Trends in the ICT sector

Worldwide

Because economic indicators suggest a slowdown in the U.S. economy, IDC now forecasts a significant drop in the growth of overall technology spending in 2001. Forecast growth for the total worldwide market is a drop from 12% growth in 2000 to 9% in 2001.

On a regional level, growth drivers will differ based on the relative complexity of regional IT infrastructures and the structural characteristics of prevailing national economies.

However, despite warnings of an imminent global economic slowdown, the big picture of global spending on technology products and services remains broadly healthy. IDC's regional forecasts[1] are given below:

United States and Canada

In the year 2000, the United States accounted for 44% of worldwide spending on IT.

IDC expects[2] the U.S. economy’s growth rate to slow down in 2001 to a 2.6% increase in GDP compared with 5.1% for 2000. IDC predicts growth in business investment to slow from 13% in 2000 to 6 or 7% in 2001. A better outlook is anticipated for 2002, resulting from lower interest rates and federal tax cuts.

Technology spending in the United States will grow 7% this year, down from this past year’s growth of 11%. In many segments, 2000 was a better-than-anticipated year for technology investment. Spending on PCs will fall 10% in 2001.

After years of steady economic growth, Canada is expected to experience a challenging 2.9% GDP growth. Canada is expected to see a general slowdown in the economy for the first half of the year as companies make adjustments to production and inventory levels to match the unexpected reduction in consumer and business demand. The Canadian economy is still very dependent on the U.S. economy as 85% of exports are with the United States. As the United States experiences a bumpy transition in its economic prosperity, Canada will feel its turbulence.

Western Europe

The economic slowdown in this region will not be quite as severe as in the United States. IT growth in Western Europe was 12% in 2000. In 2001, this number will fall only slightly to an overall growth rate of 11%.

Latin America

Latin America is among the fastest-growing Net markets in the world, and the internet user rate is more than doubling each year. Governments in Brazil, Argentina, and Chile have taken fiscal measures to wire schools and homes in low-income areas. The governments claim that the Internet is critical for beginning to reduce inequalities that developing nations face. High taxes, import duties, and difficulties in finding many goods produced abroad have all made online shopping particularly attractive.

IT spending growth in Latin America will moderate this year after a period of booming recovery, which characterized much of the region during 2000. Total market growth in 2001 will fall to 12% from the high level of 18% in 2000.

Japan and Asia/Pacific

Economic uncertainty continues to inhibit IT growth in Japan. IT spending increased 8% in 2000 and is forecast to grow 7% in 2001. Given fluctuation in the Japanese currency against the U.S. dollar, a higher growth rate is seen when expressed in a fluctuating exchange rate. In other parts of Asia/Pacific, however, technology growth is more impressive. In Australia, IT spending was up 12% in 2000, reaching $15.4 billion. Growth in Australia will drop to 9% in 2001, recovering to 10% in 2002 and 2003 and 12% in 2004. Strong growth can also be found in some of the emerging markets within the region. In China, IT spending was up 40% in 2000 and will increase 30% more in 2001. In India, the IT market will increase 29% in 2001.

Rest of world (ROW)

In developing markets throughout Eastern Europe and the Middle East, hardware spending continues to account for the majority of IT growth, with emerging markets representing the strongest opportunities for infrastructure providers. Technology spending in Eastern Europe grew 12% this past year, and this growth rate will be repeated in 2001. The world’s fastest-growing region in 2000 was the Middle East and Africa, with IT spending increasing 21% over that of 1999. IT growth in 2001 will be 11% in Israel, 14% in South Africa, and 18% in Turkey.

Drivers and inhibitors for IT spending

The following factors will drive spending on hardware, software, and IT services, including IT training, going forward:

  • Businesses are using IT professionals to solve actual business problems now more than ever.
  • Any economic slowdown will push companies to use their IT departments to increase efficiencies and cut costs.
  • Internet-enabled tools require integration with legacy platforms. This integration necessitates qualified professionals.
  • Emerging mobile technologies create new opportunities for IT services firms that have personnel who are properly instructed on these new technologies.

IT spending inhibitors include:

  • A shortage of qualified people limits the work that can be done. This is an inhibitor to other forms of IT spending but the biggest driver in IT training spending.
  • New models still necessitate rapid time-to-solution project delivery, but the deflation of the dot-com bubble has taken much of the pressure out of the market.
  • The slowdown in the U.S. economy will be a wild card for the IT industry, with certain sectors expanding and others contracting or even imploding. IDC has a positive outlook on IT training spending.

Skills shortages

Issues raised by a report of skills shortages in the USA[3] are pertinent to such shortages worldwide. Various studies document that there is a worldwide shortage of IT workers. That industries in other nations are facing similar problems exacerbates the problem within each country since the geographic location of such workers is of decreasing importance to the conduct of the work. IT employers face tough competition from employers around the world in a tight global IT labour pool. In the long-term IT labour needs cannot be met through increased immigration or foreign outsourcing, and nations must rely on retaining and updating the skills of their IT workers of today as well as educating and training new ones.

