Global Trend Reports Project and Change - H1 2014

2014

H1 | JAN-JUN

GLOBAL TREND REPORT PROJECT AND CHANGE

CANDIDATES WITH FORMAL QUALIFICATIONS MUCH IN DEMAND

• Demand is high for candidates with formal training and qualifications in a project methodology such as Prince 2 or Lean Sigma

• Salaries will increase for Project & Change professionals whose skills and experience address key pressure points such as new regulatory and compliance standards

• Many projects are being initiated in customer experience, data management and operational efficiency

• The contract market is strong, especially where hiring organisations need specific skill sets. In Project & Change movement between contract and permanent roles can be quite common

• Companies in Singapore and the UAE may have difficulty sourcing local Project & Change professionals who fully meet job requirements

In line with our commitment to keep Project & Change professionals up to date with employment and recruitment trends, at the start of 2014 Morgan McKinley conducted an international survey of its consultants in five markets. The market has picked up quite strongly in the United Kingdom and Ireland, where we may see increased competition for talent in 2014. This picture is not quite so positive in APAC and the Middle East but we do expect some improvement as the year progresses.

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QUICK LINKS

AUSTRALIA .............................................. 2IRELAND ..................................................4SINGAPORE ............................................ 6UNITED ARAB EMIRATES ....................8UNITED KINGDOM ............................... 9

Despite a relatively pessimistic outlook for Australia in 2014, the Projects & Change agenda remains a strong focus, as businesses look to adapt and become more agile. With economists predicting growth below the long term average it is essential for companies to remain competitive, in particular by reshaping operating models and by improving customer experience. Transformation and remodelling projects are the main growth area, supported by the continued focus on regulatory and compliance requirements and customer experience.

We had expected resource demand for regulatory programmes to ease early in 2014 (as delivery deadlines approached) but this demand has shown no sign of abating. FATCA, for example, is becoming GATCA (a global approach to tax compliance) while Austrac is cracking down harder on money laundering. In addition,

in most large organisations, there is significant work required to upgrade core IT systems so that they deliver an integrated view of the customer and support new revenue capture opportunities such as via mobile devices.

That said, recruitment freezes imposed from higher up organisations are depressing the job market. Projects have to compete hard for funding and this creates a knock-on effect with some organisations struggling to get full-time equivalent (FTE) approval for permanent and sometimes even contract hires. We often see that this results in more costly, and potentially more risky, work-arounds with the engagement of consultancies in order to meet key deliverables.

In the Project & Change space most organisations, even those with large internal talent pools, are keen to look at external candidates in order to

benchmark their current capabilities. There is also scope for cross-fertilisation of ideas taken from Commerce & Industry. Unlike other disciplines, candidates are more likely to move between permanent and contract roles and between organisations or even sectors to follow the size and type of projects that interest them.

In most areas of Project & Change there is an adequate supply of local talent but there are a few pressure points where organisations have been required to look abroad. In particular, we have looked to Europe and the United States to source talent and project management experience in Lean and Six Sigma or within the investment banking environment.

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Competition for the most interesting opportunities in well-regarded organisations can be fierce.

ORGANISATIONS RESHAPING THEIR OPERATING MODELS

AUSTRALIA

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OUTLOOK

SALARIES & BENEFITS

There is a requirement for business models to adapt and as the year moves on we expect more organisations to look for the right talent to secure their future success. Candidates looking to step up to their next role must be able to demonstrate their capability in a particular field, coupled with a track record of delivery. Evidence of leadership skills and effective stakeholder engagement are essential when demonstrated alongside technical ability. Competition for the most interesting opportunities in well-regarded organisations can be fierce. Line managers are often looking to meet very specific requirements and are reluctant to be flexible on industry experience, specific project expertise or methodologies.

Project success typically depends on building strong relationships with the business to drive commercial returns. As the focus on efficiency continues there may be a more rigorous approach to measuring project success.

Hiring organisations may encounter difficulties in securing the right talent to meet specific demands. Industry-wide initiatives mean competitors are undertaking very similar programmes of work and within the same timeframes. They are advised to confirm budgets and headcount requirements against competing organisational priorities as early as possible or they will miss out on the highest quality candidates.

Salaries will continue to be flat for permanent positions in this space, although a premium may still be paid for key skills in high demand such as Six Sigma and Lean Sigma. We note that thisis becoming more challenging for larger players with carded rates in place. They will need to make a very strong business case to exceed set budgets. On the contracting side we have seen a trend towards fixed-term contracts which we expect to continue in 2014.

