INFORMATION & COMMUNICATIONS TECHNOLOGY

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1 1 Professionals Australia Respect, recognition and reward INFORMATION & COMMUNICATIONS TECHNOLOGY PREPARED FOR MEMBERS WHAT S INSIDE: Current performance Future of jobs The outlook

2 2 Informer - Information and communications technology Information & Communications Technology Summary Information and Communications Technology (ICT) is one of the fastest growing occupations in the economy, with growth forecast to reach 2.5 per cent per year over the next five years, higher than the economy as a whole at 1.6 per cent. The sector continues to strengthen and demand for IT professionals is set to improve further, with ICT driving business innovations through intelligent data analytics and information management systems, and organisations positioning themselves for cloud-based advancement. ICT in the form of telephony and the use of tablet devices continues to drive streamlines business practices and modernised service delivery in the telecommunications, business, education and training, retail and entertainment industries. Digital technologies contributed $79 billion to the Australian economy in 2014, up from $50 billion in A recent report by Deloitte Access Economics found that employment in the IT sector is expected to grow from 600,000 workers today to some 700,000 by the end of the decade. Similarly, the Australian Workforce and Productivity Agency forecasts more than 33,000 new jobs will be created between 2012 and In spite of strong growth, some challenges remain for local ICT professionals if they are to differentiate themselves amid continued offshoring. In order for Australia to keep up with the demands of digital technology, local industries will need to focus on providing training and opportunities to graduate ICT professionals. Local professionals will also need to focus on skill development and specialisation in order to differentiate themselves from cheaper foreign workers and demonstrate their value to local businesses. Overview Professional roles in the ICT industry are many and varied. These roles include software and applications programmers, business and systems analysts, support and test engineers, database and systems administrators, security specialists, network professionals, telecommunications engineers, electrical engineers, multimedia specialists and web developers, sales professionals, managers and organisation analysts. The total number of ICT workers in Australia is over 597,000, of which a significant portion is comprised of professionals. The ICT industry makes up somewhere between 4 and 5 per cent of the total workforce and contributes as much to national GDP as the resources sector. Australia s ICT industry is the 14th largest in the world and fifth largest in the Asia Pacific. New South Wales and Victoria hold the greatest number of ICT workers, due mainly to the large available workforce and the tendency for businesses to locate their operations close to their major markets. The Australian Capital Territory has more ICT jobs relative to its population than any other state, driven by the large public sector in the region. A large portion of Australia s ICT workforce is made up of contractors, and the Australian public service is the Figure 2: Percentage of permanent ICT jobs in each state and territory Figure 3: Types of ICT work by state/territory Source: derived from CIIER data largest purchaser of IT contracting services. While the number of ICT jobs in Western Australia and Queensland has grown over the past five years, the workforce in these states still remains fairly small relative to their populations.

3 3 According to the Centre for Innovative Industries Economic Research (CIIER), ICT contributes 6.9 per cent to national GDP and generates $91 billion worth of revenue per annum. However, the contribution of ICT professionals to the overall economy is likely much larger, as their activity is spread across a wide range of other industries. Almost all industries require some level of ICT employment, with a large portion of this output not counted formally towards ICT. Because of its dispersion across the economy, ICT is particularly difficult for the ABS and industry bodies to monitor and compile key statistics. CIIER estimates that the industry s contribution could be as high as 10 per cent of GDP if indirect ICT contributions are included. This demonstrates the vital role that ICT professionals play in driving other areas of the economy. Current performance The industry has performed relatively strongly over the past five years, despite the effects of the global financial crisis. According to industry research firm IBISWorld, revenue in IT consulting has increased by an annualised 4.9 per cent over the 5 years through While ICT professionals operate in a wide range of industries outside IT consulting, the strong growth of this industry highlights the rising demand for ICT services more generally. While revenue has grown significantly, the labour force has also grown at a reasonable rate, rising by an annualised 3.2 per cent over the past five years. This growth reflects the rising uptake of ICT services, and the need for businesses to optimise their ICT operations. Employment IT Consulting Average Annual % Increase in ICT Professional Salaries by Industry Source: 2015 Australian Computer Society Remuneration Survey The 2015 Australian Computer Society Remuneration Survey Report produced by Professionals Australia has shown that average salary growth for ICT professionals has outpaced the Consumer Price Index (CPI). However, some areas of the industry have grown at a faster rate than others. ICT respondents employed in the business services industry enjoyed the highest average annual salary increases at 6.4 per cent. They were followed by education, at 4.6 per cent, which we also found to have the greatest annual increase in our 2014 survey. The computer services industry had the lowest average increase in salaries at 1.4 per cent. Overall, the strong salary growth across the industry reflects the importance of ICT professionals, particularly in business services. Source: IBISWorld

