Looking abroad to bridge the skills gap
Last year it hired 600 IT staff, and its total of 2500 means its in house IT department eclipses many of SA’s specialist IT groups.
“The shortage isn’t breaking us,” says its chief information officer, Jorg Fischer, but he is tired of postponing new IT projects because of a staff shortage.
“We want to try to complement our IT shop with Indian resources. We are always looking at the South African market, and we need to look beyond our borders,” he says.
“It will give me another option for how to solve IT or business issues, instead of saying I don’t have the people to do it. I want to make us more flexible and nimble so IT doesn’t become a bottleneck in delivering.”
As some technologies approach the end of their life, the bank will request proposals from Indian companies to maintain and support those applications. That will let the in-house technicians be reassigned to develop new applications to take the bank forward.
It should also give them a better career path and more interesting work, so they do not seek brighter prospects elsewhere.
The first tenders should be issued in the third or fourth quarter of this year and will target companies including Tata Consulting and Satyam, which already have operations in SA.
One example is the testing and integration of new software, which demands a large staff complement. That could be outsourced to Indian workers who could either be brought into SA or could conduct the testing processes remotely.
If projects to develop new systems also run into local skills shortages, technicians could be recruited from India. As part of the job description they would be expected to train South Africans working alongside them.
No-go areas for outsourcing will be designing the bank’s IT architecture, project management and business analysis.
The idea was inspired by what is becoming a common practice for financial services organisations in the US and Europe. Although they mainly outsource to cut their costs, the Standard Bank will do it “because we don’t have the people and the skills available,” Fischer says.
He expects many other local firms will follow suit to combat the skills crunch. The number of students studying IT at universities in SA, Europe and the US has decreased for three years, so the skills base is depleting. In comparison, India pumps out about 400000 IT graduates a year.
The bank hires many temporary contractors from the personnel provider Paracon, but Paracon has told Fischer it needs another 1000 technicians to fill all the vacancies facing its customers. Its chief financial officer, Mireille Levenstein, says: “We have never been in such a situation where there is so much demand for IT skills, and the supply isn’t there.”
Paracon also looks to India for relief, and is flying in technicians after acquiring 34,6% of India’s Nihilent Technologies last year.
Growth consultancy Frost & Sullivan analyst Lindsey McDonald says SA’s skills shortage is reaching chronic proportions and fuelling the trend for outsourcing. Yet the third-party service providers are also struggling to attract and retain skilled staff.
“In order to build a reserve of skilled personnel, service providers should show higher levels of commitment to skills development,” she says.
A report by the Economic Intelligence Unit shows that India’s quality of service and low costs make it the destination of choice for outsourcing application development and management.
Countries such as Brazil and Russia are ramping up their outsourcing capabilities to become more attractive to foreign customers, but research by Accenture says the cost benefits and experience to be found in India are often too large to ignore.
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