In Ireland we were pleasantly surprised by the number of new roles being posted, particularly in Financial Services. The situation showed an improvement in the second half of 2013 with organisations recruiting new headcount, in particular for transformation and remodelling projects, customer experience projects, and projects related to compliance and regulatory issues. We expect this trend to continue into 2014 with the return of greater economic confidence.

Currently there is adequate supply of local talent to meet the demand, but we may soon reach a point where companies have to seek talent abroad, especially in Financial Services and IT. The UK, and in particular London, is the usual source for overseas talent in this space.

With the positive turn in the global economy, Irish companies are keen not to miss out on hires that will bring new ideas into the organisation. Candidates with a formal qualification in a project methodology such as Prince 2, Six Sigma and Lean Sigma combined with ERP experience are particularly sought after, as are professionals with an accounting qualification.

The contract market is especially buoyant. “Many of our clients cannot predict the longevity of transformation and implementation projects so they are hiring on a contract basis. These contracts tend to be quite lengthy however and some will go permanent as companies see the long-term value that these contractors can offer to the business,” comments a Dublin-based Project & Change specialist with Morgan McKinley.

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Irish companies are keen not to miss out on hires that will bring new ideas into the organisation.

MORE PROJECTS BEING INITIATED

IRELAND

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OUTLOOK

Our outlook for 2014 is positive. Candidates will come forward as more and more tempting opportunities arise. Our advice to professionals who are early in their career is to look for projects internally that will allow them to improve their skills, and train in a project methodology. This will demonstrate that they are serious about making progress in this area. Specialists in accounting projects need to stay on top of the changes coming into force, for example the new IFRS 9 relating to derivatives and IFRS 11 relating to joint operations, and the application of IFRS standards to SMEs.

Hiring organisations should take into account the growing demand. If they see a strong candidate they will need to avoid protracted interview and hiring processes and be competitive in their salary offers.

SALARIES & BENEFITS

Base salaries and daily rates for contractors will certainly rise in the course of 2014 as demand increases. We have noticed that completion bonuses are becoming more common.

In Singapore the market for permanent hires in the Project & Change space remained stable in the closing months of 2013 while we saw increased buoyancy in contracting. Transformation and remodelling, IT system enhancements, customer experience, new products to market and regulatory and compliance projects have been the main growth areas in Project & Change over the past six months and will remain so in 2014. However, we also witnessed the offshoring of some business functions to lower cost countries such as India, the Philippines, Malaysia and Vietnam.

While there is not enough local talent to support ongoing hires, paradoxically companies in Singapore are often reluctant to hire from offshore, except possibly in the case of very senior hires, who

are mostly sought from other APAC regions and the United Kingdom.

The buoyancy of contracting is largely explained by the immaturity of the Project & Change market space in Singapore. The general consensus is that many Project & Change contract roles are being filled by people who would prefer a full-time position or who are returning to the country. “In certain areas contracting is more frequent, because there are specific skill requirements. But it is surprising that even in such cases, companies are still not paying a premium to hire a daily or monthly rate contractor; rather, it is a pro-rated monthly or annual salary,” says one of our Singapore-based Project & Change recruitment consultants.

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Many P&C professionals who would prefer a full-time position are currently working as contractors.

LACK OF LOCAL TALENT BUT RELUCTANCE TO RECRUIT OVERSEAS

SINGAPORE

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OUTLOOK

The overall economic situation is positive. According to estimates from the Ministry of Trade and Industry the Singapore economy grew by 4.4% in the fourth quarter of 2013 and although this represents a fall on the same quarter in 2012, economists are confident that the economy will benefit from the current recovery in the United States, Europe and China. Singapore remains an attractive destination for overseas talent because of the lifestyle and growth benefits.

Directions in Project & Change are being shaped not in Singapore but by global changes while the need for cost efficiency will inevitably bring more offshoring of projects to lower cost countries. We expect to see demand for industry-specific professionals in specialist roles such as business analysts, programme and portfolio managers, change managers, and project managers.

From a candidate perspective, the majority of projects based around cost efficiencies require a very specific skill set for each role. Employers will not engage candidates who are only an 80% fit. However, employers may find that there is a shortage of locally based 10/10 candidates.

Nevertheless there are grounds for optimism as we expect to see positions offered that incorporate IT transformations and global system roll-outs from Singapore. “Many P&C initiatives are now funded and approved by IT because most of them have a strong IT element, such as system enhancements and upgrades, or outsourcing. Only projects that are specifically finance-related come under the CFO now,” says our consultant.

