Our ICT industry is pandemic-proof for now; can it remain that way?

“Australia and New Zealand were early entrants to the digital transformation journey,” says Mario Allen Clement, senior market analyst for IDC. 

That head-start enabled our ICT industry to pivot quickly when Covid hit in March 2020, according to a new report by the analyst group.

That meant that, despite the turbulence of the pandemic impacting many businesses, New Zealand and Australia’s ICT sector is, if not booming, trucking along quite nicely; at least for now.

Spending is up in the category and there’s anticipation of continued growth of up to 2.5% per year.

Locally we can thank our government’s quick-off-the-mark stimulus measures and, what the report calls, “businesses prior investment in digital transformation” for that, as both played a key role in mitigating against the worst impacts of the pandemic.

The report notes that both governments increased tech budgets to enhance their crisis response capability which improved operational efficiency and ensured effective services as the pandemic hit.

Unlike the United States – which faced immense problems delivering stimulus cheques through some state’s antiquated tech systems – our pandemic wage subsidies and business loans were delivered quickly and efficiently.

NZTech CEO Graeme Muller says that over the last year – “even under the pressure of Covid lockdowns and border closures the New Zealand tech ecosystem continued to grow and deliver positive impacts for our economy and society.” 

The sector currently makes up eight percent of New Zealand’s GDP, and employs five percent of the workforce; our top 200 tech companies earned $12.7 billion globally in revenue in 2020.

Although the tech sector didn’t get a whole lot in the government’s 2021 budget, SMEs – in a nod to the continuing challenges of the pandemic – did get $44 million to accelerate business training courses and to adopt digital ways of working in their businesses. 

But key to the sector’s buoyancy has been that pandemic-related switch to hybrid working and the increased use of online services and platforms. Today these are the ways we access everything from shopping to banking and insurance – (insurance giant IAG closed all of its 53 AMI Insurance branches in July 2020 as a result of the pandemic.) 

A big part of the good numbers is that banking and government sectors dramatically increased their ICT spend as they accelerated online initiatives.

Tech talent shortage

But few can have missed the growing concern over the inability of NZ tech companies to hire the international talent they need.

The spending and profits generated from the “pandemic pivot” can’t go on forever and an industry without skilled, key players is one that can’t grow and innovate and will struggle in the coming years. 

Pavan Vyas chief executive of Rush Digital, the company that developed the Covid-19 tracer app puts it bluntly – “Talent has become the number one problem in the tech industry.”

Yes, Google’s Larry Page – who we learnt this year holds New Zealand citizenship – can fly in and out whenever he wants, but just try getting a software engineer to fill one of the estimated 2000 roles going begging in the sector.

In 2019 3683 visas were approved for IT professionals to immigrate to New Zealand but that recruiting was stopped dead when Covid hit, with the government rarely granting the critical worker visas required – (many fruit pickers, actors, sports people and vets however did qualify for the visa.)

“You can’t expect to go from 5,000 international workers to zero and expect business as usual,”says Muller. 

“We have been working hard with the Ministry of Education to encourage more Kiwi kids into tech career pathways, but it will take years to build up the local talent pool.

“To make matter worse, to take on more interns and graduates companies need more experienced staff to mentor them, so difficulty in accessing experienced international IT workers is a double edged sword.

“If we want to improve productivity, deliver a better health system, create high value jobs and help companies recover from Covid by being more efficient and accessing international markets, we need to increase the number of digital technology professionals in New Zealand to enable it.”

Both new and established players in NZ Healthtech, biotech, fintech and agritech are impacted. 

All are having difficulty recruiting the international talent they need.

To be clear – there’s no shortage of people who want to fill these roles; companies just can’t get them into the country.

Gina Hills, CFO of Orion Health told Stuff – “It doesn’t matter how many game-changing ideas we have. They are wasted if there aren’t enough people to execute them.

“The talent shortage is forcing the tech sector into an insidious poaching cycle, with employees shuffling from one business to another. This means the holes aren’t being plugged, they’re just moving around. As we steal each other’s talent we’re slowly cannibalising the tech sector. Companies are being forced to battle it out with each other when we should be growing together to take on the world.” 

The problem is aggravated by international tech companies poaching our best talent – a graduate software engineer here is looking at a salary of $60,000 NZD. 

An average US starting salary is $150,000 NZD – and that’s not including signing bonuses and stock options.

Often these engineers can work remotely, the time difference a bonus to the (usually) Silicon Valley-based companies, as the NZ operator can work through their night time.

Granted the tech talent shortage is a global problem but its impact here is double-fold due to our government’s intransigence in seeing tech workers as critical workers.

Hills, whose company put together a Covid-19 outbreak management tool for French Guiana in the middle of New Zealand’s lockdown without having a single person in South America, believes the lack of flexibility around the visas is damaging to our tech industry’s future.

“It’s sad to think the next great idea that could change the future of the New Zealand economy may never get its chance to get started.”

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