4 4 Informer - Information and communications technology Outsourcing Businesses across Australia are increasingly outsourcing their IT services, in an effort to focus on their core business activities. While larger companies have traditionally maintained in-house IT departments, the growing complexity of IT systems and their increasingly pervasive nature is driving companies to employ external consultants and managers, with in-house departments managing more basic operations. Technology is progressively being employed across the world to drive productivity and improve business outcomes, rather than simply being used in an operational sense. The rise of big data and the proliferation of smartphones have dramatically increased the breadth and depth of information available for businesses when making strategic decisions. ICT professionals are pivotal in collecting, storing and managing this data, establishing systems to integrate this data into other areas of the businesses, and deriving insights that are useful for businesses in guiding their decision making. The reliance on data insights is expected to increase further over the coming years, as new technology and competitive pressures force companies to seek out new ways to get ahead. ICT professionals are expected to benefit, and become increasingly vital to the success of businesses as more companies implement new technology to take advantage of the available data. The progression in the breadth of services offered by the industry will encourage growth through all sectors, with experienced professionals required to implement systems and less-experienced graduates required for operational roles. However, the outsourcing of some functional roles abroad will continue to place pressure on local ICT professionals. The challenge for the local workforce will be to differentiate their offering, providing tailored services that cater for the needs of businesses and individuals. Future of jobs According to the Australian Computer Society ICT is uniquely dynamic and will remain that way for the foreseeable future. Many of today s young people will work in jobs nobody has even heard of today. The world is currently in the midst of a golden age of technological advancement. The way people and businesses utilise technology has changed dramatically over the past decade, and this change is not expected to slow. The development of the ICT workforce will be integral to this process, with professionals required to develop new technologies and integrate these technologies into existing business models. The future of ICT jobs is also being shaped by growth in online commerce. According to IBISWorld, online shopping has grown by an annualised 16.5% over the past five years. To put this in perspective, this means that revenue derived from online shopping has more than doubled over the past five years. While growth is expected to slow to an annualised 8.9% over the next five years, this is still significantly faster than the rest of the economy. Additionally, many of the world s largest and fastest-growing businesses operate through online-only models, avoiding the overhead costs associated with a bricks-and-mortar business. Even among businesses with a physical network, a strong, user-friendly online presence can be critical to success. However, most small businesses lack the capacity to manage these operations in-house. As a result, outsourced ICT services and web development and hosting services will remain critical over the coming years. With more technological avenues opening up, and with technology becoming more prevalent across all areas of business, companies are seeking to manage their full suite of ICT operations through external contracts. While some larger companies are developing limited in-house teams, the larger trend is towards outsourcing to specialist providers. The Australian Workforce and Productivity Agency stressed the importance of investing in ICT if Australian businesses are to keep up with the digital age, stating that if Australia is to maximise the potential of digital technologies and the Asian century, it needs more people choosing IT as a career. The outlook The outlook for ICT professionals looks relatively bright, with businesses across Australia expected to ramp-up their reliance of ICT as their operations become increasingly digitalized. Gartner group, one of the world s foremost IT research companies, has made some bold predictions regarding the future of the industry. Gartner group forecasts that by 2018, businesses will require half the number of process workers and five times the number of digital workers. The cost of business operations is also expected to fall by 30 percent through smart machines and industrialised services. While these trends seem to suggest a likely downsizing in the labour force, ICT professionals will be in high demand as businesses look for skilled staff to implement new systems and steer the ship. In the short term, IBISWorld forecasts annualised revenue growth of 3.0 per cent over the next five years for Computer System Design Services and 2.6 per cent for Data Processing and Web Hosting Services. Weaker growth of 0.7 per cent is forecast for Telecommunications services as the declining popularity of some traditional services - such as home phone line rental - offsets gains made from new services. However, telecommunications service providers are typically highly diversified, and subsidise their revenue through a range of complementary services including network reselling, network operation and retail sales. As a result, telecommunications giants such as Telstra, Vodafone and SingTel Optus are heavily reliant on their ICT professionals in sustaining their diversified business models. Furthermore, the quality of networks is a driving factor behind the performance of all business segments, with consumers flocking towards better performing networks. Advances in technology and quality will be the major factor behind growth, as businesses seek to take advantage of new opportunities.

