challenges and issues in ICT skills foresighting Forecasting and technology trends ICT skills forecasting in Australia Modelling the future Current modelling...47 The future ICT professional...49 Conclusion...53 Appendices...57 Appendix A...59 ICT Skills Foresighting Working Group Membership and Terms of Reference...59 Appendix B...60 Overview of the ICT industry in Australia...60 Appendix C...62 Overview of ICT employment in Australia...62 Appendix D...73 Overview of ICT Skills Supply in the Higher and Vocational Education Sector...73 Endnotes...79
7 Executive summary
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9 Building Australian ICT skills Executive summary Targeted and decisive action is required to enhance Australia s level of information communication technology (ICT) skills and capability in order to maintain competitiveness and maximise the potential of ICT generated productivity growth across all sectors of the economy. Research by the Department of Communications, Information Technology and the Arts and the Productivity Commission has demonstrated that ICT has played a major role in Australia s productivity growth in recent years, highlighting its potential to support further sustained growth. Australia must ensure that these productivity gains are secured and built upon by increasing ICT labour force participation levels and building the ICT skills base. A highly skilled ICT workforce is the key to business productivity improvement through innovative use of ICT. This in turn provides businesses with the capability to compete successfully for export opportunities. The ICT Skills Foresighting Working Group, chaired by Keith Besgrove, Chief General Manager, Information Economy Division of DCITA, has analysed prevailing trends and identified a number of major inhibitors which threaten Australia s future ICT skills development, productivity gains and competitiveness. These are: inadequate coverage and access to quality data on demand for skilled ICT occupations; poorly defined systems of classifying occupational skills leads to gaps and inconsistencies in available data series; apparent declines in industry investment in workforce retraining and up skilling; flow on effects within the ICT industry of intergenerational social and demographic factors, such as the ageing workforce, changing workplace attitudes and generational patterns of work; outmoded and negative perceptions of ICT occupations and careers due to a poor understanding in schools and across the community of the diversity of ICT occupations and opportunities; evidence of a tightening ICT labour market and the emergence of recruitment difficulties for some ICT skills; falling entry level job numbers for new ICT graduates and a marked decline in ICT course enrolments in the university and VET sectors all suggest a declining pool of local ICT workers in the medium to longer term; the variable nature of ICT, over time and across industries, that requires ICT professionals to regularly redefine and reassess their roles, functions and skill requirements; and lack of multi jurisdictional cooperation in regard to the issues outlined above. Unless these issues are adequately addressed they will lead to a severe constriction in the supply of skilled ICT workers and increase the risk of sustained skills shortages. The recommendations in this report suggest key areas to be addressed by government, industry, and education and training providers. Working together to improve the way ICT is represented to parents and young people, to encourage higher levels of ICT workforce participation and to improve understanding of the nature of ICT related work throughout the economy.
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11 Key findings and recommendations
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13 Building Australian ICT skills Key findings and recommendations Industry leadership One of the major issues identified by the Working Group was the lack of public and private sector cooperation on many of the issues challenging the ICT industry. While a vast amount of data was available on the issue of skills across the ICT industry, there was no evidence to suggest it was being coordinated adequately or effectively. The recent participation Summit also came to the conclusion that efforts being made by individual organisations would be maximised if they could be aggregated and managed under a single industry leadership group. Recommendation 1 The Working Group recommends the formation of an industry leadership group to develop and facilitate improved ICT information and participation in ICT occupations and careers. ICT labour market intelligence There is currently a lack of consolidated useful data and information on ICT skills market intelligence. This, along with the poor dissemination of the detailed information which is available, prevents labour market participants gaining a well informed understanding of the ICT skills market and future skills demand. The Online and Communications Council and the PartICipaTion Summit also identified shortcomings in current statistical collections and access. Improved information on skills in demand and ICT occupations and careers are needed by industry, employers, ICT professionals, students and education and training providers. This information will enhance training and career planning, course and curriculum development, and assist government policy development. Recommendation 2 The Working Group recommends that the proposed industry leadership group take on improved market intelligence as one of its main activities and work with government to: assist industry to implement a national ICT nomenclature and job description framework consistent with the new Australian and New Zealand Standard Classification of Occupations (ANZSCO) occupational classification; and adapt and implement policies being established overseas to improve information on skills in demand and thereby assist government policy development.
