Downward pressure on information technology (IT) salaries, longer hours, more outsourcing and more ‘creative’ employment contracts; on the face of it there’s limited good news about the employment outlook for the Asia Pacific information technology industry in 2009. Many crystal ball gazers expect a stormy 2009 for the IT industry.
But there is a positive flip side, a silver lining to the dark cloud.
‘Business-minded’ IT decision-makers will face greater demand for their skills, and, while it’s definitely an employers’ market, senior, experienced ICT executives will continue to be sought after.
Valued middle order IT experts can also expect to receive increased professional training as enterprises strive to develop and hold their best people.
Robert Walters (RW) has something of an upbeat outlook in its latest 2009 salary survey.
Quick recovery in Asia
“As 2008 drew to a close, the general sentiment among retail, logistics, software, storage, consumer electronics, systems integration and financial services organisations was unanimous,” the RW report states. “Asia will prove to be the region to recover most swiftly and deliver consistent growth and business expansion opportunities.” For Hong Kong, RW believes that by the second half of 2009, the IT employment market will be ‘showing clear signs of re-stabilising’. The firm also makes some interesting observations relating to the slump.
The report states that “within the financial services sector, candidates with strong technical competency, coupled with expert business knowledge, will be highly sought after”.
“Equities trading knowledge will also be popular with an increased demand expected for IT professionals with knowledge of derivatives pricing and risk calculation.”
RW believes that a new generation of information security and control practices will follow the current reform of the global financial system.
“This will lead to an increase in demand for candidates with a combination of IT expertise, banking operations knowledge and the ability to define and implement robust control processes,” the report states.
Not the dotcom
Roger Olofsson, associate director, with RW’s IT specialist recruitment division, says the retrenchment exercises in this financial crisis have seen smaller number of IT professionals being let go, as compared to the 2001 dotcom crisis.
“At this stage, we do not think the IT market will go down as far as it did in 2001, which was primarily driven by the dotcom bust and the telecommunications downturn, culminating in the 9/11 event and the SARS outbreak in 2003,” Olofsson says. “Hence in comparison, the current environment is certainly not as bleak for professionals in the IT space.”
He sees opportunities where senior expertise is needed because of key IT initiatives that have been committed and for major systems implementations in the ERP space, plus large-scale integrations due to company mergers.
Olofsson believes some of the senior staff (program director, program managers) might be offered contracts rather than permanent employment. “We anticipate the employment landscape may be reshaped to a certain extent where a larger percentage of opportunities will be contract-based, even at a senior level, and will involve jobs that are traditionally permanent,” he says.
China’s weaker hiring
Global employment services provider Manpower says overall, hiring expectations have weakened in seven cities and five industry sectors in mainland China for the first quarter of 2009. Employers in Shanghai, Beijing and Guangzhou are reporting their weakest hiring intentions since the regional analysis began in the first quarter of 2007.
Lucille Wu, managing director of Manpower Greater China, says the global business downturn and decrease in exports have made Chinese employers more cautious about adding employees.
“However, people who possess senior management skills needed by companies are still in high demand,” Wu says. “Under such circumstances, companies could utilise a more flexible workforce such as temporary staffing and part-time labour to manage employment costs and hiring risks, enhancing the ability to resist external changes.”
Recruitment process outsourcing firm Alexander Mann Solutions (AMS) believes the demand for senior IT specialists in the Asia Pacific has remained relatively strong during the current financial crisis.
James Mendes, the AMS managing director of Asia Pacific, says in tough economic times, successful companies seek ‘rainmakers’ in all areas of their business—top performers who can come into a role, motivate staff, generate cost efficiencies and develop revenues, to move the company forward.
Mendes says the overall job market has tightened. Companies are seeking more ‘bang for their buck’ and tend to focus more on detailed screening and assessment processes to ensure they find the ideal candidate for each role.
