Telecom layoffs have upside for NZ – McCrae

Millions in direct govt grants shovelled at tech companies pay off as Orion Health, Xero and others line-up to say they're hiring. UPATE: NZICT offers to match laid off Telecom workers with jobs at hot tech companies - but warns the $100K days are over for some.

Tech company bosses are lining up to say they can take on some of the staff about to be cut from Telecom.

Orion Health CEO Ian McCrae says there's even a potential upside for New Zealand.

"It's tough on the people concerned," Mr McCrae told NBR Online from his company's Auckland headquarters. "But many will be moving from a utility company [Telecom] to high-growth export companies."

Orion, which makes software for digitising patient records, has prospered under the "Obamacare" health spending boom in the US, where reforms have required hospitals and other health practices to interconnect their files. The company has won Obamacare contracts for several US states, as well as landing business in Singapore, Australia and elsewhere. 

Mr McCrae says Orion currently has around 750 staff, and is in high-growth mode.

He talks specifics. Before Christmas, Orion landed a new project and looked to hire 55 new full time staff. It could only find 24.

"Since Christmas, we've picked up another project that requires 40 people," he says. He's confident of landing two more, which will require another 25 each.

Orion is privately held (Mr McCrae has a 62% holding), so doesn't release detailed financials, but it had more than $100 million revenue in its last financial year, and Mr McCrae wants it to become the first New Zealand software company to reach $1 billion in revenue (that's cash in the door, not market cap). 

Some, like consultant and commentator Ben Kepes, are dubious that Telecom middle managers will suit roles at lean start-ups and high-growth techs - or necessarily have the right skills.

But while Mr McCrae's company is known for hiring programmers, the CEO says many of the new positions are broader and include business analyst,  project management, marketing and consultancy roles.

Trade Me is also in hiring mode, spokesman Paul Ford says. The company currently has around 320 staff (including 25 with the about to be sold off Treat Me), and has a dozen positions open. "We're always advertising," Mr Ford says.

Xero adding 200 - but not at top end
Xero has doubled staff numbers from 200 to 400 in the past year. CEO Rod Drury tells NBR the cash-rich company will add around another 200 over the coming 12 months.

"Many start ups are light in experience in areas like marketing," he says. Staff from Telecom have in marketing and channel marketing, which was of real value. "CVs are already arriving," Mr Drury says.

Two caveats: not all of Xero's new positions will be in NZ, and Mr Dury says the company is already well-placed at the senior manager level; it's looking for mid-level staff. Some roles were specific to developing Xero's online accountiing software, but others were in areas like business analysis, marketing and project management where skills were transferrable.

Recruiting overseas
Candace Kinser - CEO of NZICT, an industry lobby group that includes the likes of Cisco, Endace, HP, IBM and Microsoft among its members - says many tech companies are "suffering now because they can't find staff."

She cites local IT services company Intergen (an NZICT member) as one example. "Intergen's CEO told me he wants to double staff numbers," she tells NBR. "You're talking several hundred people. Intergen is on a huge growth trajectory."

NBR understands the shortage is such that Intergen has been looking to fill around 200 positions by recruiting overseas. 

Hot techs have jobs - but not always at $100K
Ms Kinser has spoken to Telecom Retail CEO Chris Quin about NZICT facilitating a job matching service.

But she also cautions, "They're not all going to be $100,000 developer roles (Telecom's 2012 Annual Report listed just under 3000 staff earning $100,000-plus). I think that's where the issue is. It'll be across the spectrum; middle-management, back-office, you name it."

Some are doing it tough, but others are already striking out in new directions. Former Gen-i  head of mobility and product marketing Joe Caccioppoli, for example, is already pitching NBR with smartphone battery-enhancing products, courtesy of his new role as managing director of SeaChange. His company has just inked a deal to supply the local arm of Ingram Micro, the largest IT distributor in NZ (and globally). Elsewhere, an industry source tells NBR that a group of ex-senior Telecom staff are behind the Orcon bid fronted by Vivid Networks (a counter-rumour involves an Australian private equity player).

Labour-ish direct grants pay off
Yesterday, Telecom acknowledged that more than 1000 staff could be laid off (on top of 350 already gone this financial year from a 7600 starting point). Labour ICT spokeswoman Clare Curran says Telecom insiders are talking about a cull down to 5000 - implying an army of 2500 laid off staff that would out-number the reported 1300 tech jobs available.

Ms Curran has called on the government to come up with a plan. Economic Development Minister Steven Joyce says the ICT job shortage means the market will take care of things.

NBR would also add the government has been hands on in the past.

In August 2011, Xero landed $4 million in no-strings taxpayer funding.

In a December 2010 direct grant round, Orion received $7.2 million. 

Some might say the $200 million-plus shovelled at tech companies by the current government - much of which has been used to hire staff - has been a case of out-Labouring Labour in state assistance.

Regardless, it's paying off for job-hunting ex-Telecom staff.

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