Case Study

A Technology Talent Crunch

The hunt for IT talent in western Europe is growing ever more difficult, according to Sage. As one of the region's largest providers of business-management software and services, the UK-based company employs about 13,500 employees globally, with around 20% in research and development and 15% in technical support roles. Employee turnover runs at about 15% annually, and so the company needs to fill some 2,000 jobs a year even before it considers any growth initiatives.

For Karen Geary, Group Director of Human Resources and Corporate Communications, the low availability of skills is a particular concern. In the UK, for instance, relatively fewer youngsters now choose IT/technology-based courses at the higher-education level. (According to data from UNESCO, the number of students enrolled in tertiary science courses in the UK declined by more than 7% between 2005 and 2008.)

The contrast with other parts of the world is stark. "The availability of IT talent is much greater in some of the Asian economies because that is what they are churning out in schools," says Ms. Geary. "I think IT is seen as a more acceptable discipline to pursue. This is especially so when gender is added to the mix, as Asian females are well represented in technology, in contrast to western Europe. So on pure numbers alone Europe's available talent pool is probably smaller."

But it is not just low availability that worries Ms. Geary. The quality of the skills on offer is often much poorer in western European economies than elsewhere, she says. While graduates tend to be more IT-savvy these days, they often lack the business acumen and training that a customer-facing organization like Sage increasingly values. "Universities are still producing candidates with primarily technical skills, whereas other skills are also required often in equal measure," observes Ms. Geary. Her criticisms may surprise those who think Asia is the true laggard in this area, but Ms. Geary believes the region has made big improvements in recent years. "I know that certain parts of Asia have a reputation for being too focused on the technology part, but the students I have met are a lot more rounded than they used to be," she says.

Although Sage is involved at the educational level—with senior staff taking advisory board roles at universities and providing input to curricula—the slower pace of academic life makes it difficult to embed new skills within courses. The company still spends a considerable amount of time getting new recruits up to speed, with technical-support staff requiring three-to-six months of initial on-the-job training and software developers as much as a year.

Long term, the implications of Europe's perceived shortcomings could be dramatic. Sage is already starting to fill roles in the US and Europe with IT professionals from emerging markets. Ms. Geary says that trend will accelerate over the next few years unless more youngsters can be persuaded to choose science-based degrees. "We need to make technology more attractive in terms of placements, scholarships and financial incentives," she says.

Offshoring could also become more appealing if skills shortages persist. Owing to its emphasis on customer support, Sage has no plans to shift its human capital to other parts of the world. But other companies will feel differently. Cost used to be the main reason for offshoring. Could talent take its place?