“Senior IT professionals in the Asia Pacific, with experience in cost savings, offshoring, running strategic partnerships and the ability to directly impact revenue, will continue to be in demand in 2009,” he says.
Companies are now also working hard to retain staff and to take care of top performers. “Times of turmoil create a great deal of opportunity for headhunters, so it’s important to secure key talent as they are the ones who continue to have options and opportunities to explore,” Mendes says. “Leadership teams play a significant part in the retention effort, communicating with staff and focusing on talent management.”
This AMS MD says forward-thinking companies will be looking at ways of enhancing their existing workforce by investing in training and development.
“The effects of this approach are far-reaching. Investment in employees increases engagement and staff retention, reduces attrition, and provides capacity for competitive advantage when the economy begins to gain momentum once again,” he says.
“Asia is viewed as an incubator for some of the world’s leading executive IT talent, and is a ‘happy hunting ground’ for many global organisations. While the levels of demand seen in 2008 are unlikely to continue, 2009 will continue to provide good opportunities for leading executive talent.”
Our sister magazine CIO Asia’s recent annual ‘State of the Asian CIO’ research, which attracted responses from some 250 executive leaders across the region, also found some relatively cheering news. Nearly 43 per cent of respondents indicated they planned to increase their IT headcount in 2009. More than a quarter (28 per cent) expected their tech staff numbers to remain unchanged through 2009.
Less that 10 per cent of the movers and shakers who responded to our survey indicated they expected to have to cut IT staff numbers.
However, there is so much global uncertainty, says Egon Zehnder’s head of technology and communications practice, Asia Pacific, Nick Chia, that it is very hard to predict Asia Pacific IT recruitment, employment and salary trends. Nevertheless, he says the demand for “business-oriented” CIOs and IT leaders remains strong and “we expect that trend to continue”. Chia’s view is that IT decision-makers must be able to communicate a compelling business case that ‘non-IT leaders’ can understand and support.
“You cannot rely on efficiency and cost reduction as being the sole benefit IT provides. IT must be an enabler and driver of business strategy, growth and profitability,” he says.
There will definitely be continued downward pressure on salaries, Chia says, as companies try to become more efficient.
“This will impact some in-house IT jobs but could benefit those IT professionals who provide services which reduce upfront or fixed investments such as software-as-a-service, business process outsourcing and shared service centres.”
Chia says large corporations were now looking at ways to streamline their operations, and so much of that involves IT, either relating to automation or in finding different ways of serving customers.
“For instance, some of our clients are using Web 2.0 tools to enable end-users to help themselves, thus reducing the cost of supporting them,” he says. “There is also always the option of cutting IT employment in-house and getting someone else to run some or all of your IT operations for you. We are hearing a lot of talk about additional outsourcing and creation of shared services structures across large divisions or lines of business, with many companies choosing to headquarter those functions in Asia.”
Shift to Asia
In recent months, there has been a “surprisingly sharp spike of IT skills flowing into Asia due to the financial crisis in the US and Europe”, according to observers who should know.
Egon Zehnder’s Chia advises IT decision-makers to “work harder as well as smarter” and to become lateral thinkers.
“We will all have to put in more hours to get the same output as there will be more competitors, fewer resources, less patience to wait and limited pricing power,” he says. “You need to pedal faster just to keep up with everyone else who is just as motivated as you.
“Think laterally. If you’ve always been an in-house IT architect, don’t assume your next job has to be in the same area. Consider moving to a vendor and selling IT services to companies.
“Think about working for a consulting firm, advising on IT architecture. Be a freelance consultant tied to a network of other freelancers, working on a virtual basis. Volunteer your skills to build visibility. If you’re between jobs, help at a non-profit or non-governmental organisation so that you get to network with movers and shakers in your community, and can add tangible projects to your CV.”
Demand for skills
Korn/Ferry International’s managing director for Singapore and Indonesia, Gerard Chai, says although the IT employment environment will “remain difficult”, there is still demand and a shortage of skilled people in selected areas.
