2014 Year in Review and 2015 Forecast

2014 Year in Review
2014's Hiring Activity (our observations)
2014's Talent Pool
2015 and what it holds


2014 Year in Review

It was a very interesting year across the technology landscape in New Zealand. We've had a range of forces at play, that at times threatened to derail the strong (or rockstar according to HSBC Economist Paul Bloxham) New Zealand economy. Nevertheless, as I write this I'm pleased to say that they didn't. In this year’s review, I’ll reflect on each of these separate forces and then relate it back to the talent market where possible.

General election - a roller coaster ride that almost became a circus sideshow convened by a fat German ringmaster. In any case, stability reigned and the resulting economic risk of a hung parliament was avoided.

Migration turnaround - less than 12 months ago, we collectively lamented on the 30,000 plus Kiwis moving to Australia each year. We are now poised for a predicted reverse swing that is yet to materialise. As of 2013, there was 490,000 Kiwi's in the lucky country, easily making it NZ's second largest city. The tech community would hugely benefit from seeing a large migration inflow.

Exchange rates - they stayed high for most of the year, and this and fluctuating dairy prices have in turn helped our importers (most NZ ICT hardware spend) and challenged our exporters (software may be weightless but it’s not immune to exchange rates). Our balance of payments is trending downwards as a result. On the other hand, weakening the kiwi dollar can attract migrants.

Interest rates -  they crept up by a full one percent in 2014, their first move in three years. My opinion is formed on what I observe, not read from real estate observers and agents (lies, damn lies, and statistics); I believe it’s having a price cooling effect - certainly around the broader Ponsonby area where I dwell.

So, what about IT talent?

Well demand has continued to grow at a rate of knots - there was a 62% rise in the number of IT job advertisements between the first and third quarter of 2014 alone. Total job ads are one of the few market indicators we have and reflects our observations. The interesting phenomena we're seeing more than ever before is a strong protection mentality around keeping valued staff; counter offers, package revisions, study grants and long service leave are all featuring now more than ever. Furthering the intense competition is new employers seeking to replicate this, which is making for an interesting permanent employment market.

On the other hand, contracting has continued its buoyant rise. Due to the mentioned shortages, certain software development shops and other organisations that are traditionally not interested in contractors are taking them on in droves. That, and enterprise spend has resulted in strong demand for Business Analyst’s, Project Manager’s and Developers.
So, in balance I’m calling it ‘a very strong but tough market’ - for employers and recruiters alike. As for employees, well for those with the hottest in-demand skills - the pickings are rich!
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2014's Hiring Activity (our observations)


Insurance - There has been a large focus on web and mobile. This year we also saw the major IAG acquisition of Lumley General Insurance, the effect of which will be realised in the next few months. Construction - The Ministry of Business, Innovation and Employment are expecting a 3.4% rise in overall employment during 2013 to 2018. With such demand, the sector is using technology to drive efficiency, reduce cost and improve collaboration. Telecommunications companies are facing regulatory pressure that is likely to lead to increased prices for the New Year; here there is a continued need to drive efficiency and reduce cost. Utilities - asset sales and volatility in the price of oil is as predicted, leading to an increase in diversification. Alternative energy continues to be trendy and there appears to be some acquisition activity within the sector. Banking - LVR changes have favoured the banks, and with the continued move towards mobile banking solutions, security and anti-money laundering also continues to be high on the list of priorities.


The Services/Consulting industry had a strong 2014, but overall saw an increased level of competitive pressure. Competitive advantage comes in part from the ability to source and provide resources with niche skillsets. We’re seeing an increased trend in the end client organisations being involved in the hiring processes within the consulting organisations. As to be expected consulting firms appear to be more willing, better equipped, and see a greater benefit of recruiting from offshore than they have been previously.


Government signalled the challenge of delivering better, faster and more secure services on the back of the release of the Government ICT Strategy and Action Plan 2017. This has given rise to increased activity levels towards a collaborative approach for ICT projects across government agencies.  Significant issues with several large government ICT projects such as the Ministry of Education’s NovaPay System and the Ministry of Primary Industries and Customs Joint Border Management System resulted in an increased focus at the highest levels of government on programme and project governance and benefits realisation. This has engendered an increased requirement for programme assurance resources, which have been difficult to source.

