talent acquisition metrics hiring-process

Australian Talent Acquisition Metrics and Analytics Alert

Is the Australian technology sector on the brink of a Talent Crisis?

No longer the underdogs.

For a long time, Australia has reveled in the underdog tag. If we weren’t in lockdown, and if the pubs were open, we’d be in them, talking about our brilliant performance at the Tokyo Olympics despite our small population. 

The same is also now true of our Technology sector. Atlassian, Afterpay, A Cloud Guru, Airwallex, and Canva have put us on the map in a global sense. No longer are we seen as just a gateway to Asia for the big companies looking to gain regional market share.

But whilst we pat ourselves on the back, some alarming numbers suggest that Australia’s ability to grow this sector further is in serious jeopardy.

The Tech Council of Australia reveals that “Since 2005, tech jobs have grown by 66%, compared to an average jobs growth rate of 27% across the economy.” Whilst this feels like brilliant news for our economy and tech community, it highlights the looming crisis that we face.

According to Linkedin, ~12% of the Technology market changed jobs last year against the 8.9% of all Australians who changed jobs. Yet, in 2020 the AIIA released a report stating that the average attrition rate was 21.7%. The correct number is most likely in the middle somewhere. 

The first 6 months of last year saw a high degree of caution in the market. It’s understandable, as job stability became the priority for most workers. But late last year and for 2021 so far, the market has been like nothing we’ve seen before.

How big is the Australian Tech talent market?

In conjunction with Horsefly Analytics, our Data partners, we studied the talent market across 94 role titles and skills. These were Software, Data, DevOps, Design, Product, and Cloud related. See the footnotes for the complete skill and role breakdown we used(1)

The World Economic Forums Future of Jobs 2020 report showed an increasing global demand for the roles and skills we collated. We took confidence from this that our thinking was on point for the sake of this discussion.

We found that the current size of the Australian technology talent market in the Software/SaaS space is ~350,000 people.

The actual number was 320,394, we rounded up ~10% because we know that not everyone maintains an active work-related social media presence. So it is not unrealistic to expect this number to be closer to 350,000.

5.7 Candidates per role.

At the time of writing, the volume of advertised roles across the major & niche job boards and LinkedIn for these skills totaled 60,579. 

Looking at this simplistically, this means there are only 5.7 candidates for every advertised role in the market. This number assumes that all these people are actively looking for new jobs, which is not the case.

The midpoint salary range was $117,106, with a low-end average of $60k and a high-end average of $187k.

On our nation’s largest job board, seek.com.au, only Trades and Healthcare & Medical have a higher demand than Technology. 

Breaking this down State by State, the raw supply and demand numbers start to look even more ugly for NSW & VIC.

3.8 Software Engineers per role.

As we dig deeper into the granular role level details, it’s clear that the more technical the roles are, the more sought after and therefore fiercely fought after they are.

When we look at the broader Software Engineering market, for example, the numbers remain eye-watering challenging. See the footnotes for the complete skill and role breakdown we used (2)

Even the well-established local technology employers such as MYOB, Carsales, Seek & REA Group find themselves competing like never before.

So save a thought for those businesses whose brand is not a prominent talent magnet or those without staff numbers at a level where they can leverage high volumes of employee referrals. 

The reality is that with 3.8 candidates for every advertised role, these businesses need to find different ways to compete and attract in an already small talent pool. 

Average advertised salaries remain relatively consistent, although anecdotally, we are hearing about more frequent cases of advertised and offered amounts differing. Again, supply and demand are at play. Multi offer scenarios will generally only drive offers salaries north. 

The supply and demand breakdown at a state level again reveals some grim numbers.

Diversity & Inclusion has long been a challenge within the technology sector and with the gender split currently sitting at 80/20 M/F, we see no immediate change to the challenges here.

Everyone wants to hire Senior Engineers.

In January this year, we predicted that the mid-level engineer market would be fiercely contested and that forecast seems to bear out. Senior-level engineers (generally) tend to be at an age where they carry more household debt and family responsibility, this (again, generally) makes them more risk-averse when it comes to career moves. 

The drop in university completion rates in the last year has slowed the already dwindling supply of new talent into the market. And with only 18% of the talent market having 3 years or less of commercial experience, the competition for the mid-range experience sector has been ferocious.

The traditional pathways into the Industry are stalling.

The Age reported in April that ” In January last year 30,000 international students poured through Melbourne Airport to prepare for the academic year on Victorian campuses. This January there were 70.” With overseas students forming such a large proportion of our overall student population, the longer-term effects of this are yet to be realised. 

Of slightly more concern are the overall course completion rates for Technology within the STEM category. The Department of Industry, Science, Energy & Resources website shows on their Equity Report page, that completion rates have only been increasing by ~1000 per year in the 5 years leading up to the Pandemic. 

So with only ~17% of total enrollments completing courses, we’re not seeing sufficient numbers of people joining the industry to balance the supply and demand challenges.

The traditional migration top-up has been put on hold.

Our migration partner and a national authority on Immigration and its workforce impacts, Jamie Lingham shared his thoughts on COVID’s impacts on migration. 

“Passenger arrivals have impacted the whole workforce and IT is not immune to this. There are some occupations that the Department has added to the Priority Migration Skilled Occupation List (PMSOL) but I am sure that from your perspective, this is not enough to manage the shortages.

We are finding limited success with bringing in people on 400 visas for short-term projects, in occupations that are not on the PMSOL, but this is only a band-aid solution, especially given that these are for projects that do not last for longer than six months and are not ongoing. Throw in two weeks quarantine and these people can only be active for up to five and a half months.

