The UK is among the best environments in the world to conduct ebusiness, but unless the IT workforce is suitably developed the opportunity will be wasted, according to a comprehensive report on the country's technology skills.

More than one in three businesses have vacancies for IT professionals that they are finding hard to fill. And as offshore outsourcing trends continue, the situation will only get worse.

The IT Insight: Trends and UK Skills Implications report, published this week by industry skills council e-Skills UK in collaboration with analyst Gartner, is designed to provide a wide ranging picture of the current situation in the UK technology staffing market.

The report will be used as the basis for developing the Sector Skills Agreement to be established between e-Skills UK, the government and educational bodies, on how to take the UK forward.

The report examines a number of areas, including the need for highly-skilled IT professionals as well as basic IT proficiency skills among the entire UK workforce, and the impact of trends such as offshore outsourcing on the IT skills market of the future.

A huge number of people are affected by the need for increasing IT skills, Margaret Sambell, director of strategy for e-Skills UK, told Computing.

'What struck us is the scale of the challenge,' she said. 'We are not only talking about the 1.2 million people in the IT workforce who have rapidly-changing skills requirements because of their increasingly complex roles, but there are also 20 million people who use IT every day at work, and employers are expecting increasingly sophisticated skills among those people, not just the ability to use word processing and spreadsheets.'

The report's key conclusion is that the UK can no longer afford for technical and business skills to be separated.

'All business managers and leaders really have to understand IT and its intertwining with business strategy because it is no longer just the preserve of the IT department ? it is integrated throughout the business.

'There is a growing body of opinion that all board members should have had experience managing IT-enabled transformation projects because it is now such a fundamental component of running a business,' said Sambell.

Despite the economic slowdown following the collapse of the dot com bubble and the US 'war on terror', the UK IT industry is expected to continue to grow by between 2.2 and 3.5 per cent a year for the next decade, between five and eight times as fast as the average employment growth rate for the rest of the country's workforce, says the report.

While continuing growth is undoubtedly encouraging, it is crucial that UK IT staff develop the right skills to take advantage of the situation. Just over a third of the 3,200 businesses surveyed for the IT Insights report have vacancies for IT professionals which they find difficult to fill, and 42 per cent say this has had a material impact on their productivity and performance.

Despite an encouraging regulatory environment, Sambell believes the skills issues could stall the UK's performance against global competitors.

'The UK is lagging behind other countries in terms of ebusiness and trading online. We have one of the best environments in the world in terms of regulatory structure, broadband infrastructure and so on, but take-up is not as strong here,' she said.

The UK needs to look at how it develops complex strategic skills, such as project and programme management, if it is to make the most of its existing infrastructure and the growing trend to outsource lower-level jobs to other countries, says Sambell.

'The effect of offshoring is that entry-level jobs are fewer, but we have more jobs requiring business, client and technical skills.

'The problem is, it is difficult to progress people from entry-level to these roles without those lower-level jobs, so one thing we'll be focusing on is how we can accelerate that development and what mechanisms we can put in place to help do that,' she said.

It is not in the UK's interests to fight the trend to outsource some IT jobs abroad, says Institute of Directors senior policy advisor Jim Norton.

'We increasingly want people with more skills than just IT. So what we are seeing, and the report elucidates this nicely, is that basic IT stuff such as programming will get pushed out to India, but workforce numbers won't fall, assuming we can carry on filling the jobs requiring a higher skill level,' said Norton.

'There is a need to address these hybrid skills and find people who can act as translators between the technologists and the business fold because they speak different languages.'

e-Skills UK is to work with training providers, schools and universities to ensure a broader range of skills is incorporated into technology qualifications.

Changes in emphasis of technology teaching in schools will help broaden the skills base and address the IT industry's significant gender imbalance, says Norton.

'The question is whether we can take the pool of people we already have and motivate and retrain them,' he said.

'We can train the new generation by getting into schools, but we have a serious problem with retraining, partly because some people might not want to retrain,' he added.

The Department for Trade and Industry (DTI) and the Department for Education and Skills welcomed the report.

'It is a high priority for the DTI that the UK has the most competitive environment for IT skills,' said a spokesman for the DTI.

'We work closely with e-Skills UK and companies in the sector and across government to match IT skills to business demand. We are also working with industry to improve diversity in the IT sector, particularly the under-representation of women,' he said.

Richard Allan, Liberal Democrat IT spokesman, said: 'IT adds huge value to the UK economy, but only if businesses can access the right skills.

'Too few people at all levels of the workforce are being trained to a high enough level in IT,' he said.

'If we ignore this, the UK will fall behind in terms of competitiveness. But if we rise to the challenge, the investment will pay for itself many times over.'

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What happens next?

The IT Insights report was undertaken by sector skills council e-Skills UK, in conjunction with analyst Gartner, to establish a clear picture of the current state and future trends of the UK IT workforce.

The report will underpin the development of the Sector Skills Agreement (SSA) for IT.

The SSA plan was launched by the government in July 2003 to provide a means for businesses, sector skills councils, educators and government to work together to meet the changing skills needs of UK industry sectors. Once the SSAs are agreed by stakeholders in March 2005, they will begin to be put into practice.

The IT Insights report has isolated nine key themes (see below) to be discussed and incorporated into the final SSA.

e-Skills UK aims to publish the draft SSA for consultation over the coming month. The objective is to have an action plan in place by the end of March, says chief executive Karen Price.

'We are currently taking the nine themes, turning them into some clear objectives and coming up with what interventions need to be made to achieve them,' said Price.

'The objective is to have an implementation plan by the end of March where everybody is playing their part ? the government, educators and employers.'

Facts and figures

• 34 per cent of businesses with job vacancies for IT staff are finding them hard to fill
  
• 42 per cent of these companies say this is having a major effect on their operations; 76 per cent have had to delay the development of new products and services; 42 per cent have increased operating costs and 39 per cent are having problems meeting customer service objectives
  
• The UK IT industry will grow at between 2.2 and 3.5 per cent per year for the next decade, between five and eight times the country's average employment growth predictions
  
• Only 20 per cent of the UK IT workforce is female
  

The report identifies nine main themes:

• Over the coming decade significant numbers of people are needed each year, filling increasingly complex roles
  
• Skills in the IT workforce are changing rapidly with stronger demand for broader and deeper experience
  
• Action is needed to address the gender imbalance endemic in the IT workforce
  
• The UK has one of the best environments in the world for ecommerce, but this has not been matched by the level of uptake by businesses, government and citizens
  
• Business managers must be equipped to realise the potential of IT
  
• The vast majority of employees will need to be equipped with IT skills at a growing level of sophistication
  
• IT skills are becoming as fundamental as literacy and numeracy. Those who lack them will find their personal and professional lives limited
  
• Skills development needs require new delivery methods that integrate work-based, vocational and academic learning
  
• The private training industry alone will be unable to deliver the necessary IT skills. Unprecedented, government-enabled collaboration is required, with educators and employers working together in new models of partnership