Bermuda’s IT sector contributed more than $220 million to the Island’s economy last year.

Information technology made up 3.9 per cent of the gross domestic product (GDP) — a total of $222 million — according to a report from the Department of Statistics. That was down from $229 million in 2013.

Capital investment in information and communications technology (ICT) grew by 5.7 per cent to $81 million in 2014, compared to $70 million the year before.

The increase reflected a 38.3 per cent increase in the purchase of computer software.

But the number of people working as IT professionals fell by more than a quarter last year compared to 2013 — down 78 jobs.

And the number of IT-related jobs also fell, down 130 posts (15.5 per cent).

IT-related posts accounted for 2.1 per cent of jobs in 2014 compared to 2.4 per cent the year before.

The report stated: “The majority of companies surveyed (62.5 per cent) did not outsource their ICT needs in 2014.

“Nearly three out of 10 companies (28.8 per cent) outsourced their IT needs to other local companies and approximately one in every ten companies (8.7 per cent) outsourced their ICT needs overseas.”

Steve Bull, managing director of IT firm Independent Consulting Solutions (ICS), said there had been a steady decline in in-house IT departments over several years.

He added: “IT departments in Bermuda might have been as high as 20 or 30 people, but many jobs have been relocated elsewhere, especially programmers and higher-end support people.”

Mr Bull said he knew of one company that gone from more than 30 IT people to none as roles had steadily been transferred overseas over a number of years.

He added: “The nature of business we are seeing in Bermuda is changing — we’re not seeing the Ace and XL type of numbers. We’re seeing two to 10 people starting a reinsurance company or a new idea.

“It doesn’t make sense for them to hire an IT person, so they are outsourcing.”

Mr Bull added that the increase in investment in IT equipment could be put down to companies not replacing systems and equipment during the recession.

He explained: “It’s a refresh — we went through a period where people weren’t spending money on technology because they were unsure of where things were going.

“It just came to a point where it became a risk for companies to continue running on ageing equipment.”

But Mr Bull said he was optimistic about the future of the IT industry and ICS on the Island.

He added: “We are excited — we’re growing and we’re looking forward to the future.”

The survey also revealed that the ICT trade deficit increased by $19.7 million — almost two thirds — in 2014.

The report said” The wider deficit reflected an increase in imports of 9.9 per cent or $11.1 million combined with a decrease in exports of 10.6 per cent or $8.6 million.”

And it added that businesses with a higher number of employees “invariably used ICT in greater proportions and across a wider spectrum of activities than companies with fewer employees.”

Graham Pearson, CEO of the Ignition Group of technology companies, agreed with Mr Bull that companies were moving “back office” roles to cheaper locations and also consolidating IT skills to head offices, usually in North America and Europe.

He added: “The biggest employers of IT staff have typically been the reinsurance giants — as the consolidations in that sector continue, so will the reduction in staff.”

And Mr Pearson said: “Outsourcing is an attractive option — that can eliminate full-time roles with all those attendant costs, human resources and work permit challenges.”

He added: “In real terms, we will see a continuing decline in the need for local full-time tech staff, outsourcing becoming more prevalent, which is an opportunity but at the same time a challenge as the access to global tech skills and services become more readily available and at lower prices than local companies can provide.

“Local companies need to differentiate themselves with high levels of service but balance that with demand from the client base to pay less.”