Software products

Growth in 2014 was driven by funding through IPOs, private investment, and mergers and acquisitions. This is due to the appetite for New Zealand products internationally, the desire to gain market share and to further cement their place in a specific vertical, and to broaden their hold or domain.
The rise of the DevOps department and continued innovation being built into the front-end and UX experience has driven a huge chunk of hiring activity and up-skilling. Given the SaaS trend, this will continue to be important in the future.
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2014’s Talent Pool

Thankfully, the New Zealand ICT sector is thriving, which is great - yet it means that there is a constant demand for skilled talent both on and offshore. With the New Zealand software market, being largely Microsoft oriented there is a perpetual demand for .Net Developers in the permanent and contract space, and it is expected that this demand will continue to grow. There also has been an increase in demand for Java Developers.

Net migration is the highest we’ve seen in the past couple of years. The government is aware of the skills shortage and as such, it is a lot simpler to acquire a visa for a technical person than it was in previous years.

The big question however is ‘what drives talent to seek new work?’ Typically, IT employees strive to work with the latest most advanced technology and efficient systems, which will help grow their careers. As such, a couple of the standout reasons for employees seeking new roles are ineffective systems and processes, and out of date technology.

For a visibility on ICT professionals salary levels, download a copy of our Salaries report.


2014 has seen a steady rise in IT contractors with skilled professionals enjoying the diversity it offers and businesses being more receptive of taking on contractors for specific projects.

Great Business Analysts and Project Managers are still in constant demand, as are good Java Developers in the wake of a significant shortage. The former two are good news as this talks to planned project work.

Contractors are becoming more discerning with the type of contracts they take up i.e. length, location and rate, and are often taking time to choose between roles. Clients that strive to retain in demand IT contractors are under rate and extension pressure - we have also seen some instances of Clients offering permanent contracts with attractive packages in order to retain talent.
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2015 and what it holds

Economic sentiment - There remains a confidence in the New Zealand economy that we believe should continue throughout this year. The results of this bullishness will be impacted by a variety of forces.

The reduced dairy payout fallout - this seasons being $4.70, significantly down from last season’s $8.40 per kilogram, and still significantly below a 5-year average of $6.20. Despite a massive reduction, it shouldn’t have as much of an impact as it would appear on the surface; farmers didn’t spend the windfall, they reduced debt - meaning that they shouldn’t really reduce their retail and capital investment as it hadn’t changed a great deal in the first place.

Interest rates will remain unchanged and this should continue to focus heat on property prices in the two areas that need it least; parts of Auckland and Christchurch. This as per previous years is due to our positive net migration numbers driving a need for additional accommodation.

The ongoing Christchurch rebuild will have its continued favourable impact on the economy.
With the predicted economic strength and interest rate stability, the dollar will remain high, and against the greenback, we may see some opposite pressure as their currency rallies on the strongest job growth in 13 years!

So, what about the tech scene in New Zealand?

Software product development shops will continue to forge the northern technology community, but with more caution. Why? Well, we have seen more technology company listings in the last year than at any other time in New Zealand history; not that many have gone all that well. There was some reckless abandon - most likely fuelled by the heady Xero share price from investors, and there has been some lost wealth and opportunity from lacklustre listings. Great news? Unfortunately, there is a significant amount of optimism driving valuations – with Silicon Valley like exits being discussed. To paraphrase; “You’re not in Sandhill Road now Dorothy” and we don’t get those sort of multipliers. I’m very active in The Angel community and we’re seeing more opportunities in the ICT market than ever before.  However, other investors and I are becoming a little reluctant to invest based upon these expectations. The model is proven however; if we build good software, if we can create effective support structures and have good customer insight - we can see success. The key is reining in the entrepreneurs expectations.

Enterprise is spending again, and should continue to do so. There are many multi-million dollar projects either in mid-flight or planned to kick off soon, with a couple that I’m aware of into the $100m+ realm. Heady numbers indeed, but these spends are always spread over multiple years, vendors and jurisdictions.

What about tech trends?

Well the crystal ball is always murky but the big tech emergence I see happening this year is that clunky new phrase ‘The Internet of Things’. The technology and user community are ready, new and previously unthought-of devices are moving into the mainstream and there’s some tech giants keen to make it happen. I will bang the big data drum again, there’s more execution happening here, and the ongoing move for financial and tax institutions to move away from their old Cobol based systems. I personally know of eight upcoming IT projects of over $10m, so the delivery scene will be busy…

Lastly - points to consider as an employer

Your employment brand – it will assist or hinder your intentions for growth. This is like managing a reputation - not easy to do but incredibly worthy and something I will blog about soon. Carefully consider additions to your remuneration packages and that they align with people’s general preferences, you’ll find some useful insights in one of our blog posts on employee benefits. Get clear about what you need and get into action now, the year is heating up fast.

Contact us to find out more about the current market.

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