“Lifelong employment`s gone,” says Johan van Jaarsveld, managing director of EOH Interim Talent, the labour broking company formed in February by JSE-listed EOH Holdings to tackle the changing IT job market.
“People don`t want to sit there and say, ‘I`ve worked 40 years for this company`. It doesn`t happen anymore.”
He says many experienced senior people now want to work eight to nine months a year, with the flexibility to take time off to be with their families.
“People tend to look at it from a demand side, but I think that there`s massive pressure from the supply side, where guys are saying, ‘These are our terms of conditions to work.` I`ve just had a guy placed in Cape Town. He`s got full-time employment, but he`s taken three months off. He`s going to spend some time with his family in Cape Town and, while he`s there, he`s going to do some work for us.”
One of the big drivers behind the changes in the labour market is the emergence of a younger generation with a different mindset.
The new consolidation?
The skills shortage is increasingly cited as a problem by IT companies presenting their financial results. The death of expertise is creating only a renewed interest in labour broking, but analysts say it may also influence a new wave of consolidation in the sector as companies look to acquire skills in short supply.
In October, Datacentrix, which has traditionally eschewed acquisitions, announced that it had identified some potential purchases that would help it move into complementary markets. Chief operating officer Ahmed Mahomed said that with the skills shortage, it would take too long to grow organically into those areas, thus making small acquisitions necessary.
In the same month, Paracon announced the acquisition of X-Pert Group and its 150 consultants, citing access to a wider range of skills as one of the motivations.
An analysts cautions that the IT skills shortage is part of a cycle.
"As soon as there's a downturn, you're going to have a lot of companies with too many people, and they're going to have to shed them."
“If you look at the new generation, Generation Y we call it, their values are totally different to ours. In the old days, status, money and career were important. For these guys, it`s time and flexibility. Of course, money is still important, but the values of the younger generation are totally different.” Many people who do not qualify for black economic empowerment (BEE) status have accepted that they are not going to be MDs and directors of major companies, but they have skills that they see as a valuable commodity that can be sold.
The old days
Van Jaarsveld says contracting addresses these changing needs and also fulfils evolving business requirements. “Certain skilled resources are expensive, so it`s difficult for a company from a fixed-cost perspective to justify having that specialised skill on a permanent basis, because maybe the project`s only running for six or 12 months. In the old days, you only had the option to appoint the guy permanently. What did you do after the period? You had to redeploy or retrench. So maybe they pay a bit more now, but they get the expert skill they require and they get it for a specific period,” he says.
EOH Interim Talent was initially formed to tackle the requirements of the EOH Group for contract staff.
“We found that when we do major implementations internally, we need a lot of contract people, and we tend to use contract houses to get those people,” he says. The group decided that if it needed the resources, it may as well acquire them itself and save costs.
“That grew and we said if we do that, a lot of our customers – existing EOH customers – are also looking for resources, be that either on a contract basis or on a permanent basis. And they`ve got the relationship with us – we`ve maybe handled an Oracle implementation or a Baan implementation. We may as well have the continuity in a customer by providing those resources to a customer once we`re off site.”
Since EOH Interim Talent`s business is aligned to that of its parent, its approach is to focus on four specialist areas: enterprise resource planning (ERP), corporate performance management, development/application and generic IT skills. The aim is to acquire a small footprint in each specialist area and then grow that business organically, albeit aggressively. The company recently made its first such acquisition when it bought ePrime Consulting, resulting in the addition of approximately 50 SAP sub-contractors to its pool.
“We defined the ERP space as a target area for EOH Interim Talent and, in terms of the top end of the market, there`s Oracle and SAP. We have found that the SAP side, in terms of the market, is a lot more open from a supply and demand perspective in terms of contracting positions, whereas with Oracle at the moment there are a lot more permanent people working.”
The skills in this area are “pretty scarce”, says Van Jaarsveld. Immigration may help in future, although there are obstacles, he adds.
“There`s a massive influx at the moment of foreign skills, mainly from India and Zimbabwe. That`s an area that can stimulate and grow the supply side. I think it`s something that South African companies still need to get used to.”
But, as many companies have in the past outsourced their development to India and other countries, this change in mindset is possible, he says. That is not the only obstacle to foreign skills being absorbed into the local industry.
“There is a huge supply at the moment,” he says. “A lot of them are looking for sponsorship and residence. That is the biggest hurdle for them, as well as getting some local experience.”
Van Jaarsveld says EOH Interim Talent is in a unique position. “Because it`s so closely aligned with our business (EOH Holdings), it`s actually providing resources to our business, and it`s using some of our business` spare capacity that we sell on again…. So it`s basically an extension of EOH, which, at the end of the day, makes it a lot easier for us.”