Tech skills shortage: Report reveals extent of over-reliance on immigration

The tech sector was one of many caught out by the pandemic as border closures revealed an over-reliance on immigration.

IT firms, organisations trying to fill vacant positions in their IT department and startups have been scrambling to fill vacant roles over the past year.

Job-hopping is on the up, and the average IT salary has shot up to $119,442 vs the New Zealand white-collar average of $59,703.

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Our largest IT services firm, Datacom, recently said it had hired 200 new staff since January as Covid continued to drive a boom in cloud computing, and demand for advice about remote working – but also that it would hire another 250 if it could. The company had even turned to a programme that trains prisoners in coding to help top-up its funnel.

A new public-private report reveals the stunning extent of the tech sector’s over-reliance on migrants, and proposes a series of solutions.

It also says female, Māori, Pasifika and disabled people are under-represented in an industry “perceived as not welcoming, or not safe for diverse individuals”.

The “Digital Tech Industry Transformation Plan”, released this morning was produced by two industry groups, IT Professionals New Zealand and NZTech, and overseen by a steering group that included reps from MBIE and IRD, academics and private sector execs.

“Immigration is essential for a high-skills industry such as tech,” the report says. “However it’s currently at an unsustainable level – more than 50 per cent of new roles are filled via immigration.”

A level of around 20-25 per cent would likely be sustainable in NZ, it says.

But “In 2019, 4462 new IT jobs were created and 3683 visas were approved for IT professionals to immigrate to New Zealand, more than the total number of students graduating from tertiary study in tech qualifications combined.

“The evidence clearly shows that the Immigration system has become the first port of call for meeting skill needs for many companies in the tech industry. It is often seen as easier and cheaper than investing in upskilling domestic talent.”

There is too little domestic training, and it’s mismatched to skills in demand, the report says.

The report says immigration is important for fixing the skills shortage in the short term.TechNZ has noted that the Other Critical Worker visa is an option here (the Government recently declined to introduce a visa specific to the tech industry). However, employers including Vodafone NZ and Datacom have told the Herald they have only been able to import a handful of staff under that option, with requirements set too high. In June, Immigration NZ said only 15 highly skilled tech workers had come in under an Other Critical Worker visa.

The report says “there is no silver bullet” for the skills shortage and everyone must play their part.

“This isn’t a challenge that industry can expect the Government to ‘fix’. The Government can’t say it’s industry’s problem and others can’t blame the education sector. All parts benefit from the transformation and must work together to make it happen,” it says.

The report recommends 10 actions to boost tech skills in NZ.

A number relate to topping up the tech sector funnel through diversity (currently the tech sector has a notorious skew toward males, and low numbers of Māori and Pasifika – in part because of the “digital divide” that sees lower-income families with less access to digital technology. Lockdowns revealed some 200,000 Kiwis had no access to the internet at home at all):

• Action 1: A strong strategic focus on reskilling and upskilling
• Action 2: Rapidly expand pathway options to industry
• Action 3: Refine the Immigration system to be more targeted
• Action 4: Industry must step up and lead the transformation
• Action 5: Māori to be a crucial partner in skills
• Action 6: Expand the tech Story to a domestic audience
• Action 7: An All-of-Government strategic approach to skills
• Action 8: Increased support for digital tech learning in schools
• Action 9: Radically re-defined standardised job “roles”
• Action 10: Strengthen the tech sector through greater diversity

It says the immigration tap must be turned on again because cutting-edge firms will always need to recruit some offshore talent.

But it qualifies that “Over time, our industry needs to become less reliant on immigration and more prepared to develop domestic talent.”

Māori Digital Skills body proposed

And though there are already initiatives to diversify the local tech workforce -Datacom is also partnering with Te Wānanga o Raukawa, which offers online courses for Māori who want to upskill and enter the tech workforce, for example – the report says there needs to be more.

It adds, “It is essential any initiative to enhance rangatiratanga and mana motuhake opportunities, designed and progressed, are authentically led by Māori, within the context of by Māori for Māori.”

As a practical step, it recommends the creation of a new agency.

“Achieving this authentically requires the formation and operation of an independent Māori Digital Skills body focused on the digital technology sector and ensuring that equitable funding allocations and expenditure properly reflect the higher needs of Māori communities,” it says.

Industry must step up

Elsewhere, the report says the tertiary sector needs to do better. One of the problems is a paucity of flexible options for those who want to re-train mid-career.

And at lower levels of education, it says “An insufficient proportion of students are excited about digital careers in schools and this is resulting in fewer students with industry-desirable attributes choosing digital tech as a study and career option.’

But it also adds that “the industry must step up.” It says there needs to be an attitude change in an industry that is short on in-house training efforts – especially for those entering the workforce.

“There are often insufficient roles in the industry for recent graduates and new industry entrants, with the industry’s culture often leading to a hesitance to hire and develop those entering the industry,” it says.

The report is scathing about the IT industry’s hiring culture and its attitudes to the disabled, women and some ethnically diverse job candidates.

“The industry is perceived as not welcoming, or not safe for diverse individuals,” whom it goes on to say are under-represented in the tech sector and IT courses in tertiary institutions, based on stats collected by the Digital Skills Forum.

“There’s a perception of not fitting in or it being an uncomfortable place to work,” it says.

Another diversity problem “There is insufficient Māori, Pasifika and gender diversity amongst those entering tertiary study for digital careers leading to insufficient diversity in the industry,” the report says.

So what next?

Paul Matthews, the head of IT Professionals NZ and chair of the steering group behind the report, says the report, including its Skills Plan, is now with the Government, which will chew it over in the months ahead.

“MBIE has been engaged throughout the process and while it has been driven by industry, they are in support of the proposal,” he tells the Herald.

“The Skills Plan will form a cornerstone of the Digital Technologies Industry Transformation Plan so we expect that, post-consultation and subject to ministerial approval, the plan will become policy.”

Matthews adds, “Obviously it’s for Government to determine whether this would include the full plan, but we certainly hope and expect it would give the strong evidential basis of it.”

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