A skills crisis in the software development sector could seriously damage the UK’s ability to compete globally, according to the second of the Microsoft-commissioned Developing the Future (DtF) reports published last week.

The IT industry is growing five to eight times faster than the national average and needs 150,000 new entrants each year. But the number of students taking A-level computing has dropped 43 per cent from 2001 to 2006, and IT-related degrees almost halved ­ from 27,000 to 14,700 ­ between 2001 and 2005.

Technology skills are vital to the growth of the UK as a knowledge economy ­ one relying on high-level skills rather than a manufacturing base or large pools of cheap labour.

At the moment the UK knowledge economy accounts for 41 per cent of gross domestic product, but the proportion is expected to rise to 50 per cent by 2010.
And without the right skills, the country will not be able to compete with overseas rivals. But it is not only established economies making the transition.

At the current growth rates China will surpass the UK in the near future, says Microsoft UK managing director Gordon Frazer, who is also a board member of sector skills council e-Skills UK.

‘The shift towards the knowledge economy in the UK presents great opportunities but we must be aware of the skills challenge,’ said Frazer.

The DtF warnings are not new. Only last month a government advisory group, the Information Age Partnership (IAP), released a report calling on government, industry and academia to work together to meet the needs of the EU i2010 knowledge economy agenda.

The IT industry does not simply need more people, says e-Skills UK chief executive Karen Price.

‘Whether I am talking to the IT industry or the chief information officer community, they are all telling me it is not the shortage of people but developing the right skillset to compete in the global marketplace,’ she said.

UK universities remain world-class at producing traditional computer scientists for research and development roles, says Price. But there are also vital non-technical requirements.

‘The new market opportunity is people combining business and technology skills and that is where the growth and skills shortage lies,’ said Price.

The private sector has a central role to play, says Paul Smith, managing director of offshore software development at recruitment consultancy Harvey Nash.

‘If each decent-sized company were to commit to providing excellent on-the-job training today, sponsoring students next year and working with a partner university on designing and funding a vocational course, the UK would be back on track in five years’ time,’ he said.

DtF recommendations include: a curriculum review of IT teaching in schools; encouragement to large software companies to enhance their education programmes; and pilots to establish how to form effective links between industry and academia.