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LogicaCMG squeezed by graduate shortage

Graeme Wearden ZDNet.co.uk

Published: 01 Sep 2006 11:55 BST

IT services firm LogicaCMG is struggling to hire qualified staff in the UK, forcing it to increase wages and move work overseas.

In its interim financial results, released on Wednesday, LogicaCMG admitted that it was finding it harder to hire high-calibre graduates in the current labour market.

"It's not a crisis, but it is a concern," said a LogicaCMG spokeswoman on Thursday, who explained that part of the problem is that fewer UK students are choosing to study subjects such as maths and physics at university.

"In the UK, the skills we're most in need of are onshore project management, technical architects and consulting," she explained.

This shortage appears to be good news for those who do get hired, but not necessarily for LogicaCMG's clients. The company reassured investors that it was managing to charge clients higher prices, to compensate for wage increases required to fill vacancies.

"We are able to achieve increased prices for the higher demand skill areas, allowing us to compensate for wage increases," said the company in Wednesday's financial results statement.

Faced with recruiting challenges in the UK, LogicaCMG has been hiring more subcontractors in this country and abroad. This is typically more costly than employing full-time staff, so there is pressure within LogicaCMG to drive costs down. As well as conducting its work offshore, the company also recently moved its own accounting operations to Bangalore, India.

There is growing concern that Europe may be facing a tech skills shortage in the future.

In August, the Confederation of British Industry (CBI) warned that the UK education system is failing to turn out the kind of school leavers that the technology industry requires to stay competitive with China, India and Eastern Europe. The issue is also being examined by the European Commission, via a taskforce launched in June.