14 Building Australian ICT skills Upgrade of the IT Contract and Recruitment Association placement data collection The IT Contract and Recruitment Association (ITCRA), in conjunction with Multimedia Victoria, has established an internet based data collection of IT placements with data supplied by 32 of its members. The data is currently published for Victoria only. However, with a relatively small effort the data collection process could be greatly improved to align the data with the new ANZSCO occupation classification and published for all states and territories. Recommendation 3 The Working Group recommends that the Australian Government fund the establishment of an open access National ICT Skills Tracking and Monitoring System based on the Multimedia Victoria/ ITCRA model. Any information collected should be presented in a manner consistent with recommendation four. Access to information on ICT skills, occupations and careers There is currently a lack of public access to data about the ICT skills labour market, largely due to the poor dissemination of the quality data already available. The new Skills Australia (web/online) portal being developed by DEST and DEWR appears to be the most obvious initiative to address this issue. The website will provide information on skill shortages, industry skill needs, future employment growth and education, and training opportunities across all occupations. It will include a specific ICT module. Recommendation 4 The Working Group recommends that the Australian Government work with key stakeholders to improve access to quality data and analysis on ICT skills and jobs by aggregating and maintaining weblinks and data on the ICT skills market. This would include analysis of ICT labour market trends and projections as well as information on career structure on an upgraded Skills Australia website.
15 Building Australian ICT skills ICT workforce retention, retraining and up skilling There is a perception that industry investment in ICT workforce retraining and up skilling has declined, but there is little data on this important issue for either the ICT industry or the broader ICT labour market. The combined impacts of the ageing workforce, changing generational patterns of work and the apparent failure of many employers to upgrade workplace skills could mean that Australia risks being unable to sustain key ICT based economic capabilities, operations and services in the future. Recommendation 5 The Working Group recommends that the Australian Government, in cooperation with industry stakeholders, fund additional research into staff retention, retraining and up skilling issues and practices. This could include: ACS and AIIA undertaking regular review of investment in and attitudes towards staff retention, retraining and up skilling as part of their regular surveys and consultations with members; CompTIA Australia, possibly through the new IT Pro Australia website, undertaking a survey into investment in and attitudes towards vendor training; and DEWR including questions in its ICT skills shortage surveys on employer investment in and attitudes to staff retention, retraining and up skilling. ICT workforce attraction The Working Group identified as a major concern an outmoded and negative perception of ICT occupations and careers, and a poor understanding in schools and across the community of the diversity of ICT occupations and opportunities. The Working Group concluded that there is an urgent need for action to address negative perceptions of ICT careers in the community which lead many young people and those who influence their career choices (such as parents, teachers, career advisers) to underestimate the opportunities available in ICT and thus to turn away from considering a career in ICT. Recommendation 6 The Working Group recommends that the Government work with industry, the education and training sector and State/Territory governments to re focus the way ICT is presented by: jointly funding, developing and delivering a National ICT Awareness Campaign consisting of a national communications campaign addressing negative perceptions of ICT and highlighting the opportunities and attractiveness of ICT careers; enhancing ICT careers promotion and outreach efforts to schools by leveraging the new Career Advice Australia (CAA). In particular this would include: forming strong links with the network of National Industry Career Specialists (NICS) and Regional Industry Career Advisers (RICAs); providing them with information and advice on the modern ICT workplace, jobs and careers and ICT skills in demand and in shortage; and promotion and marketing of the ICT module of the Skills Australia website as part of the above.