5 5 In the medium term, the Department of Employment projects the total number of ICT workers to grow by 9.4 per cent between and The greatest growth in professional employment will be for software and applications programmers, managers and business and systems analysts. A number of factors are driving demand for ICT professionals in the longer term including the NBN (requiring 16,000 to 25,000 personnel over 10 years), cloud computing, the expansion of e-commerce and e service delivery and the correlated need for data security, mobile technology and a continuing rapid rate of change. While the greater ICT sector is expected to grow from a revenue perspective, greater activity doesn t always equate to more jobs in all areas. IBISWorld forecasts a decline in jobs in the telecommunications services industry over the next five years. This decline is being driven by greater competition among service providers, with each provider trying to minimise costs and deliver value for customers. The introduction of the NBN and investment in 4G networks will tighten competition amongst network carriers, placing some pressure on employment. However, growth will be supported by technological advancement, greater network coverage and infrastructure upgrades. Over the longer term, improving technology will continue to drive the industry forward. Computer consultants are expected to be in high demand as businesses look for solutions capitalising on these advances in technology. The domestic industry is also expected to benefit, at least in the medium term, from data security concerns and privacy and surveillance legislation associated with offshoring data. While the offshoring of ICT roles is expected to continue to some degree, this will be mainly limited to operational roles. Professional and consulting roles will be more resilient, as the need to implement cutting-edge technology in business operations becomes more pressing. Opportunities:» National Digital Economy Strategy: the Federal Government has proposed a range of initiatives that aim to make Australia a leading digital economy by These move will create increased demand for analysts and testers over the medium term, and will make digital business more attractive throughout the rest of the economy;» NBN: construction-related services, and the design, building and maintenance of the NBN will require the rapid ramp-up of a design and construction industry by an estimated 16,000 to 25,000 personnel over the 10-year period of the project. This increase in employment will facilitate the rollout of fibre and wireless networks to over 10 million premises in 10 years. When operations, the NBN is expected to deliver a massive boost for the economy. For every ten percentage point increase in broadband penetration in the community, GDP increases by 1 per cent;» Cloud computing: forecasters suggest increased use of cloud computing in the medium to longer-term. This increase will drive a faster and more flexible economy, as businesses and individuals will be able to quickly share and access information and rapidly increase the scale of their operations;» Mobile technologies: mobile technology will continue to drive the sector over the medium-term, as businesses seek to take greater advantage of the unprecedented level of e-commerce;» E-commerce: Australian s are becoming increasingly comfortable doing business online. As more Australians shop online, businesses with client-friendly online platforms are expected to benefit;» Data/internet security: organisations will increasingly need to balance data access with security. The continuing trend toward online transactions and cloud computing will make data security all the more important, as the credibility of online data sharing is reliant upon the security of this data;» Business communications: businesses are moving a larger portion of their operations to online platforms, seeking to manage sales, conferences and client interactions online. Significant savings are available to businesses by managing their operations from a central head-office, communicating with clients online. This is likely to create demand for ICT professionals with experience in social networking applications who can integrate customer relationship management, web and internal communications; and» Rapid rate of technological change: businesses are seeking to prepare themselves for future technological change. As a result, there will be strong demand for new technologies and new ICT specialisations to keep up with rapidly evolving and updated hardware and software. This ever-changing technological landscape will require a broad-based commitment to ongoing skillsdevelopment of the local workforce.

6 6 Respect, recognition and reward ICT Informer Level 1, 163 Eastern Road SOUTH MELBOURNE VIC Sources: data/assets/pdf_file/0004/28570/ Australian-ICT-Statistical-Compendium-2013.pdf Addressing-ICT-workforce-challenges.pdf future_d2nc46aboykbbdwzcnwpnn dividends_as_ computer_1hczqrv94fkvjqozmzp0pn industries_5r7a7xxry3madkma9mrqxk to_asia_glsvvz0n1ochd0dorhmsqm employers-want-a-cheapie-just-arrived-off-theboat-aussie-it-workers-told g515.html html?rand= more_job_u9nlqs2jbcaeoi2fstmwvn IBISWorld Industry Reports: J5800 Telecommunications Services (May 2015), J5921 Data processing and web hosting services (July 2015), X0004 Online Shopping (July 2015), M7000 Computer System Design Services (May 2015).