So, it’s Liberation Day, and the USA has rolled out tariffs across the world. The tariffs are likely to affect all economies and sectors to varying degrees. Commentators across the globe are attempting to decipher the impact, but rarely have we seen such tumultuous change. With that noted, I boldly attempt to predict the impact on the Australian IT Jobs market.
American Tech Employers in Australia
Whilst tariffs don’t directly affect services, an America First policy creates a very plausible scenario where considerable pressure would be felt to re-shore jobs if the US IT jobs market were to falter. Victor Janulaitis, CEO of Management Consultancy, Janco, recently noted, “A preliminary impact of DOGE is being felt, as many contracts for IT professionals have been put on hold and government IT [professionals] do not have a clear picture of what the future holds for them.”
The Tech Council of Australia recently published a report stating 100,000 Australians are employed by American Tech companies. Whilst not all 100,000 are IT workers, there are 7 American organisations in LinkedIn’s Talent Insights top 100 employers of IT workers: DXC, Apple, Microsoft, IBM, AWS, Accenture and Dell. Most of the innovation in these organisations is performed offshore whilst locally the focus is firmly on sales & delivery. Most of us would agree that effective tech implementations generally benefit from proximity to the customer and most businesses in Australia would prioritise supplier partners able to offer locally supported implementations. Thus, many IT roles are not readily “re-shoreable” to the US.
There are also a number of American businesses with tech presences in Australia that develop solutions using Australian IT workers for not just a local customer base, but also an American or global audience. Most of America’s offshore tech roles are located in India where labour is comparatively cheap. Whilst Australian salaries and rates are lower than the US, they are much higher than comparative roles in India. Thus, the cost of re-shoring from Europe/Australia/Canada to US would be much smaller, which is obviously a concern for the local market.
In positive news, the Aussie dollar is fairly weak and the cost of employing staff in America is much higher than here in Australia. Bob Wallace, a New York IT recruitment veteran and one of our Principal Consultants at Balance, notes “it’s so much easier and cheaper to find staff in Australia, there’s more available talent and similar skill levels. Financially, it’s basically the same number of dollars in different currencies”.
The Tech Stack
So much of the technology Australian businesses use is American, especially in the enterprise software space. As far as technical requirements in job specs, it’s nearly all American – Microsoft, Oracle, AWS, Cisco, Java, Adobe, Salesforce, Google etc. It’s much easier to talk about what’s not American.
But is that a problem? Tech is a massive export earner for America and even under an America First approach, unless there is a complete breakdown in global trade, I simply can’t envisage a scenario where the status quo of American domination in global software tech will not be maintained. And clearly, Australia is extremely unlikely to impose tech tariffs.
Australian Tech Exports to US
If we look at our local tech businesses, from our big success stories (Canva, Atlassian, Wisetech etc) to smaller and mid-sized local tech businesses, they all have an established US customer base, or are keen to develop market share in the world’s largest economy. It’s unclear where the delineation between a service and a product will be drawn, and therefore I’m unsure which, if any, Australian tech products will be hit with tarrifs. However, I’m more certain there will be some inflationary effect on hardware as nearly all supply chains will be tarrif affected.
Further, an America First approach will create impediments for many of our B2B businesses as the US Government and their suppliers prioritise local partners above foreign businesses. Helpfully, the cost of changing tech systems is high, so should act as a counterweight to any America First forces, and in another positive news the Australian Government is now likely to prioritise local suppliers.
Additionally, with the entire world dealing with a less predictable administration, there is a chance of opportunities opening up in numerous other markets, as countries look to suppliers from less volatile countries.
Investment
If we look at Australia’s tech success stories, Venture Capital firms played a major part in many of their growth trajectories. Investors in Australian tech companies, both start-ups and established businesses, have always been a combination of local and overseas players with US investors playing a major role. It’s possible that we’re about to see considerable change with pressure for US capital to be invested in the US. There is the possibility that non-US capital could replace some of the gap, but I would suggest that investors risk appetite may decrease and over-all it will be trickier to source funding. This is likely to be especially apparent in the start-up space, due to the potential decrease in access to the coveted US market.
In Conclusion
The good news for Australia is that our 10% tariffs are the minimum imposed. This may present us with some opportunities to take market share from America’s other more heavily impacted trading partners. The local IT jobs market is in its best shape for 2 years. However, the broader global economic impact is likely to overwhelm any local uptick. I would expect we will feel ripples in the short term, and there is likely to be some bigger waves in the medium term. Its true these changes present risk and uncertainty, but we’ve proven incredibly resilient as a nation, and a sector, for many decades and despite my nervousness, I’m exceedingly hopeful that we will flourish by adjusting to the new tariff landscape whilst working hard to open up new markets.
Steve Santopaolo joins Balance
It gives us great pleasure to announce that recruitment industry veteran Steve Santopaolo has joined the Balance team as a Principal Consultant.
Widely regarded as a true gentleman of the industry, Steve brings over 30 years of tech recruitment experience.
Possessing one of the widest networks in the industry, he’s already created a strong impression with our customers and candidates alike.
Having previously worked with many of the Balance team, we know Steve will provides a tremendous recruitment experience for everyone he deals with.