“We see opportunities in financial services, logistics, the public sector and healthcare,” Chai says. “Industries that will scale back their IT recruitment include manufacturing, retail, hospitality and transportation. “We expect companies to make an effort to keep their most effective employees yet at the same time weed out non-performers. Companies will reorganise to meet the changing environment, adopting a more regional or global platform. Some companies will also make a stronger push towards outsourcing or adopt the ‘software-as-a-service’ model”.
Leon Hendra, division manager for Robert Half Technology (RHT) Tokyo, says the economic downturn has had “a direct and significant impact on IT recruitment especially at a senior level over the last six months”.
“With a lack of new initiatives, division and project management roles have dropped off significantly,” says Hendra.
“Coupled with a higher than usual number of senior candidates looking for roles due to layoffs and instability in the market, this has turned a normally candidate-driven market on its head.
“In many cases, this situation has lead to clients increasing the level of minimum requirements that they will accept in applicants as well as trying to keep offered salaries as low as possible.”
Hendra says that despite this, there is, as always, a market for the top-tier professionals and clients are still willing to pay a premium to secure them. Senior IT professionals looking for new opportunities in 2009 will be expected to demonstrate a wide range of understanding, covering multiple disciplines and offering prospective employees an effective cost-reduction strategy.
“Regardless of industry, thorough companies will look to reducing the number of permanent head count on their books and instead, bringing in contract professionals or outsourced solutions,” he says.
Kenneth Hung, managing consultant, IT&T, Hudson Hong Kong, says that, unfortunately for Hong Kong, IT has been one of the worst-hit areas as companies look to reduce costs and people. Hung says if there were 100 solid jobs last year, there are probably around 50 solid jobs this year.
“There will be a tougher interviewing process to ensure the right person is recruited, but there are still solid and good jobs here for the right candidates,” he says.
“Some companies are looking to get more out of IT in an economic downturn in order to create more efficiencies and productivity from the organisation. Therefore they expect more from IT and more from IT employees.” Hudson’s general manager, China, Raymond Wong, says the financial crisis has forced many IT multinationals to shut down or reduce their number of employees in China.
“According to the strategy adjustment and cost control plans from headquarters in US or Europe, many IT companies in China now are reducing their employees, freezing new headcount and salaries,” Wong says. “Employees who would look for other opportunities have now decided to hold on to their current jobs due to the uncertainties in the market.
“To cope with the current global financial meltdown, companies in China are cutting daily expenses such as laying off employees, re-organising the business structure and reviewing their investment plans.”
Wong says the Chinese government has rolled out its largest financial stimulus package with US$586 billion to spur domestic demand and boost the slowing economy.
“How this amount will really boost the domestic economy is really something that Chinese companies are waiting to see.”
A Hong Kong government spokesperson tells MIS Asia that the IT sector is a vital contributor to the economy.
In 2007, Hong Kong’s total expenditure on in-house research and development (R&D) activities in IT amounted to US$335 million. This represented an impressive growth of 26 per cent over 2006 and 49 per cent over 2003.
One estimate, by the Vocational Training Council in 2006, put the total number of employees engaging in the principal lines of IT occupations at nearly 65,000, representing 1.4 per cent of total employment in the HK economy.
“Clearly, the year ahead will be a challenging one for our business community, including not least IT operators,” the spokesperson says. “In anticipation of the possible slowdown in overall economic activity, Hong Kong companies can be expected to be more stringent in containing their staff size and other expenses.
“The longer-term prospects for IT nevertheless remain bright, as the strategy of leveraging on the fast-growing mainland economy as our immediate hinterland pays off, and as productivity uplift, brought about by the restructuring process towards a knowledge-based economy, continues. With sound fundamentals and flexible market institutions, Hong Kong is expected to recover swiftly once the global economic environment improves.”