16 10 Building Australian ICT skills Research on ICT skills in schools The Working Group expressed concerns that the quality of ICT teaching in schools, and the outmoded image of ICT work presented, may be deterring students from considering ICT as an option for further study at university/tafe and as a career choice. This was an issue that also received considerable attention at the participation Summit. In particular the Working Group raised concerns about the teaching of ICT as a specialised subject in the later school years. The Working Group considered that the focus should be on teaching fundamental ICT principles, useful as a foundation for further study, rather than on specific programming areas. Recommendation 7 The Working Group recommends that action be taken to review and enhance the teaching of ICT in schools. The working group suggests that: government fund detailed research on school ICT teachers to assess the characteristics (e.g. gender, age), qualifications and challenges of ICT secondary and high school teachers; and ICT industry bodies and leading ICT vendors work with education agencies and professional bodies to assist and support school ICT teachers and teaching staff in universities and TAFEs.
17 1 Background
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19 Building Australian ICT skills Background 1.1 Building ICT Skills as a Strategic Priority Building and maintaining a sustainable and world class ICT workforce and ICT skills base is necessary to meet the current and future needs of the economy and ensure that Australia continues to achieve strong productivity, economic and social benefits from ICT. As part of its fourth term commitment the Australian Government recognised the need to support future economic growth by addressing Australia s growing demand for skilled labour and the challenges of skills shortages and mismatches. Research by the Productivity Commission 1 and the other government bodies 2 predicts future declines in labour force participation as the Australian population ages. Increasing labour force participation through ongoing skills development for young and prime age workers, and ensuring older workers maintain their skills and employability are a major priority. In its 2004 election policy statement, Information Technology: Connecting an Innovative Australia, the Australian Government highlighted the reskilling of ICT workers as an important issue. Furthermore, Online and Communication Council Ministers 3 agreed at their August 2005 meeting to collaborate on a more coordinated approach to Australia s ICT capability, particularly ICT skills, and to improve the quality and range of key data 4. These commitments recognise that Australia faces an ongoing challenge to ensure that the available ICT workforce is in line with the changing needs of the ICT industry as well as industries across the Australian economy. 1.2 Formation of the ICT Skills Foresighting Working Group In February the Minister for Communications, Information Technology and the Arts, Senator the Hon Helen Coonan, established the ICT Skills Foresighting Working Group to contribute to the portfolio s consideration of the Australian ICT labour market. The Working Group analysed the current trends and potential developments of ICT technologies, the applications of technologies, and their implications for the ICT workforce and its skills development. This included a review of the ability to accurately forecast future ICT workforce demand, the fit between industry skill needs and existing training, and possible options for better forecasting the future workforce needs of industry. Economic Implications of an Ageing Australia, PC For example: Workforce Tomorrow Adapting to a more diverse Australian labour market, DEWR Online and Communication Council is made up of Federal and State Ministers responsible for Information Technology. Joint Media Statement, Twelfth Ministerial meeting of the Online and Communication Council, 24 August 2005: p.2 Building Australia s ICT Capability 5 Media Release, Building future skills in Australian ICT, February /media/media_releases/building_future_skills_in_australian_ict2
20 14 Building Australian ICT skills The Working Group focused on ICT skills development directly related to the ICT industry as well as the ICT skills needed in other industries in the economy. However, the Group did not concern itself with broader basic ICT skill levels required in business, government and by people in the Australian community. In addition, issues such as off shoring and skilled migration were not given detailed attention as they were areas which fell outside of the Working Group s terms of reference. The members of the Working Group as well as its terms of reference are provided at Attachment A.
