The growing trend for agencies to hire external ICT skills is one of the key features of the Federal Government market. This trend is driving strong growth in the Government IT Services market - almost 30% in the last 5 years.
According to Intermedium’s Labour Hire Report, the Federal Government let almost 800 contracts for ICT labour hire in the year to 30 June 2006. These contracts were worth $78.5 million.
However, whether this trend is a result of a skills shortage in the public sector is the subject of some debate. There have been mixed messages in the press recently about the availability of ICT skills in government, and in the market more generally, and about the level of ICT salaries. The Department of Defence has recently been under scrutiny for IT support problems caused by skills shortages.
In response to predictions of an ICT skills shortage, the Federal Government established an ICT skills and professional development taskforce 12 months ago with the aim of developing new recruitment and retention tactics to combat the looming shortfall in IT skills. According to Patrick Callioni, chair of the taskforce, the Government is not yet suffering a skills crisis. He was quoted recently saying, "We have issues, but we don't have a crisis.”
Mr Callioni added, “However, if we don't do something we will have a skills crisis in both the public and private sector.” He identified skills in IT security, project management, contract management and business analysts as those most needed by government.
The demand for skills is said to be driving significant increases in ICT salaries. However, the Australian Information Industry Association suggests that the salaries “war” is not as fierce as some reports would suggest. AIIA’s August Survey of Salaries and Remuneration Packaging in the Australian ICT Industry, forecasts salaries growth of 4.1% for 2006-2007 across the ICT sector.
The use of outside labour is widespread across the Federal Government. 40 agencies hired outside labour to supplement in-house IT resources in 2005-06. But the Government Labour Hire market is dominated by three agencies. DIMA, Centrelink, and Defence accounted for $46.4 million (58.8%) of the contracts (by value) let during the 2005-06 year.
Paxus, the largest labour hire provider to the Federal Government, is ranked number 8 based on the total value of ICT contracts signed during 2005-06.