Since information technology is an enabling technology that affects the entire economy, the failure to meet the growing demand for IT professionals could have severe consequences for each nation's competitiveness, economic growth, and job creation.

One of the problems inherent in assessing IT skills shortages, and in formulating IT training policies to meet such needs, is that information technology is evolving rapidly, with resultant shifts in labour requirements. Accordingly, at best, any assessment can only be a snapshot of a rapidly changing phenomenon.

IDC in its assessment of the IT skills shortage (The Future of the IT Workforce, 2000 and Beyond #W21937) made in March 2000, notes that there are some key aspects to a discussion of the 21st-century IT workforce and human relations:

  • The shortage of qualified IT workers in the United States at both the individual enterprise level and in the aggregate is consistently identified as the first or second most critical business issue in corporate America. Employers are unable to hire and retain sufficient workers to get all of the work done that they plan.
  • As IT is becoming a global business, the worker shortage is also becoming global.
  • IDC forecasts increasing levels of revenue, adoption, and work for the IT industry in the future. This, in turn, will increase the demand for skilled workers.
  • Certain practices, methods, and resources can be used to successfully attract, engage, and create value from the workers and workforce of the future. As those best practices and leading thoughts are shared across U.S. industries, each participant will benefit, and the result will be enhanced industry performance.
  • Growth in the global IT market shows no signs of abating, so organizations have no choice but to compete for the talent and skills of the U.S. workforce.

The size of the skills shortage

The consensus appears to be that the shortage of skilled workers is a worldwide phenomenon, and one that will not easily be filled. A recent survey of the skills shortage in the USA highlights some of the issues:

Despite the bad experiences of dot-com and tech companies, and the current economic slowdown, the U.S. requirement for a steady supply of new IT workers continues. A new study When Can You Start?[4]by the Information Technology Association of America (ITAA) finds a national IT workforce of 10.4 million. Add to this total an additional 900,000 workers that companies say they hope to hire this year. Of this total, 425,000 positions will go unfilled because of a lack of applicants with the requisite technical and non-technical skills.

Information technology employment remains at the forefront of the U.S. economy, directly accounting for approximately 7 percent of the nation's workforce. The talent gap for IT workers remains large, although substantially less than 2000. Hiring managers report an anticipated shortfall of 425,000 IT workers to fill their openings. Last year, ITAA found a shortage of approximately 850,000 workers – or twice the current total. Non-IT companies remain the larger employer of IT workers with 9.5 million, generate the greater demand at over 640,000 and experience the larger gap at approximately 303,000. In aggregate terms, non-IT companies employ ten times more IT workers than do IT companies. Not a surprising result as this study finds a total of 305,835 non-IT companies in the U.S. with over 50 employees, compared to 13,842 IT companies with over 50 employees. This means 22 non-IT companies exist for every one IT company in the U.S.

Both non-IT and IT companies forecast an increase in demand for IT workers over the next 12 months, although less than last year. Non-IT companies expressed the need for 643,257 new IT workers – 45 percent fewer than the previous year. IT companies foresee the need for 258,332 new IT workers or 41 percent fewer than last year. The gap in qualified applicants also is expected to close significantly in the next 12 months. Non-IT companies will see 302,853 IT jobs go unfilled; IT companies anticipate a gap of 122,505. These numbers are down 51 percent and 47 percent respectively from 2000.

The survey goes on to identify the hottest, most in demand jobs now and in the future:

  • Technical support people remain most in demand by IT and non-IT companies alike - one-fourth of all new positions over the next 12 months. Even so, this report finds substantial softening of demand for these professionals, down 65 percent. Last year, hiring managers cited a need for three times as many technical support personnel as the next closest category, programming/software engineering. This year paints a demand picture much more evenly spread over the eight NWCET job categories.

The best ways for workers to acquire needed skills:

  • Four-year college degrees proved the best pre-hire means of attaining needed skills and knowledge in four of eight job categories: database development/administration, enterprise systems, programming/software engineering and technical writing. Private technical schools pulled the highest marks for network design/administration and digital media.
  • The certification by applicants through a vendor or industry certification program remains of moderate importance. Managers ranked vendor certifications as 3.4 (IT companies) and 3.1 (non-IT companies) on a five-point scale measuring importance. Industry certifications tallied slightly higher at 3.7 and 3.4, respectively. IT companies viewed certifications at least as important as a bachelor's degree; non-IT companies placed certifications slightly below a bachelor's degree in importance.

Classification of Skills

What is an IT worker? In a broad sense, the term “information worker” can be applied to data entry personnel, auto mechanics who use computer diagnostic equipment, medical technicians who operate CAT scan equipment, and loan officers who use computers to assess creditworthiness, etc. With the convergence of communications and IT, the definition of an ICT worker becomes even more difficult.

The addition of the term `skilled' aids in focus, but with online certification courses so readily available, many persons working in SME enterprises will have substantial skills but only put on the "IT hat" as part of their job description.

