IT Industry In Australia: Growth, Issues And Challenges

Overview of IT Industry in Australia

Question:

Discuss about the Knowledge Intensive Service Activities.

Australian IT market is developing slowly. It is a huge country with low population strength; hence skill shortage in any domain is common. Unlike countries like US, Japan and even India who are known for offering IT support both from outsourced operational services or from headquarters, Australia’s software sector is relatively new and slowly upgrading. In this literature review on IT industry in Australia, the researcher conducts an empirical study by collecting secondary data from several sources, such as previously published books, journals, research articles on the respective topic (Bernstein and Yuhas, 2002). After studying from these scholarly sources a critical understanding of the scenario has been presented below that explores various facets of IT industry in Australia, such as the growth, associated issues and challenges faced by the software sector.

The Australian IT sector is generally not compared with leading software development countries like US, Japan, Phillippines and India. After conducting a thorough research on the market condition of Australia it is evident that Australia is a big country with a very small population and hence there lies strong competition for IT jobs. Several people have migrated in the hope of earning money and enjoy better living conditions. As far as IT domain is concerned, an applicant is expected to possess domain expertise and thorough knowledge (Crawford et al. 2013). IT is a specific sector that needs specific skill and knowledge. From the collated information on IT domain, according to the reports published by the Government in Australian Industry Report 2016, large companies generally outsource the main software development work. Since company’s demands skilled staff with domain based knowledge, for example, banking industry demands IT specialists with banking knowledge and experience. Thus even if an individual has ten years of experience in handling software development in Project Management, the person is generally identified as unsuitable in the banking industry (OECD KISA project, 2010).

As far as the growth and issues of the Australian IT industry is concerned, it is evident from the report published by Spencer (2017), that the IT sector of Australia will experience huge skill shortage in another five years. The researcher has conducted a survey and collected data from respondents selected from IT sector. A comparative study on data collected in 2011 and 2014 has been evaluated by the researcher and underpinned that in 2014 respondents in IT sector under the age of 30 was only 6% in comparison to the survey data collected in 2011 where it showed that 18% employees in the department were below 30 years of age. The chart below clearly shows a steep decline of 66% in just three years.

Growth and Issues of the Australian IT Industry

It has been further pointed out by economists and industry analysts in Australia that companies or market leaders like Microsoft, Google and HP generally run key software oriented operations in other countries and have set up a different operation in the respective region and they generally have different hiring requirements (Di Tullio and Bahli, 2013). IT is Australia generally focuses on,

1. Property and business services
2. Government administration as well as defence

• Finance and insurance sector

1. Communication services
2. Manufacturing

According to Ehrig et al. (2007), the Australian economy is in transition. Majority of population is employed in the service industry. Social services and Distribution services are mainly known for offering steady employment. In other industries like Agriculture, Forestry and Fishing employment is offered based on contract.

Research on innovation in the Australian domain has emphasised on exploring patterns of innovative activity within an economic condition. OECD KISA project (2010), as per this report the software sector plays an important role in the Australian economy. Within the domain, there is a significant amount of production in software development and final products are offered to consumers both at the domestic and international market. The software has evolved as an input to the production of software. According to the data published by the Australian Bureau of Statistics (ABS) information technology innovation has become integrated into all leading areas in the economic development. Information and Communication Technology: Australia (2004), and Enabling Our Future Australian IT industry is a small but significant part of the world industry and it contributed around $50 billion to the Australian economy (Fitzpatrick and Keane, 2006). The country today has about 24 000 specialists firms that offer employment to more than a million people.

Over the years it has been experienced that tech sector in Australia experiences low growth that mining and other domain. There are several challenges facing businesses. The global economy has impacted on the country’s economic development in the past few years. Rapid economic growth was experienced by China and this has completely changed the global trade and investment flow. Besides other domain, the key custom of IT industry is to successfully release product upgrades and meet client demand (Gentle, 2007). Some of the biggest challenges to be considered amidst competitive environment are;

Cash flow: both small and big companies experience issues with cash flow as it takes a significant amount of time to receive payment from the clients. Meeting on-going expenses hence become a major challenge for the company.

Innovation: drive to innovation has gained importance and its demand has increased in the business. Organisations today are forced to explore new opportunities and unlock growth potential. Several companies are coming up with innovative solutions triggering competition in the market (Holcombe, 2008).

Challenges Facing the IT Industry in Australia

Overseas expansion: business growth and skill enchantment have encouraged companies in outsourcing projects to India or China. IT companies could easily get the projects completed within time and budget. They could save money by using skills from economically developing countries. Thus companies today prefer using highly knowledgeable and skilled task force from outsourcing. This practice has impacted heavily on the job market and tech professionals are rarely getting a job.