In some more heartening news on the employment front, a December 2008 survey, by the Singapore infocomm Technology Federation (SiTF), found that 60 per cent of the Lion City’s ICT industry companies are forecasting positive profit growth for 2009.
The survey also showed that organisations will continue to hire this year, with half of the infocomm local enterprises (ILEs) and one-third of multinational corporations (MNCs) indicating their intentions to do so, especially in the areas of sales and marketing, IT and engineering. Half of Singapore’s ILEs plan to continue with their overseas expansion plans, in spite of current economic conditions.
“It is heartening that the Singapore ICT industry will continue to grow and hire this year, considering the economic climate,” says Tan Yen Yen, chairman of SiTF. “However, the impact of increasing business costs is a valid concern and this is an opportune time for companies, especially those in the SME sector, to adopt infocomm technologies to reduce costs and increase efficiency.”
The SiTF survey found that the top business cost concerns for both ILEs and MNCs are rent, salary and transportation. Travel is the first area where they will look to reduce costs. MNCs are least willing to reduce spending on training, an indication that the downturn is an opportunity for workers to upgrade. “The government should put greater focus on market creation during this tough period and continue to promote Singapore as an ICT hub, data centre and regional HQ,” Tan says.
“It is important that the total value of setting up operations in Singapore vis-a-vis cost of operations remains attractive for foreign companies. SiTF would also like to appeal to the government to accelerate plans in implementing projects and explore new areas of investment, such as green IT.”
A spokesperson for the Singapore government ‘CIO’, the Infocomm Development Authority (IDA), says that “the impact of the current economic slowdown worldwide and in Singapore will no doubt affect the infocomm industry”.
“With the economic downturn, companies are reviewing their IT spending and rethinking their business strategies,” the spokesperson says. “The economic outlook for Singapore remains uncertain in 2009 and similarly, the outlook for the infocomm industry.
“The focus for IDA in 2009 will be to deploy our resources and efforts to help sustain and grow our infocomm industry and manpower during the economic downturn. IDA will continue to work with the industry to invest in innovation and capability development, including infocomm manpower training and skills upgrading, so as to take advantage of opportunities when the economy recovers.”
According to Yeo Gek Cheng, director, IT&T, Hudson Singapore, 2009’s first quarter will be a key determinant of what the recruitment market will look like for the rest of the year.
Yeo says Singapore, like many Asian markets, is still short of top talent and while the financial turmoil impact might make it less of a shortage situation, it does not change the situation fundamentally. Good candidates will always be in demand.
Revenue generation first
“Any IT role related to revenue generation will be a priority whereas IT roles classified as cost headcount will be scrutinised,” she says. “Lean and mean is the way to go. Aggressively pursuing ASEAN markets outside of Singapore, to boost revenue, will also come into play.”
Yeo says recruitment cycles come and go. “The dotcom bomb and SARs took their toll for a total of three years and the market came back up beautifully after that,” she says.
Her key advice? Focus on building skills and experience as well as keeping industry network and contacts current. Let the market ride out this particular down phase.
Dr Lee Boon Yang, Singapore’s minister for information, communications and the arts, says: “Globally, there is increasing demand for infocomm talent—people who possess both the technical skills and the business knowledge. He was speaking at the Singapore Computer Society Gala Dinner and IT Leader Awards 2008 ceremony.
“The next generation of infocomm professionals has to possess more than just sound infocomm skills,” Dr Lee says. “They must also be well-equipped with domain knowledge of different businesses to be able to offer solutions and services primed to the needs of each specific business environment.”
Patersons HR & Payroll Solutions global human resources director, Martyn Puttick, says the market is still very active and the demand for good quality senior IT staff remains very competitive.
Retaining good staff
“With the financial turmoil and resulting need to shed staff, companies are retaining the good staff, if at all possible,” Puttick says. “Due to this, salaries have not yet been affected.
