Pandemic relief dents profits for Datacom
CEO lauds shareholders for getting behind worker wellbeing priority
Our largest IT services firm has reported a dip in full-year profit — which its boss pins on a pandemic relief measure for staff.
Auckland-based Datacom let its close to 7000 employees hold on to and carry over unused leave days.
“This was in response to two key factors: the need for Datacom to put the wellbeing of its people first; the fact borders largely remained closed in response to the pandemic, limiting people’s ability to travel,” said group chief executive Greg Davidson.
“While this has impacted our profit, it let us live up to our value of putting the wellbeing of our people first.
“There was a 180-day lockdown in Melbourne and similar in Auckland.
“It’s just not reasonable for people to take leave when they’re cooped up and can’t go anywhere.”
Datacom net profit fell to $28 million for the year to March 31, 2022 (from the yearago $35m) on revenue that nudged up from $1.41 billion to $1.45b.
Free cashflow was $114m, versus $156m in FY2021.
“As a group, we are thankful to our shareholders for taking a long-term view and supporting our decision to allow employees to accrue leave,” Davidson said.
Datacom, founded by the late John Holdsworth, is 57-per cent owned by the Holdsworth family’s investment vehicle Evander Management, and 43 per cent by the NZ Super Fund.
The CEO says the wave of digitisation spurred by the pandemic means Datacom’s pipeline “is the largest I can remember”.
But he adds the flipside is that a lot of Datacom’s business involves reselling thirdparty product — and that it’s seeing lead times of 300 days or more for some gear as Covid continues to play havoc with global supply chains.
“We don’t want to get into a situation like the construction industry with Gib, so that means much more careful planning,” he said.
The positive has been that “a lot of our business with customers used to transactional. Now there’s more desire for genuine partnership.”
We don’t want to get into a situation like the construction industry with Gib, so that means much more careful planning. Greg Davidson (right), Datacom CEO
Labour crunch continues
It was a year of “immense pressure” on the hiring front as the technology sector’s acute labour shortage continued,
Davidson said. “That’s meant rising salary costs.”
Yet amid the unprecedented hiring challenges, Datacom did manage to add bodies.
Its total headcount increased from 6539 to 6801 in the year to March, with its New Zealand complement increasing from 3134 to 3509.
Most of the balance are in Australia, but the firm also has staff in the US, Malaysia and the Philippines.
The leave accrual measure applied to staff in all countries.
The answer to the tight labour market is “to train like crazy and be a net producer of talent”, Davidson said.
“We’re widening the pool by drawing in people who never saw themselves working in the sector.”
Last year, a major report by Nztech, IT Professionals NZ, with support from MBIE, found a major of lack of diversity in the white male-dominated IT sector.
It said that stemmed, in part, from inclusion issues with secondary school and tertiary courses.
It also said that while border closures had exacerbated the tech talent squeeze, they did not create it.
Pandemic restrictions had also exposed an over-reliance on imported labour, insufficient IT training in schools and at universities, and a fallaway in industry in-house training.
Here, Datacom has gone on the front foot over the past 18 months, expanding its existing inclusion initiatives.
It became the first company to sign on for the Take2 programme to train ex-prisoners for the IT sector, and offer them apprenticeships.
Datacom also partnered on multiple training and cadetship programmes, including, Hertechpath, Tupu Toa (a leadership and intern scheme for Ma¯ori and Pacific candidates) and a reciprocal partnership with Te Ru¯nanga o Nga¯i Tahu.
The tech talent crunch has “served as a timely reminder for our business — and the industry as a whole — of the importance of taking a ‘homegrown’ approach to talent”, Davidson said.