No Entry

With so many low-rung programming and maintenance positions being outsourced, what formal processes do our CIOs have in place for entry-level IT hiring?

Tim Catley emerged from a chemical engineering background to become the group IT manager for Nationwide News. Now, as he watches recruits at all levels and from many different disciplines carve out a niche for themselves within News's environs, he knows that while for now they remain oblivious to the possibility, some of them, some day, will become technology leaders like himself.

"These days, people going into the CIO roles understand pretty much an overview of the business. In some cases that's built on an IT-technical background but in many cases it's not. So in that sense, as it certainly was for me, I would think that there would be a very broad cross-section of graduates coming into businesses such as this who wouldn't have the foggiest idea that the CIO role in 15 years' time might be what they do," Catley says.

Yet it starts to look like many of those CIOs-to-be will weave as impromptu and ad hoc a course towards the CIO role as Catley did himself.

For instance, Nationwide News used to sponsor students going through the business technology course at Deakin University, and while some employees doing MBAs still do get a salutary stint in IT, these days the company has no formal program in place to groom IT graduates for the CIO position. And in that News is simply staying true to the wider trend. "We take in recruits at all levels from lots of different disciplines but there is nothing that is focused on running somebody through the organization to end up at the CIO level," Catley says.

These are uncertain times for government planners, would-be IT professionals and business. Some universities warn of looming IT skills shortages amidst definitive evidence of deficits in certain geographies, skill sets and sectors. Some employees or would-be employees decry the supposed skills shortage as a myth and demand to know why, if IT workers are in such short supply, the entire industry, or at least their part of it, seems to be confronting a "dead" job market. Some IT professionals languish uneasily out of work or are forced to take pay cuts, while employers struggle to fill key roles and Canberra loses a $10 million IT project because the Australian Taxation Office could not find 100 qualified staff in the territory to complete the job on time.

At the same time a steady rise in the number of temporary work visas for skilled IT professionals provokes ire and fears that unscrupulous employees might be leading a race to the bottom, in a period when, with IT careers clearly having lost much of their glamour since the heady dotcom days, application rates for IT courses are down even if enrolments - for a smaller number of positions than in the past - are not. In fact Catley's own son started first-year computer science two years ago and dropped out because it did not take his interest, making it a personal, as well as a professional, question for Catley at least.

As if all that were not enough to give any youngster contemplating an IT career - or, for that matter, an organization planning to groom a graduate or three for the CIO role - pause for thought, now we are following America in putting offshore outsourcing firmly on the agenda, at least in the financial services industry, as Australia's largest banks contemplate sending processing to India to cut costs. Factor in that where a decade ago business would routinely write its own software in the name of that elusive competitive edge but now is much more likely to buy off-the-shelf, and it becomes clear many green recruits today, far from starting off cutting code, can be expected to follow radically different career paths than those of yesterday.

"My biggest concern is that with some of these moves to offshore some of the jobs, especially in the development area, we will then see a reduction in the number of young people going into university doing IT courses because of the poor job market we've had here in the last three or four years," Insurance Australia Group (IAG) CIO David Issa says. "It's almost like we're getting ourselves into a cycle that if we don't have people going into the IT courses, we won't therefore in three or four years have graduates coming out that we can hire. Then we will have an acute job shortage and the only option will be to send them to jobs somewhere else, which to me is a shame in this country if we allow that to happen."

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While other companies have been hiring fewer new recruits over recent years, Issa is putting his CIO money where his mouth is. In Issa's first two years in the role, IAG took on 10 or 11 new recruits each year. This year the number rose to 15, and Issa says IAG wants to increase the number of graduates every year.

Other companies have been feeling more of a pinch and their hiring practices are reflecting that. For instance, AXA Australia used to take on six or seven new graduates every year. Now, with a major restructuring program completed that saw some work outsourced to an external company, that figure has dropped to just two or three a year. And CIO Wendy Thorpe says these days AXA is looking for recruits with strong BA skills.

