Problems in the IT industry In the information technology industry, it is widely acknowledged that how well IT departments of the future can fulfil their business goals will depend not on the regular updating of technology, which is essential for them to do, but on how well they can hold on to the people skilled at manipulating the newest technology. This is becoming more difficult. Best estimates of the current shortfall in IT staff in the UK are between 30,000 and 50,000, and growing. And there is no end to the problem in sight. A severe industry-wide lack of investment in training means the long-term skills base is both ageing and shrinking. Employers are chasing experienced staff in ever-decreasing circles, and, according to a recent government report, 250,000 new IT jobs will be created over the next decade. Most employers are confining themselves to dealing with the immediate problems. There is little evidence, for example, that they are stepping up their intake of raw recruits for in-house training, or retraining existing staff from other functions. This is the course of action recommended by the Computer Software Services Association, but research shows its members are adopting the short-term measure of bringing in more and more consultants on a contract basis. However, this approach is becoming less and less acceptable as the general shortage of skills, coupled with high demand, sends contractor rates soaring. An experienced contract programmer, for example, can now earn at least double the current permanent salary. With IT professionals increasingly attracted to the financial rewards and flexibility of consultancy work, average staff turnover rates are estimated to be around 15%. While many companies in the financial services sector are managing to contain their losses by offering skilled IT staff 'golden handcuffs' - deferred loyalty bonuses that tie them in until a certain date - other organizations, like local governments, are unable to match the competitive salaries and perks on offer in the private sector and contractor market, and are suffering turnover rates of up to 60% a year. But while loyalty bonuses have grabbed the headlines, there are other means of holding on to staff. Some companies are doing additional IT pay reviews in the year and paying market premiums. But such measures can create serious employee relations problems among those excluded, both within and outside IT departments. Many industry experts advise employers to link bonuses to performance wherever possible. However, employers are realising that bonuses will only succeed if they are accompanied by other incentives such as attractive career prospects, training, and challenging work that meets the individual's long-term ambitions. This means managers need to allocate assignments more strategically and think about advancing their staff as well as their business. Some employers advocate giving key employees projects that would normally be handled by people with slightly more experience or capability. For many employers, however, the urgency of the problem demands a more immediate solution, such as recruiting skilled workers from overseas. But even this is not easy, with strict quotas on the number of work permits issued. In addition, opposition to the recruitment of IT people from other countries is growing, as many professionals believe it will lead to even less investment in training and thus a long-term weakening of the UK skills base.