21 2 The Key Strategic Role of ICT in Australia s Economy
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23 Building Australian ICT skills The Key Strategic Role of ICT in Australia s Economy 2.1 ICT as a major driver of economic growth There is a strong consensus both internationally Organisation for Economic Co operation and Development [OECD] and in Australia that ICT is a major driver of economic growth and productivity, principally through its capacity to enhance efficiency and innovation. ICT provides the communications infrastructure and the means to access and store data and to manipulate it to provide information critical to business, government, research, education and community operations. Innovations using ICT that capture, transmit and display data and information electronically have become a central ingredient to the growth of national productivity. Over the past two decades, up to 85 per cent of productivity growth in the manufacturing sector was due to technology, of which ICT was a significant part. 6 Recent research by DCITA, Productivity Growth in Service Industries 2005, has found a strong correlation between productivity growth and ICT use and intensity. ICT intensive services that have experienced high productivity growth include communications, electricity, finance and wholesale trade. ICT transformation and innovation is a broader social process encompassing technological, organisational and cultural change. The DCITA commissioned study Achieving Value from ICT: Key Management Strategies demonstrated that regardless of the business size, organisational structure or industry, those that combine their ICT investments with good management practices achieve the greatest value from their ICT outlays. The essentials of good ICT management consist of being ICT aware, possessing a strong change management philosophy, a strategic organisational culture, and providing effective leadership. The rising role of ICT in economic activity has made it critical to the achievement of Australia s national goals, for example, future economic growth, national security, dealing with demographic change, environmental management, education and health. As ICT is a collection of many constantly evolving technologies, the continuous process of technology migration and the emergence of new solutions require frequent renewal of the economy s technical know how. 2.2 Technology trends Business demand for ICT and ICT innovation are interdependent, and ICT take up, infrastructure capability and level of integration in turn influence the adoption of other ICT technologies. Current ICT technology trends can be grouped into those related to infrastructure and those related to the business enterprise. Infrastructure technologies experiencing the highest growth are broadband networks and wireless systems, which form the communications backbone of business enterprises. Achieving Value from ICT: Key Management Strategies, DCITA data/assets/pdf_file/25466/achieving_ Value_from_ICT_ _Key_Management_Strategies.pdf
24 18 Building Australian ICT skills Enterprise technologies that businesses are investing in are those that run applications internally and manage linkages with other businesses, such as e commerce and supply chain systems (e.g. Enterprise Resource Planning). Developments and improvements in core ICT technologies such as processor speeds, miniaturisation and bandwidth are fuelling rapid changes in the capabilities of the communications platforms and the services they provide. For example, digitisation is blurring the boundaries between communications infrastructure and services such as television and telephony. Devices which attach to these platforms, such as 3G mobiles and games platforms, are acquiring functionality which cuts across traditional industry distinctions. ICT is facilitating change in business models and allowing new business models to emerge which have implications for skills demand. For example, the customisation of software is reportedly declining in favour of proven off the shelf business processes. 2.3 The Structure of the Australian ICT Industry The Australian ICT industry is a source of internationally competitive products and services that contributes to a significant percentage of productivity growth across the Australian economy. In the value of Australian production in ICT goods and services by ICT specialist firms is approximately $48.7 billion, of which $2.9 billion was ICT goods, $16.5 billion computer services and software, and $29.3 billion telecommunication services. More detail is provided in Attachment B. ICT Research and Development (R&D) is also important to future economic and employment growth. Most sectors of the economy spend a significant portion of their R&D effort on ICT R&D (Table 1). This figure as high as 77 per cent in the finance and insurance sector. The supply of high level research skills is a fundamental input to the success of industry research and these skills are most fully developed by post graduate research training.
25 Building Australian ICT skills 19 Table 1 Industry ICT Employment for Industry Sector Aug 2005 Number employed % share ICT Capital Expenditure Share of Industry Sector Expenditure (%) ICT R&D Share of Industry Sector R&D Expenditure (%) Mining Agriculture, forestry and fishing * Transport and storage Manufacturing Construction Retail Trade Health and community services np Wholesale trade Accommodation, cafes and restaurants np Property and business services Personal and other services np Government administration and defence Education Cultural and recreational services np Electricity, gas and water supply Communication services Finance and insurance All industries Source ABS collections. Notes *: Data not collected np: Data not published
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27 3 Major ICT labour trends and issues