“By Q2 in 2009, we feel the demand for skilled IT staff will slow down and the market will be saturated with a broad range of IT skilled staff. This will drive down salary expectations and potentially the types of contracts offered.”
Puttick says there seems to be an increasing trend towards more creative contracts that give employers a lot more flexibility in the type and length of employment.
“We feel this will become more common as employers will look for reduced financial commitment to new staff,” he says. Senior IT staff with a good reputation in the market will not be affected. However, within certain sectors such as banking, retail and manufacturing, the need for senior IT staff will see a dramatic downturn with companies consolidating and centralising services.
“We may even start to see a trend to outsource IT services that will reduce the need for skilled IT staff even further.”
Higher level IT management skills are still the ones in hottest demand, agrees John Brand, research director with Sydney-based IT industry analyst firm Hydrasight.
“We still see a significant need for security and identity professionals and a ‘variable’ demand for architects, but we are seeing some drop off in demand for lower level programmer and junior developer roles,” Brand says. “Senior developers and experienced project managers appear to continue to be in strong demand. CIOs are specifically concerned about knowledge and skills retention for their organisations. However, the recent softening of the global economy appears to have made them more comfortable with the ability to retain and even re-recruit from alumni.”
Growth in the region
IT consulting and project management services firm, PTS Consulting, still forecasts growth in Singapore and across the region. It is looking to recruit experienced technical project managers to manage large-scale corporate relocations, data centre and business integration projects.
PTS Consulting managing director, Ben Watson, says that, with both front and back office staff reductions, the number of IT support personnel required will inevitably fall. “Existing staff will be required to be a lot more flexible in the work they deliver and the location from which they operate,” Watson says.
“The financial services industry sector is seeing continued growth in the China and India markets and experienced international resources are in short supply in these regions. Businesses may therefore encourage staff to relocate.” He says that this year, and the last three months in particular, have redefined employees’ sense of loyalty, security and, perhaps, their estimate of self worth.
“With global institutions such as Lehman Brothers collapsing, employees have had to question the security of their current positions and are less inclined to view their current employer as long-term,” Watson says.
“Merger and acquisition activity will no doubt increase as struggling businesses are sold off and snapped up by competitors.
“Senior executives with experience in integration, consolidation and divestments will continue to be in high demand, as will those who can demonstrate a track record of delivering cost savings and value to their organisations. Senior IT people with experience in managing change, consolidation and integration, will be sought after as businesses will be relying on experienced practitioners to help them weather the financial storm.”
- To those currently employed, now’s the time to deliver more value with less. Be very aligned to the pulse and strategic goals of the business and be open to new solutions and cheaper alternatives.
- To those thinking of making a move in these turbulent times—stay, focus and commit. Take the time and opportunity to upgrade your skills and knowledge.
- To those looking for employment, be flexible. Don’t be too caught up on the size of the compensation package. Show that you’re a team player and have a positive, confident attitude. Demonstrating that you have the right competencies and can deliver success is crucial.
Patersons HR & Payroll Solutions advice
- Consolidate support services and ensure full utilisation of staff.
- Use smart recruitment—take your time and look for the right candidate at the right price.
PTS Consulting advice
- Be positive: It’s not all doom and gloom: The current financial turmoil will create demand for change. The consequence of any change, whether that is expansion, downsizing, integration, consolidation, optimisation or even closure, is an increase in demand for those who can manage and implement that change. So be positive and focus on how you can contribute individually.
- Be realistic: The boom years have encouraged a generation for whom money was easy, jobs were plentiful and the expectations of employer and employee were perhaps misaligned. It is important to understand the direct value you add to your business and to be realistic about your expectations and sense of worth.
- Be patient: It is still early days. For many, this past year has delivered an almighty blow and most organisations are still picking themselves off the floor, and wondering what on earth hit them. It will take a few more months to unwind financial exposure and to fully understand positions of risk. Only then can more long-term strategies be established and implemented.
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