Analysts have blamed the culling of IT contractors during the Gershon Review and an exodus of talent from Canberra during the global financial crisis for an alarming shortage of technology skills in Australia's public service.
The Federal Government's 2010 State of the [Public] Service Report released late last week revealed recruiting ICT staff continued to be the Federal Government's biggest skills headache.
The report found ICT skills shortages hampered the capability of almost 70 percent of government agencies in doing their job.
"It is highly likely ICT will continue to be a problem for at least another three years," said Ovum Research Director, Geoff Noonan.
Peter Acheson, chief executive of recruiter Peoplebank, believed the problem was self-inflicted.
He said large IT projects in 2006-07 attracted talent to Canberra - with the capital territory's contractor rates the highest in the country.
That reversed during the GFC, as the first tranche of IT workers left Canberra, he said.
"All of a sudden these projects were either being scaled back or [projects] had less funding. This had an immediate effect on contractors originally from interstate."
He asserted that the Federal Government's Gershon review made the position toxic for IT contractors.
"We should be under no illusion that Gershon was a pretty blunt instrument in terms of delivering further cost savings and further reductions in headcount to Federal Government," Acheson said.
Time for a change in policy?
Noonan queried whether it was now time to move away from Gershon's recommendation to cut contractor numbers by 50 percent.
In the light of consistent evidence, it might be better to focus on attracting skills from all sources to secure the delivery of government services, he said.
Since the beginning of 2009, Government agencies have attempted to convert a reasonably large number of contractors to full-time employees to meet Gershon targets.
But at the same time, private sector giants such as the NAB and the Commonwealth Bank have launched major IT redevelopment projects, which accelerated the exit of IT people out of Canberra, Noonan said.
Noonan predicted the Government would find the going tough in its efforts to tempt highly paid contractors to become permanent staff. The State of the Service Report found that contractors accounted for 19 percent of the Government's ICT workforce in 2009-10.
"This means government ICT budgets continue to be tightly linked to movements in contractor pay rates," he said.
Acheson said the more "street-smart" CIOs in Canberra recognised there was a Federal election coming earlier this year and decided to top up their staff.
"That's one reason we saw a substantial spike in July that we have not seen sustained in August, September or October." Acheson said.
He now estimates that only a "thin layer of IT talent" is available in Canberra at present.
"If we see a couple of large Federal Government projects scale up, then demand will get very strong," he said. "Supply is relatively short. In that environment we will see larger rate increases."
Both Noonan and Acheson considered decentralising IT operations beyond Canberra was an option, noting that agencies such as Centrelink have moved part of their IT operations out of Canberra to cities like Adelaide.
"They do some of their IT development and IT systems integration in Adelaide and that works pretty well for them," Acheson said.