IDC defines an IT worker as "anyone doing work conceiving of, developing, planning, implementing, operating, or maintaining information technology as his or her primary work.”[5]

Most do not work in the IT industry. This is not a job classification definition. It is also not a credential-based definition. Many IT workers in today's workforce do not have formal IT-related academic credentials. IT workers come from a very broad and diverse background – academically, experientially, and culturally.

What IT workers have in common is the type of work they perform. They have a knowledge that is not common to the general workforce and is necessary to do their IT work. At the very least they understand how to apply computing-based applied technology to work processes, and at the other end of the spectrum they understand the physics and engineering theories sufficiently to invent new computing paradigms and products.

IT workers do not work exclusively in a particular business or economic segment. They work wherever computing resources are being applied, such as in government, telecommunications, manufacturing, enterprise information systems departments, IT companies, IT service companies, consulting firms, not-for-profit organizations, academia, military, small businesses, and, increasingly, as self-employed small business owners leveraging the Internet.

These workers are not all trained in a particular way. They may be trained in mathematics, computer science, electrical engineering, business, social science, physics, chemistry, communications, and other formal education disciplines that include learning about computing at different levels of theory and application. Increasingly, liberal arts curricula are including training in planning and implementing information technologies to accomplish outcomes. Associate-level and continuing education programs focused on transferring sufficient knowledge and skill to be able to operate and maintain IT capacity and resources are becoming widespread and competitive. Companies are teaching employees the IT skills necessary to plan, implement, operate, and maintain internal and client systems and processes.

Education and training status

Definitions and classifications of IT training and education

The IT training industry is a complex one. IDC points out[6] that while the education industry has remained relatively unchanged for 3,000 years, the impact of technology and changing business requirements have forced the corporate learning industry into a mature and more complicated world filled with diverse instructional methodologies, changing content requirements, new management solutions, and of course higher expectations. The industry is filled with terms and categorizations that can mean one thing to one person, and something quite different to another.

Definition of the corporate learning or training market

By IDC's definition, the corporate learningmarket represents external training and education content, delivery, and educational services. This is training purchased from third-party training vendors rather than developed and delivered by internal resources. It represents "discrete" or "stand-alone" training revenue, and not learning that occurs informally during a separate engagement or as part of another project (e.g. outsourcing).

Academic learning (primary, secondary and tertiary education) is not included in IDC's calculations of the corporate market. However, corporate universities - defined as "a university program specifically designed for a specific corporation's employees in order to attain an organisational learning objective" - that utilize external third-party learning partners/suppliers is included in IDC's calculation because it represents a learning solution designed to meet the specific business and learning objectives of a corporation.

Classification of IT training sectors

IDC has identified[7] three market segments: learning content, learning infrastructure solutions, and learning services. In addition, IDC has identified further market components within each segment.

IDC's Corporate Learning Taxonomy, 2001


Source: IDC, 2001

Definitions of the terms used above, are given in the Appendix at the end of this chapter.

Another way to look at the market is by instructional methodology or delivery tool - "the method of transferring information to learners for the purposes of learning". The way in which content is delivered has dramatically changed over the past five years, to include the following:

Corporate Learning Instructional Methodologies Taxonomy, 2001

Classroom-based / Technology-based / Text-based
Classroom / CD-ROM / Text books/ebooks
Workshops / Satellite broadcast / Reference documents
Labs/Exercises / Videotape / Manuals/Workbooks
XXXX / eLearning / XXXX

Source: IDC, 2001

What drives the corporate training market?

IDC[8] claims that the IT corporate training market is fundamentally linked to two related spending categories: IT hardware and software and IT services. In addition, macroeconomic conditions influence training market forecasts.

IDC is of the opinion[9] that IT services including training will be well insulated from any economic downturn as long as the downturn is not too severe. The positive outlook on the software market bodes well for IT training vendors as does corporations’ robust software spending in 2000. Software spending is a direct driver of the IT training market. As new products are purchased and employed, the technical and user training associated with those new implementations will help ensure a smooth transition or integration into the related business processes.

IT services spending is an indirect driver of IT training spending. In a turbulent economic climate, IT services firms will be asked to take more responsibility for the business strategies of their customers and, most important, to clearly deliver value. Looking forward in 2001, the internet hype is long gone and traditional technology vendors and consulting firms that are able to provide basic infrastructure-related services, deliver large outsourcing engagements, and serve the growing and complex solutions market should do well.

IT Training: Trends and Opportunities

Trends in the IT training sector were observed in the United States by IDC. Some of these trends can be applied worldwide, with some applications to local circumstances, and are listed below:

Skilled Labour Shortage

Regardless of the strength of economic growth, the global economy will continue to suffer IT labour shortages. In the US in 2000, it was found that almost half weren’t for new positions but for replacements of employees lost to attrition. (Of course, job descriptions are often revised when replacements are hired.) Most of the attrition is due to turnover rather than retirement or changing professions.