With passenger arrival numbers down to 3,500 with the Delta variant, we are not sure how long they will continue to remain at this level. Remember that we also have 35,000 Australian’s stuck offshore waiting to get home, not to mention the partners of Aussies and the workers who want to also come.

Once we open up more bubbles, travel, and access to key staff will be easier, but I anticipate that this will be a gradual reopening with higher value roles, or job creators, being given priority. Imagine the food pyramid, the top level will be to do with COVID, then the re-build. Tourists will be at the bottom.

I think that when it does open, there will be a tsunami, but in the meantime, we have to look at alternatives such as the 400 and GTI visa programs to bring people over.”

So in short we lack the opportunity to top up our talent bank with imported skills. This then places the problem squarely on our shoulders to solve.

The War for Talent never ends.

hiring process with recruiting team

The phrase “War for Talent” has re-surfaced across social media over the last few months. But it’s important to remember what this means. 

For the most part, it’s buying, or stealing (depending on your point of view), someone from another company. That company then, in turn generally does the same, and on it goes.

With so few candidates for every role, is it any wonder that Talent Acquisition professionals across the country now think nothing of seeing 3-4 job changes in the last 7-8 years in a resume? We used to call this “job-hopping”, and think that there was something wrong with that candidate. They’d be labeled as unreliable or unstable, and likely to do the same to us given the chance. We viewed them as risky. Not anymore, however.

We must build, not buy Talent.

hiring manager satisfaction

But how sustainable is this? Because unless we find a way to replenish the stocks at a level that meets demand, surely this situation will just continue. Or get worse.

One way to tackle this might be to Build Vs. Buy (to use a Software phrase) our way out of trouble. 

Internal mobility between teams is one thing. The very simplistic framework for this is to find a mechanism to identify high performers. This will most likely happen through data collated from managers’ feedback which is then fed to an HRIS system. We already know that these people can become hungry for more responsibilities/opportunities which therefore makes them susceptible to offers from other employers.

The challenge is then to find that extra responsibility/opportunity internally. Maybe in another team or even location (travel restrictions permitting of course 😷)

However, another solution may lie in re-training or cross-training high-quality staff who already possess relevant transferable skills, or show the interest and aptitude to acquire skills in another discipline. 

If these people are already aligned with the company and its values, and would rather not leave to pursue other interests, why wouldn’t you keep them? 

Making that transition doesn’t happen overnight and it takes planning, commitment and communication from both sides, but it is possible. 

An industry-led University network?

recruiting process for hiring managers

The report by SHL last year that looked at the top-ranking universities for supply to the GAFAM collective in the US got us thinking. 

What if our Australian unicorns got together with the industry and both Federal and state governments to establish a University that taught the skills needed to begin a career in Technology? What if they could design and deliver courses that armed already smart people with the skills needed in order to contributors almost immediately.

There could be a campus in each state, minimising the need for interstate travel. Given that lockdowns may be here to stay for a while, this could be viable. Commercial real estate also seems to be plentiful at the moment btw.

The contributing businesses could tour schools with their technical staff and recruiting/people teams to sell the work, life, and possibilities for a Tech Sector worker and hook the kids into the idea early. 

Career opportunities for our underrepresented communities.

hiring managers and recruitment process

The cost of this would surely be a fraction of the ~ $38Bn – $40Bn spent on Defence each year by the Federal Government. Not only would jobs be initially created in the implementation phase, but we’d be able to provide more realistic options for our school leavers, the industry would have more control over its destiny and maybe most importantly, we could provide more pathways into the Technology scene for the most underserved and under-represented parts of our community. Which in turn could deliver the improved diversity that the whole sector is crying out for.

Every idea needs action to make it a reality but as we’ve seen through the last 18 months, where there’s a will there’s away. Or, when there’s the will there’s a way.

recruitment efforts

There are no doubt plenty of other ideas that could make a huge difference. But we could be on the brink of a major talent crisis unless something major happens. It took the industry itself to form its council and better exercise some control over the sector. It may yet take the Industry itself to plot its future. 

Australia has shown that it can build world-class companies. There is no reason why we can’t build a world-leading industry that helps secure long-term Australian success. The time is now for action.

Footnotes.
  1. The skills and role types we studied with Horsefly Analytics consisted of; Software Engineer, Software Engineering, DevOps, Data Engineer, Data Engineering, AWS, Azure, BigData, Machine Learning, Software development, Software Developer, Data Scientist, .Net, Java, C#, ASP, Javascript, full-stack, programmer, programming, artificial intelligence, PAAS, Solution Architect, Enterprise Architect, Enterprise Architecture. Data Architecture, Data Architect, Solution Architect, big query, NumPy, hive, spark, NoSQL, knime, C++, Jenkins, Jira, cucumber, Kubernetes, TDD, Test Driven Development, tester, QA Engineer, QA Engineering, Ansible, hybrid cloud, computer programming, mobile game development, mobile product development, ios development, android development, platform architecture, platform architect, Hadoop, python, CTO, Chief Technology Officer, Tech lead, director of software engineering, head of software engineering, CIO, Chief Information Officer, Cloud, Product Design, UX, UI, UX Designer, User Experience, Cyber Security, Cyber-Security, information Security, change management, Digital Transformation, IT Transformation, Penetration Testing, Penetration Tester, Kotlin, API, Elastic Load Balancing, elasticsearch, IoT, Internet of Things, Robotics Engineer, Developer, Data Visualisation, Product Management, Product Manager.
  2. Software Engineer, Software Engineering, DevOps, AWS, Azure, Data Engineer, Kubernetes, DevOps Engineer, Ansible, Docker.

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