"Our organization is now much more package-driven, so in terms of building things from scratch, which we used to do 10 or 20 years ago, we don't do so much today," Thorpe says. "We buy packages so you're learning how to adapt to those packages and use them efficiently from a business perspective. We're doing more in some of the newer technologies, which the kids today like - things like Java and the like - but some of the older languages, we're not doing so much of the programming of that in-house any more."

It's a sentiment echoed by Ron Sawyer, director of corporate services ITS at Monash University.

"Ten years ago we'd write a lot more software that we do now. We tend to buy packages now and configure the packages. We quite often need to buy interfaces for those packages to get them to integrate with each other and with the systems that we've already got," Sawyer says. "The [IT] role is now more a configuration and add-on role rather than developing products from scratch, so with the new graduate our main focus is on developing their technical depth and breadth and also on their customer service skills.

"Once they've been working in that role for a while, those that show promise, we train them up with staff supervision, give them some support and in some cases have them mentor or supervise a more junior person," Sawyer continues. "After five to 10 years we may get them to manage projects, starting with a fairly small project where they can learn project management techniques - client communication skills, how to do risk assessments focusing on projects. From there they may go into a service management role or take on larger and larger projects, or a line management role supervising a whole team."

Future Unpredictable

In such uncertain times, it is doubtful anyone can say with certainty how entry-level IT jobs are evolving. Will low-rung programming and maintenance positions become a thing of the past, as newly minted graduates pursue more specialized, business-oriented positions? What kind of opportunities will ensure businesses can pursue CIO succession planning with confidence and ensure a steady - if not robust - flow in the IT career pipeline?

When US CIO magazine began asking similar questions recently, its starting point was that most CIOs would be thinking about this, that some would be concerned, and at least a few would have strategies in place. As it happened, they weren't, and they didn't.

The story editor's explanation of why, after weeks of reporting, the magazine had no story: "Whatever concern some CIOs may have over not hiring people for entry-level jobs is, at best, wishy-washy and mostly lip service. They really don't care. There's some vague talk of creating new, entry-level-type positions in order to have a talent supply for the future, but no one's doing it; no one has concrete thoughts about how to do it, and no one is all that concerned about the future in the first place," their editorial ran.

"One CIO that our reporter talked to said she didn't need entry-level people. She'd fill her higher-level analyst positions by hiring talent groomed at other companies. Of course, this pragmatic strategy falls apart if the companies across town have CIOs who also don't need entry-level people.

"So who'll be hiring and breaking in the entry-level people who will eventually migrate to the companies that outsourced all their low-level jobs? Perhaps it will be the small businesses that can't take advantage of offshore economies because of their size, or maybe it will be the big outsourcers themselves - such as IBM Global Services," the editorial continued.

"So be it: The future of the IT profession resides with small companies and IBM. I'm not sure if that's a comforting thought. But you don't care anyway.

"Do you?"

Whatever the situation in the US, it would be unfair to claim the majority of Australian CIOs are indifferent to this future. Most of the CIOs we spoke to did have graduate recruiting programs, albeit at a significantly reduced level from the heady days of old; most had mentoring programs in place, and most were actively involved in grooming their future replacements.

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On the other hand, it is fair to say many Australian companies have been at least as good as US ones at poaching recruits from elsewhere rather than investing in new skills, an approach Issa points out is incredibly short-sighted. Issa sees little sign of a skills crisis in most areas of IT, if only because most companies have not been doing much at all over recent times, but says there are critical shortages in newer technologies like VoIP. However, Issa would never dream of just poaching those people from elsewhere, even if they were readily available. It is just not in his company's long-term interest, he says.

"You need to invest in people and give them the opportunity, which is what we've done here," Issa says. "We started a VoIP roll-out two years ago and now we've got people who knew nothing about VoIP two years ago but now have got just as much experience or more experience than anyone in the marketplace. Some people see that as: 'You will lose these experienced people to other companies'. I actually see it the other way around. My view is always that you give people opportunities and they'll stay. If you don't give them the opportunities they will leave and go where the opportunities are."

Nevertheless, as Issa points out, when there is a skills shortage, there tends to be a skills shortage worldwide - it is folly to assume you will be able to recruit at will.