SALARIES & BENEFITS

It is very difficult to predict overall trends in salary levels. In the contracting area, if the economic climate improves there will necessarily be an upward pressure on rates with contractors commanding premiums in niche areas where there is a skills shortage.

In the United Arab Emirates many organisations are currently implementing change management programmes and in the latter half of 2013 we saw a continuation of high levels of demand for new headcount. However there is a shortage of locally based talent to drive reorganisation and globalisation projects; moreover, there has been insufficient movement in recruitment budgets to attract people in this space from overseas (typically Europe or the USA).

The main growth areas are currently regulatory and compliance, customer experience and service, and data management. We expect to see an increased focus on transformation and business remodelling projects in 2014.

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Organisations are eager to recruit P&C professionals with Lean Sigma experience.

SHORTAGE OF LOCAL TALENT WITH NO SOLUTION IN SIGHT

OUTLOOK

The outlook for 2014 is overall neutral but it should prove positive for candidates with formal project management qualifications such as Prince 2, Six Sigma, Lean Sigma etc., and with an MBA or similar post-graduate qualification. Fluency in more than one language is obviously also a big plus in this cosmopolitan environment. “Hiring organisations are eager to recruit Project & Change professionals with experience in Lean Sigma, but such people are thin on the ground,” says one of our consultants in the UAE.

UNITED ARAB EMIRATES

SALARIES & BENEFITS

We do not anticipate significant movement in salary levels in 2014. Employers tend to focus on basic salary rather than annual gross package. Some overseas candidates may therefore be discouraged by the rising cost of living, in particular housing costs.

The demand for Project & Change professionals continues to increase and one of the main drivers of this demand remains compliance and regulatory issues in the aftermath of the financial crisis. For example, provisions need to be made to cover Dodd-Frank, Basel III, the Markets in Financial Instruments Directive (MiFID), the European Banking Authority governance guidelines, Financial Stability Board principles, the European Market Infrastructure Regulation, the Foreign Account Tax Compliance (FATCA) and the Financial Transaction Tax Act. Organisational changes and IT implementations, in particular to improve

operational efficiency, account for further demand for Project & Change professionals. Those with project-relevant qualifications such as Prince 2, Six Sigma and Lean Sigma, particularly when combined with an accounting qualification, are well placed to find satisfying roles. Candidates who can demonstrate significant experience on relevant successful projects are also in demand.

Banks and financial services institutions are working to tight timeframes to meet new regulatory demands, so employment opportunities tend to take the form of contract or interim hires. The contract market is therefore buoyant.

“Tight deadlines combined with cost constraints require an elastic workforce,” comments one of our London-based P&C specialists. “We see companies letting permanent staff go, replacing them with contractors, and at the same time we see permanent staff, perhaps frustrated because they have seen no salary improvement, leaving for contract positions,” he adds.

However, while the market is positive at a macro level, many companies are still cost-conscious so salary levels and daily contracting fees have in general not increased.

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Candidates in the contract market should keep a sharp eye out because the best opportunities will be snapped up quickly.

A LOT OF MOVEMENT BETWEEN CONTRACT AND PERMANENT ROLES

UNITED KINGDOM

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OUTLOOK

External regulatory and compliance changes will continue to drive strong demand well into 2015. The global initiatives that are impacting organisations take time and resources. We will also see transformation and remodelling projects as well as a focus on data management.

Employers will be looking for candidates who can demonstrate clear application of their skill set. For example, if you have led a programme or project involving change you need to able to demonstrate your leadership capacity detailing the situation, task , actions and results or

outcomes. Above all, hiring organisations will want you to demonstrate that you can hit the ground running, so P&C professionals who are focused on regulatory and compliance must keep abreast of new requirements and the timelines of change. “Candidates in the contract market should keep a sharp eye out because the best opportunities will be snapped up quickly. At Morgan McKinley we have responded to this situation by providing blogs, webinars, panel discussions and other innovative communication channels to keep candidates up-to-date,” says a London-based consultant.

SALARIES & BENEFITS

Increased demand will put a squeeze on availability of candidates and this will drive salaries higher for key skill sets. Given that we still are emerging from a cost-conscious market and many organisations have pay freezes in place, this will pose a challenge for employers. We don’t expect significant changes to performance-related pay.

A MORGAN McKINLEY GROUP COMPANY

GLOBAL TREND REPORT PROJECT AND CHANGE

2014