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Skills shortage driving offshoring: Westpac CIO

Westpac’s CIO Clive Whincup tells young IT professionals that the bank has no option but to tap offshore technology resources
Westpac CIO Clive Whincup said the bank has no option but to look offshore for technology skills

Westpac CIO Clive Whincup said the bank has no option but to look offshore for technology skills

Westpac Banking Group’s CIO Clive Whincup today claimed the bank looks offshore for IT labour because there “simply aren’t enough people” in Australia with the right skills for certain roles.

Speaking to a group of young IT professionals at an Australian Computer Society event this morning, Whincup defended Westpac’s recent decisions to send IT jobs offshore to meet the demand for technology skills.

Westpac is in the midst of a five year, $2 billion Strategic Investment Program (SIP) to upgrade its core IT systems. The program is due for completion by 2014.

In March, the bank outsourced 119 software development and system maintenance jobs to Indian companies Tata Consultancy Services, Wipro and Infosys as well as IBM, in a move that drew fire from the Finance Sector Union.

Whincup said Westpac had “no option but to tap into large resource pools which are not geographically local” for the transformation program although not all people who do “coding and testing will be provided by outsourced providers.”

“We have to do this [offshore] because we have a shortage of skills. The paradox is that because we are doing it and because the media and some elements of society are fixed with the fact that it’s happening for cost reasons, it’s actually becoming a self-fulfilling prophecy.

“People are forming the view that all of the [IT] jobs are going offshore, therefore there are no jobs in Australia, therefore I am not going to put my son or daughter in a technology-related degree course.

“That’s the logic that we have to cut off – there’s a shortage of skills, therefore we are going internationally. Jobs are not going offshore, activities are going offshore because there is not enough supply within the local market for those activities to be undertaken locally.”

Whincup said IT professionals have to get used to working with global supply chains, understand that it [offshoring] is a necessity and don’t allow it to become a reason for people to not enter the industry.

“If you think of industries like manufacturing, this happened a long time ago,” he said. “You have to have a global supply chain if you are in the car business for example. In other words, you don’t source all the parts locally, you source some of them locally and other remotely.”

Salary gap to become less relevant

Whincup also believes that the gap between IT wages in Australia and India will slowly start to become less of an issue in the future.

“In the past there was a very strong view that the driver [for offshoring] is cost and that view persists in the media today,” he said. “It’s simply a question of labour arbitrage, that is, people in India earn less than people in Australia.

“That is a fact but with every passing year, it becomes less relevant because salaries are growing in India much more rapidly than they are growing in Australia and at some point, they will reach parity,” he said.

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Comments

No Mates

1

Wow it proves that who you know totally outweighs your intellect and experience ...... Clive strikes me as a senior manager at best - but Westpac under Gail and Bob McKinnon - no surprises - average is rewarded if a mate !!!!!!

Richard

2

It always struck me as odd how much bad press Westpac got for its overshoring of IT roles in the last year. The fact is the other major banks have all had similar restructuring schemes in the last 5 years. What Mr Whincup says is the reality of the Australian labour market. IT university enrollments have fallen over the last 6 years in stark contrast to the increase in vacancies in the IT market in Australia.

byron_connolly

Staff

3

Richard, that is certainly true but I still firmly believe that cost is a significant driver.

M

4

Yeah... this seems just a little bt self serving to me. Banks won't employ anyone (in IT) who hasn't already worked for a bank. What about employing trained professionals and giving them some skills in the specific banking environment? Its a bit difficult to swallow that banks are _so_ different in terms of systems administration or .NET programming or database skills etc.

J

5

M,
You are certainly correct, there is very little difference.
I believe it is also a fallacy that there is an IT skills shortage in Australia. Post a job on Seek.com.au and see how many applications you receive in just one day. What I believe is happening is the selection criteria is far too narrow, that is must have experience with technology A, B, & C, versions 5 & 6 in industry Z. If you do not have this exact combination then you are relevant to the role. The recruiting managers are forgetting that they need flexible staff that will "grow" in their organisations and they should be recruiting for intelligence, flexibility, potential, customer service, and weight these attributes higher than hard technical skills that will become irrelevant in a very short period of time.

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