But when it comes to the broader picture of grooming folk for the CIO role, it seems the current climate means CIOs see the future at best through a glass darkly, as it were.

That is not really surprising - after all, Australian Information Industry Association (AIIA) policy manager Michael Hedley says the current picture on skills and jobs demand is "very mixed".

"Is there a skills shortage?" Hedley queries. "Well the real issue, which we're trying to produce some work on, is the demand side, because unless we know what the demand is we can't really say the number of graduates coming out isn't at the right level at the right time."

To that end the AIIA is working with the Department of Communications, Information Technology and the Arts (DCITA) to examine trends and future developments in Australia's information and communications technology (ICT) sector and their implications for ICT skills development. DCITA's new Information and Communications Technology Skills Foresighting Working Group, on which Hedley sits, is analyzing emerging ICT requirements in the hope it can improve the identification of skills in demand and the options for training and other initiatives to enable more effective ICT skills development.

It is not a small ask. For one thing, Hedley points out, assessing demand is a bit like measuring that proverbial piece of string: simply going to employers to collect demand information is fairly useless, because most employers simply are not looking into the long distance. They have a pretty good idea of the new recruits they need over the next six to 12 months but beyond that the picture gets pretty sketchy, particularly in such an uncertain economic climate.

"The problem is that we have a short business cycle which runs alongside an academic cycle of three to five years," Hedley says.

And of course different companies are in different stages of their employment cycle, further complicating the picture. That makes other economic indicators important. For example, apart from a bit of a bump around the turn of the century, the long-term trend line in the growth of ICT employment has been pretty steady, suggesting the number of people employed in ICT occupations is still growing somewhere between 3 and 5 percent a year.

Further, Hedley says, things are looking up for prospective employees, with more jobs apparently on offer. Salary packaging remains pretty stable yet a small percentage of positions are proving difficult to fill, with CXOs complaining of the difficulty of hiring very senior major project managers and senior high-level account managers.

However, it is when you look at the changes in the types of people being employed that the picture becomes clearer. Demand for specialist ICT graduates - the honours students and those who have completed a masters degree, for instance - remains strong, particularly amongst companies with a computing engineering division involved in high-level research.

"Those top-level performers probably have three or four job offers in their second year or third year, so the demand for really good graduates is really there," Hedley says. "But for the rest, we are hearing companies now - because the focus is so much in Australia particularly on the business side, services side - are hiring from a wider graduate pool than before.

"One of the trends . . . we hear people talking about is that companies are certainly interested in hiring people with business experience. IT is something that we are having a bit of a look at. One of the things that has happened is that the majors have restarted their graduate hire and the graduate cadet programs, although probably not at the numbers that they used to sustain in the mid to late 90s."

"I think in today's market we're seeing that we need to find ways to get those guys in, to start to build up their skills and give them the organizational opportunities to focus on other areas of our business," says Dimension Data Australia CIO Paul Christensen.

In fact Christensen thinks his own pathway through the internal IT organization is worthy of emulation. He moved up to the CIO role after filling a range of different roles within both operational and administrative areas of IT within the development group. "That really allowed me to have a very broad look at the whole team and be able to say, 'Well, here's where we need to focus at an operational level, a general management level'; so it put me in good stead in terms of being able to manage quite a diverse workforce."

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Fast Track

Then there are changes in the quality of new recruits to consider. Christensen says he has noticed that these days new recruits seem to graduate with a much more encompassing appreciation of IT and a much broader skill set. For instance, where over the past 15 years many products were only introduced to people through their working careers, much of that is assumed knowledge for graduates today. He believes that may mean that many more new recruits will be positioned to take a fast track into more senior positions.

"I'm seeing tremendous compressions in time frames from the perspective that the rate of change is very, very fast - it's almost like they're cramming what they used to do in the year into a month. So I think that is going to accelerate careers but I also think that the industry won't tolerate the explosion we had in the late 90s with people jumping from university degrees to consultant levels in two years. There is going to be acceleration, but I think it's going to be a lot more structured," Christensen says.

