Prospects for employment as an ICT contractor to the Federal Government have shrunk significantly since last year’s Federal election, as the Government continues to re-evaluate its IT spend, and its imposed efficiency dividend begins to pinch.
However Intermedium predicts the market is likely to pick up again next year as Government ICT activity accelerates.
There are two major factors currently affecting the Federal Government ICT Labour Hire market. The first is that the new government expects every department to cut expenditure by 2 per cent. And the second is that much ICT activity has been put on hold, with Minister for Finance and Deregulation Lindsay Tanner considering the report of Sir Peter Gershon’s independent review into the Australian Government's use and management of information and communications technology (ICT).
As a result, Intermedium research shows a significant contraction in the Federal Government ICT Labour Hire market during the 2007-08 financial year, with the average contract value substantially lower than in the previous year.
Intermedium’s Labour Hire Report provides a comprehensive snapshot of the Federal Government ICT market in the 2007-08 financial year, including information on IT contractors employed on a time and material basis. It’s a valuable source of information for suppliers and agencies, enabling them to:
Understand trends in the market
- Identify areas of potential skill set demand or shortage
- Monitor spending by agencies
- Benchmark their activities and performance about other agencies and competitors
And it includes some bad news for contractors, with the average value of contracts dropping from $148,259 to $135,681 in a single year.
“Entering 2008, there has been a prolonged pause in activity, coinciding with completion of programs at Centrelink, and scaling back by agencies such as the AFP,” says Intermedium Head of Research and Principal Consultant Tim Conway.
“The immediate outlook is for this low level of demand to persist until early 2009. This will put short-term downward pressure on contractor rates, and it is likely many skills in demand may shift to other markets in Australia or overseas. However, in early 2009, as the Government sets in train many of its election policy initiatives, demand can be expected to pick up, perhaps rapidly, with the result there may again be a shortage of key skills in the first half of 2009.
The problem facing the Federal Government is that the fall in demand for skills has been artificially induced, and may have perverse effects by exacerbating skills shortages down the track.