As far as Australian cities are concerned, Melbourne and Sydney are the most popular destinations where job seekers throng for tech jobs. Australia has a large number of migrant populations. Besides native population, the country has supported the migrant population in growth and living (Nicolette, 2015). According to the experts, Australian IT industry has experienced a significant decline in involvement from young professionals. There has been a remarkable fall in joining the industry over the past few years.  According to the chief executive of the online services company, IT industry should solve the problem plaguing the situation so that more people could join the industry. Besides this industry expert chairman of CSIRO mentioned after analysing the overall attitude of the job seekers and IT professionals in Australia that Australia lacks a culture of ‘keep learning’. According to him, there is a vacuum in loving learning or knowing the unknown or keep practising to improve skill. Thus, the nation’s lack of approach towards indulging into continuous learning therefore impacts on the overall performance of the professional domain. Hence when the aptitude is compared with other countries like Israel or India companies identify that in every place people struggle towards improving every day. The professional environment is steep in continuous strive towards personal and professional improvement, and since this attitude is not present in Australian population companies are disappointed (OECD KISA project, 2010). For example, according to Mr Thodey regarding coding process, the professional attitude towards completing the task in Australia does not incorporate any new experimentation, research or other improving approaches, instead the professional’s approach is to stick to the existing format and just ‘whatever gets you going’. There is no willingness towards innovation, experimentation or improvement. And this is leading to a palpable state in IT sector.

With the growth of mobile smartphone technology, Australian IT domain experienced certain changes and expressed willingness towards exploring the new and interesting sector. Jobs in computer system design increased. This area demanded skill in programming and software development and in 2008 experienced a sudden surge.

Australian Cities and IT Jobs

As per the Australian App Economy report, Australia could experience significant growth in the mobile computing sector as more people are interested in the domain.

Besides this industry analysts such as Dr Mandel further reported that Australia is equipped to absorb to new technologies at a rapid pace and exploring the growth trend he has further mentioned that Australia is expected to perform well and thus he named it “the app economy” as this domain comprises of app developers from the IT sector.

At present about 9.4 per cent of Australian tech jobs include people working in app development activity (Spencer, 2017). Thus since the health of app development is good, if the other industries like retail, finance, entertainment accept digital development and make use of innovation on a regular basis, the particular area in IT would reach new heights by 2020. App economy is contributing immensely and a report from Apple clearly highlights that the App Store has successfully added about 70,000 jobs in the Australian economy.

Besides the app development and digital innovation, E-business and E-solution have gained considerable importance in the past few years. Several companies have begun investing and initiating online retail business. Though the initial set up demands time, IT knowledge and support as well as specialised skill, in the e-business domain offers immense scope for growth and development and economic enhancement Australian IT industry should focus on developing and adopting specific strategies to improve business (Xu and Quaddus, 2010).

It could be hence culminated after studying from several economic analysis and IT journals on the economic condition of the domain and future of the sector that new possibilities are coming which if addressed and managed in a proper way would help in earning revenue, sustain and evolve as a successful industry contributing immensely to the GDP of the country (Spencer, 2017).

References

Bernstein, L. and Yuhas, C. (2002). Software development. New York: McGraw-Hill/Professional.

Crawford, J., Leonard, L. and Jones, K. (2013). The Role of Worker Tenure and Employment Heterogeneity on Software Development Work Activities. Journal of Information Systems and Technology Management, 10(3), pp.483-502.

Crawford, W. (2003). First have something to say. Chicago: American Library Association.

Di Tullio, D. and Bahli, B. (2013). The impact of Software Process Maturity on Software Project Performance: The Contingent Role of Software Development Risk. Systèmes d'information & management, 18(3), p.85.

Ehrig, H., Floyd, C., Nivat, M. and Thatcher, J. (2007). Formal Methods and Software Development. Proceedings of the International Joint Conference on Theory and Practice of Software Development (TAPSOFT), Berlin, March 25-29 1985. New York: Springer.

Fitzpatrick, M. and Keane, T. (2006). Software development. South Melbourne: Thomson Social Science Press.

Freedman, J. (n.d.). Software development.

Gentle, M. (2007). IT success!. Chichester: John Wiley & Sons.

Holcombe, W. (2008). Running an agile software development project. Hoboken, N.J.: Wiley.

KONG, J. (2008). Visual Language Techniques for Software Development. Journal of Software, 19(8), pp.1902-1919.

Nicolette, D. (2015). Software development metrics. Shelter Island: Manning.

Obrenovic, Z. (2013). Software Sketchifying: Bringing Innovation into Software Development. IEEE Software, 30(3), pp.80-86.

OECD KISA project (2010). Knowledge Intensive Service Activities in the Software Industry in Australia. [online] Available at: https://www.oecd.org/sti/inno/34608992.pdf [Accessed 28 Aug. 2017].

Spencer, L. (2017). Australian IT industry faces impending skills shortage: Greythorn | ZDNet. [online] ZDNet. Available at: https://www.zdnet.com/article/australian-it-industry-faces-impending-skills-shortage-greythorn/ [Accessed 28 Aug. 2017].

Xu, J. and Quaddus, M. (2010). E-business in the 21st century. Hackensack, NJ: World Scientific.