Skills File ? The skilling fields

Imagine if 90% of your IT systems fall over at the stroke of midnight, 31 December 1999. And when you look around for someone to fix them, there is no-one there.

What if you also have two major projects to implement - a new base currency and a major revamp of telephone dialling codes (again) - as well as being expected to increase productivity, cut costs and come up with new systems to support the business.

This could easily become a living nightmare. A major skills shortage is set to coincide neatly with the huge amount of work needed to make business systems millennium-proof.

'Anyone who remembers decimalisation in 1971 will remember the difficulties of updating computer systems then,' says Philip Virgo, strategic adviser to the Institute of Data Processing Managers (IDPM) and author of the 1996 IDPM IT Skills Trends Report. 'But decimalisation did not coincide with a cyclical skills shortage. The year 2000 challenge does, and will happen at the same time as the introduction of European Monetary Union (EMU).'

Virgo's report predicts not only a shortage but also an IT skills crisis over the next few years. It finds that the number of companies trying to recruit experienced professional IT staff - particularly from the under-35 age group - is at an all-time high.

'The number of jobs being advertised is now nearly four times that of the same period in 1993,' says the report. 'Meanwhile, the proportion of the professional IT workforce aged under 25 and 35 have both fallen.

The proportion under 25 is now 6.2%, compared with 9.7% in 1993 and 18.9% in 1987.'

The problem is caused not only by a fall in the birth rate, long predicted to hit UK business in the late 1990s, but by the cuts made in graduate training and recruitment during the recession in the early 1990s.

Other casualties of the recession are older, more experienced employees, who are tempted to take early retirement and are generally 'downsized' by their employers.

The result is that too many employers chase too few under-35 IT professionals around the marketplace. But the under-35s see an opportunity to make hay while the sun shines and auction their services to the highest bidder.

Tony Coombes, director of recruitment consultancy Software Personnel, says it was very similar in the boom times of the late 1980s. 'Requirements for contractors are at an all-time high,' he says. 'We find that some contractors are keeping three or four balls in the air at the same time, then deciding at the last minute which post to accept.

'Our average rates have risen from #1,092 a week in January 1996 to #1,158 in January 1997, with the biggest leap between December 1996 and January 1997.'

It's not just skills such as SAP, Oracle and Microsoft Windows NT that are in short supply, says Coombes. Rates for Cobol programmers, which had fallen to #600 a week, are now back up near the top of the tree. Contract staff who saw a fall in demand for traditional skills two or three years ago have seen a resurgence as companies try to address the year 2000 issue.

Changing skill-sets have added to the crisis. John Sharp, associate director with responsibility for recruitment and resourcing at CMG, says that some skills, such as SAP and Internet or intranet experience, are more difficult to find than others.

'Two years ago, you didn't have a problem finding network people,' says Sharp. 'Now, the network is a crucial part of business applications and Internet/intranet people are like gold dust. It's the very new and very old skills which are at a premium.'

A further issue is that in a seller's market, IT professionals can become more particular about the type of work they do. The best people are not going to want to spend their time fixing the year 2000 problem, as Paul Gibbons, training manager at software and services company ABS, points out.

'Good people are going to want more interesting work,' he says. 'There aren't enough people to work on putting things right for the year 2000.

Those who offer their services will become more choosy and possibly charge more money. That leaves an awful lot of medium-sized companies which will face a mad scramble at the last minute.'

But those companies which have begun to tackle the year 2000 issue may face other challenges in 1997. David Hutton, MIS manager at J F Renshaw, which manufactures cake covering ingredients, says his biggest problem is finding the right calibre of IT staff. This may not necessarily mean people with good technical skills, but those who have the ability to understand and interpret business requirements.

'It is difficult to find people with the right communications skills, not on a technical level but on a business level,' says Hutton. 'You also find, especially at a PC level, that there is a real lack of understanding about IT procedures - the fact that systems have to be stable and properly backed up.'

One reason for this shortage could be the emphasis on easy-to-use PC systems and toolsets, which encourage quick and dirty development with no understanding of corporate IT requirements. CMG's Sharp has also discovered a growing crop of time-wasters who claim a technical knowledge that turns out to be limited end-user experience.

As the skills shortage begins to bite, an increasing number of inexperienced practitioners are likely to jump on the contractor bandwagon. But are there other solutions that employers could follow, rather than bidding for a shrinking pool of experienced staff? The depressing answer is that it may be too late for many companies to make any sort of radical changes to their recruitment strategies before the real problems start.

But Virgo of the IDPM has some constructive advice. He suggests that companies start retraining end-user staff to handle the year 2000 problem.

By spreading out the work - which can be interminably boring - to a large group of people, companies can avoid the problem of employing a small group of highly skilled employees who are likely to jump ship for higher rates.

Another solution is to look again at IT staff contracts. The more difficult it becomes to find the right IT people, the more important it is to hang on to the good staff you already have, particularly when the organisation is investing in expensive training for highly marketable people.

One approach is to set up contracts with mortgage-style penalties for early opt-out. This means that if someone leaves a company after just a short time - less than a year say - then they should reimburse the costs of any training they have been given.

But CMG's Sharp does not believe this is the right way forward, even in the midst of a skills shortage. 'It is very difficult to hang onto your investment,' he says. 'But I don't think that punitive contracts work. Some companies tried it in the 1980s and it was a complete disaster.

It is much better to create an environment where people are happy to stay.'

Another lesson to learn from the boom and bust of the 1980s and early 1990s is to let people go in the most constructive way possible. As Virgo points out, the companies which downsized in the least humane ways are unlikely to entice those people back again. Those which handled the process sensitively will find it easier to bring the people who took redundancy back into the fold.

Organisations should also look at recruiting from groups of people who are more likely to be loyal to the organisation and to the locality, says Virgo. For example, graduates who lived at home while at university are more likely to stay put for longer.

Finally, organisations must think about how they can use their existing staff in a more effective way, instead of constantly chasing a limited number of people around the marketplace. Peter Brown of the Peter Brown Partnership specialises in helping teams of people to work together more effectively. He believes employers should do more to understand the competencies of IT people and how well they are matched to business goals.

'You see massive redundancies because companies have shifts in strategy,' says Brown. 'But it's a lot easier to change imperceptibly, over time.

Organisations should proactively say: "What is our business plan, what skills have we got and what do we need to do about developing the skills we need?"'

There is a great deal that companies can do to flatten out the skills shortage, particularly in the areas of graduate recruitment and highly focused training and retraining. They can also use people outside IT to manage large amounts of work, such as the year 2000. But there is no doubt that 1997 will be the year when a lot of IT managers' worst nightmares come true.