Sawyer points out that not only is the CIO role these days very much more business-focused than it was in the past, there is much more politics involved than there was 10 years ago.

To help groom them for bigger and better things, Monash encourages promising project managers and section managers to undertake an MBA program, seen as an important step in moving towards senior management in IT. To prepare them for the political side of the role, Sawyer says, there is nothing like sitting on project steering committees alongside the business leaders within the university.

Others, such as AXA, run graduate rotation programs that give recruits a chance to rotate into different areas of IT every six months. And Thorpe says some IT staff have successfully applied for roles in the business areas. "[Recruits also] get involved with presenting to business managers about the things that they're working on and those sorts of experiences but we haven't transitioned across an organizational-wide graduate program at this stage," Thorpe says.

Some other companies are reducing their graduate intake while focusing on succession planning. For instance Munich Reinsurance Company of Australia general manager IT Udo Bauermann says his company takes on new recruits perhaps twice a year, and with much of the IT work done globally can offer them only limited opportunities. Still, recruits have the option of taking up roles in the business, and the company runs a management training scheme with the Australian Graduate School of Management.

"This is really an expensive thing we do but we know that succession planning is important, and my time here is limited anyway," says Bauermann, who is due to be recalled to Munich in two years.

The CIO who replaces him will, as usual, need to acquire a vast library of different skills before being ready for the job. It is just that the current batch of recruits will likely face a much more uncertain path to the top than even their predecessors did in their time.

SIDSEBAR: Grooming the Next Generation of IT Leaders

by Thomas Wailgum

Jeff Campbell is not your typical CIO. He didn't start off as an entry-level coder 20 years ago, grinding his way up through the IT ranks to the top spot. Campbell actually began his career on the other side of the cube wall, as a junior cost accountant for FedEx. His first IT job is his current one; in 2002 he became vice president of technology services and CIO at The Burlington Northern and Santa Fe Railway. Even so, Campbell is aware of how important it is to attract and retain entry-level IT staffers at BNSF in order to establish a firm foundation for tomorrow's leadership ranks - especially as the spectre of programming jobs heading offshore looms over computer science undergrads.

Campbell is concerned about the horde of baby boomers at BNSF who will be retiring soon. The average age of the company's non-union employees (half of Campbell's 1164 IT workers are non-union) is 45 years, with an average of 18 years at BNSF. "What's more alarming," says Campbell, "is that we're hearing that there won't be enough workers from gen X and gen Y to fill the baby boomer void."

BNSF executives have made talent development a top priority, and Campbell is no exception. He says his technology services group has a recruitment program that looks for prospects who have an understanding of core technologies and also know how to do project management and business process redesign, and can manage service-level agreements and determine ROI on IT. "But we haven't reached a point where we're finding [those skills] in the marketplace," he says. "So we try to infuse them here."

Prospects come in all shapes and sizes, Campbell says. There are interns, whom BNSF snags as undergrads; recruits from universities and job fairs; general marketplace hires; and transfers from BNSF's other departments. One of the ways BNSF "infuses" some of its new hires in technology services is by sending them through a six- to 12-month cross-functional training program. The Corporate Management Trainee program is for recent university graduates in the operations, engineering, mechanical, finance, marketing and technology services departments. The purpose of the program is to provide a source of future managers, support diversity goals and bring in fresh ideas. Trainees take railroad industry courses, meet with BNSF senior executives, receive new-hire orientation and work on railroad case studies.

Mark Lutchen, a partner in the IT business risk management practice at PricewaterhouseCoopers, stresses the importance of this apprentice-type IT career model that incorporates the other parts of the business. The benefit for CIOs is that the more steeped their staffers are in business knowledge, the more aligned IT will be with the business side.

Though Campbell is serious about grooming BNSF's future IT workers, he also believes in outsourcing; currently IBM Global Services is responsible for the railroad's mainframe and midtier computing infrastructure, and 40 percent of new application development is done by Infosys in India. This blended approach allows him to take advantage of outsourcing's cost savings while keeping a firm grip on the knowledge of in-house staffers.