Aussie ICT market rallies

An atmosphere of optimism among Australian CIOs could spark increased demand for software systems and talent during the coming months.

Analyst firm Longhaus reports that a growing number of business projects in Q3 2009 could mean more ICT project approvals, and consequently employment, in Q4.

According to Sam Higgins, who co-authored the "Longhaus Australian Tech Index: Q4 2009" report, hiring freezes were common in early 2009 in response to the global financial crisis (GFC).

"As a result of the GFC, we saw CIOs in both Q1 and Q2 of this year really slam on the brakes when it came to ICT contractors," Higgins told iTnews.

"It was definitely fear, plain and simple ... most CIOs, while not having experienced a downturn in ICT in the last five years, certainly appeared to read the warning signs and simply held off hiring the flexible part of their local labour forces."

Longhaus describes the recent drop IT staffing demand as the 'second worse since the dotcom bubble'.

As the GFC took effect, many organisations implemented new approval requirements for capital purchases including new hardware and software assets, Higgins said.

"Pre-GFC, a CIO might have been able to simple get a divisional head to sign off on a $500K project," he explained.

"When the GFC hit, these types of investments might have had to get CEO approval for the first time in five years. In some cases they simply didn't get [approved], amplifying the reduced demand the GFC had already bought down."

In 2009, ICT spending grew by only one percent from the previous year's. For comparison, 2008 saw an increase of eight percent.

As the market improves, however, Longhaus expects the recovery of the ICT sector to outpace that of the broader Australian economy due to as-yet unmet business requirements and the ease of restarting dormant ICT projects.

Higgins said ICT spending would increase by three to four percent in 2010, with 40 percent of respondents to Longhaus' CIO Confidence Poll expecting to commence new projects in the coming quarter.

"We're entering a period of intense application renewal," he said. "If you decided to go to the cloud, then it is strategy, architecture, process expertise and project management you'll need."

"We certainly don't expect it to take too long before getting skills in key application platforms in particular enterprise level Java and .NET, along with the higher order architectural and design skills, will be tight," he said.