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29 Building Australian ICT skills Major ICT labour trends and issues 3.1 ICT Employment In February 2006, Australia employed approximately ICT practitioners across all sectors, representing 3.6 per cent of the total workforce. The Australian ICT industry accounts for some 40 per cent of ICT professionals. The remaining 60 per cent are spread throughout ICT user industries across the economy. This reflects the development of a broader ICT capability, greater reliance on ICT based services and integration of ICT in virtually all economic activity. Intensive ICT user industries include the communications, electricity, mining, manufacturing, financial services and services sectors (Table 1). More detail is provided in Attachment C: Overview of ICT employment in Australia 3.2 The changing nature of ICT employment The roles that ICT professionals perform are becoming increasingly diverse and cause constant change in the job tasks within ICT occupations. The work of an ICT professional can now encompass: management of significant ICT contracts with major vendors; development of application oriented solutions; implementation, management and support of ICT systems; and selling of ICT products and services; and undertaking consultancies. The skills required vary considerably. They range from very specific in depth technical knowledge and expertise to others where broader technical ability is needed alongside good interpersonal and project management skills. Converging technologies and capabilities driven by ICT, and consequent changes in markets and business models, is continuing the rapid and spreading adoption of ICT technologies by business and governments. Distinctions between old and new economies are now blurred as many older industries are becoming hybrid industries with a strong ICT dependence. It is increasingly difficult to distinguish between ICT service and hardware providers and companies providing specialist electronic hardware or software solutions. For example, in the areas of robotic equipment or toll related financial services the outputs are predominantly ICT based yet wouldn t be considered as ICT output in the traditional sense. As ICT is increasingly embedded in all aspects of business and government operations, ICT professional skills and competencies are becoming core elements of many occupations. This trend has increased the need for a clear understanding of the fundamentals of business and markets as a necessary part of the ICT professional s skills. As ICT professionals now work in multi disciplinary teams dealing with complex problems, they also require problem solving abilities, negotiation skills and a capacity to understand the needs of customers and project colleagues.
30 24 Building Australian ICT skills Figure 1 seeks to illustrate the multiple career pathways and influences on skills supply for the ICT workforce. Figure 1: Key Pathways and Influences on ICT Skills Supply
31 Building Australian ICT skills Demand for ICT skills Figure 2 shows the indexed long term employment growth of ICT professionals compared to all professional occupations and all occupations. It demonstrates the significant growth the ICT profession has undergone since Figure 3 shows the breakdown of this growth amongst the three largest ICT occupations and demonstrates that computing professionals have had the most substantial increase. Figure 2: Long term employment growth for ICT Professionals*, compared with Professionals and All Occupations: 1986 to Professionals ICT Professionals All Occupations Aug-86 Aug-88 Aug-90 Aug-92 Aug-94 Aug-96 Aug-98 Aug-00 Aug-02 Aug-04 *Source: ABS Labour Force Survey IT Managers and Computing Professionals (DEWR trend data)
32 26 Building Australian ICT skills Figure 3: ICT Professionals Employment February 1996 to February ICT Professionals 150 Computing Professionals Computing Support Technicians 25 Information Technology Managers 0 Feb-96 Feb-97 Feb-98 Feb-99 Feb-00 Feb-01 Feb-02 Feb-03 Feb-04 Feb-05 Feb-06 Source: DEWR 2006 In the lead up to 2000 (Y2K) ICT employment was driven by the pressure to upgrade computer software combined with strong growth in ICT investment by communication service and the finance and insurance industries. Also in 2001 the world wide ICT industry suffered a sharp contraction in demand in many markets and this led to a substantial restructure of large international firms such as Nokia, Motorola and Ericsson. Australia felt some of the repercussions of this development. Following a strong period of growth between 1994 and 2003, the slowing of demand for ICT products and services led to a levelling out and then fall in growth of professional ICT in February The strong rise in the past year has taken employment of ICT professional to a new Australian peak with ICT professionals employed in February There are many and varied reasons for skill shortages in ICT. In particular the demands for specific skills related to specific technologies can happen with both new and outdated technologies. A sudden lack of employees with skills in new technologies can outpace the supply if enterprises and governments suddenly adopt new technologies and their applications. Equally, businesses using older ICT technologies can sometime find the recruitment of practitioners difficult because the needed skill sets are becoming rare. Several technologies are often employed to develop a solution, and increasingly they are being combined to inject innovation into products and services provided by older industries and other fields of research. Many industries and areas of research are becoming increasingly dependent on the advances in ICT to support their leading edge research and applications. For example, the convergence between nanotechnology, biotechnology, information technology and cogitative science is widely acknowledged as an important area of research which is expected to yield significant innovation.
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