January 1 2000 by Peter Buxbaum
The pursuit of high-tech talent has degenerated into a nightmare of poaching and cannibalizing. In Silicon Valley-where turnover averages 20 percent-workers are sometimes swiped mere weeks after completing in-house training. The frenzy is fueled both by rapid proliferation of tech-centric firms and a shrinking pool of skilled employees.
“Thousands of Internet companies start up each month, all of which are recruiting infrastructure managers, Web designers, and software engineers,” says Dennis Carey, vice chairman of executive recruiting firm Spencer Stuart. “Many IT functions are being outsourced because they can’t recruit talent and because skills become obsolete quickly. But the outsourcing companies themselves are overloaded. Demand is clearly outstripping supply.”
The education and career choices of the nation’s youth are cited as a primary reason the imbalance is so dramatic. “The work is growing but the talent base isn’t,” a commercial banker told Forrester Research in a recent survey of 2,500 firms. “In America, kids all want to be lawyers, stockbrokers, or doctors. They don’t want to be Dilbert.”
Figures from the American Electronics Association (AEA), the nation’s largest high-tech trade group, confirm that the movement of U.S. college graduates into the proliferating high-tech marketplace has ebbed. The numbers of high-tech degrees awarded in recent years has fallen steadily-by 27 percent in computer and information sciences-while demand for database administrators, systems analysts, and computer scientists and engineers is expected to increase by more than 100 percent by 2006.
The gap is forcing companies to seek out creative answers to the talent deficit. “High-tech companies are throwing in anything they can to get the people they need,” says Tom Stohler, director of workplace policy at the AEA. “There are many high-tech jobs sitting empty because of the lack of candidates.”
While most companies won’t talk about their recruiting strategies for fear of losing a competitive edge, Texas Instruments went public last May with a scheme to attract new workers by beefing up its employee referral program with enhanced incentives and hype. TI gives employees $1,500 and a chance to win a Ford Explorer for each new hire they refer. “We tripled the number of successful referrals of experienced professionals in the second half of 1999 over the first half,” reports Roger Coker, TI’s director for U.S. staffing. TI still has 800 job openings in the U.S., 350 of them for engineers and scientists.
Others focus on keeping the talent they have. “We have a 9-80 program, where employees can choose to work 80 hours in 9 days and take every other Friday off,” says Ken Larson, VP of human resources at Candle, who sees “lifestyle” perks as a way of retaining workers. In Silicon Valley these can involve everything from offering pet insurance or legal services to awarding one-month sabbaticals for every three years of service.
With the U.S. IT employment market fully tapped, many firms are looking overseas for solutions such as importing human resources or exporting work. The notion of importing workers sparks political opposition from the same forces of economic nationalism that oppose globalization in general. But, warns Carey, “we are now above and beyond the question of nationalism and politics. The question is what’s necessary to sustain our competitive advantage.” The technology revolution, he says, must inevitably-and even more urgently-be fueled by the same influx of foreign labor that propelled the Industrial Revolution of the 19th century. Domestic solutions such as educational improvement and workforce retooling will bring little relief to an acute situation in which, according to the Forrester report, “good people are handed a job contract well before they’re handed a diploma.”
The AEA has been lobbying Congress to pass the Gramm-Dreier bill, a measure that would increase the cap on H1-B visas-which allow entry to workers with special competencies for between three and six years-from the current 115,000 per year to 200,000. Congress is expected to take up the proposal this year; however, the White House reportedly opposes the legislation.
While the Gramm-Dreier proposal languishes in legislative limbo, IT firms, like their industrial counterparts before them, are seeking greener pastures on foreign soil. “Many savvy technology companies have begun to out-source and/or establish a presence in other countries, where labor costs are lower and where they can optimize productivity per worker,” says Carey. For companies that are already global, exploiting talent on a worldwide basis comes naturally. “Fifteen or 20 years ago, most of our R&D was done in the Americas and Europe but we had sales offices worldwide,” says Mary Kumar, worldwide IT support manager at Hewlett-Packard. “Then we began to think about how we could develop the human resource pool elsewhere in the world. Our move into Asia basically replicated what we had already done in Europe.” Now, H-P increasingly relies on its operations in India and China for R&D.
Computer Associates International (CA), the third-largest software developer in the U.S., executed a global human resources strategy from the beginning, according to Yogesh Gupta, senior vice president for product strategy. “We pursued this model because we found out a couple of things about good talent,” he says. “First, no geographical location has a monopoly, and second, good talent doesn’t necessarily want to move.” CA has established development centers in the U.K., Germany, Singapore, India, China, Australia, Japan, and Israel, in addition to several in North America. CA’s ability to leverage brain power on a global basis has enabled it to compress software development time through round-the-clock activity.
“We may be developing code in Germany, for example,” says Gupta. “When they leave for the day, the Germans send their work to New York for testing and New York relays it to California for integrating. By the time the Germans wake up the next morning there is more work for them to do.” CA’s worldwide presence has also aided in its war against computer viruses, one of its leading lines of work. The company has anti-virus labs in Australia, Singapore, Israel, Germany, and the U.S. “This allows us to monitor viruses when and where they break out,” says Gupta. “We can catch a virus in Singapore or Australia 12 hours before it gets to New York. Those 12 hours can make a difference in preventing the spread of the virus before North America wakes up in the morning.”
Emerging Internet-based skills marketplaces-with names like FreeAgent, iNiku, Skills Village, CareerBuilder, Monster, and HotDispatch-may help companies match up their Internet project requirements with appropriate professionals more efficiently. TI posts listings on such job market sites, says Roger Coker, but places more emphasis on recruiting through its own Web site, which, besides the job listing itself, includes tips on career planning and resume writing, a calculator to show cost-of-living differentials in various parts of the country, and a questionnaire designed to test the cultural fit between the company and the applicant. Twenty-eight percent of TI’s total professional hires and half of its Internet-sourced hires came from its own Web site in 1999.
Cisco reportedly gets 80 percent of its new hires through the Web. Clicking on the Hotjobs@Cisco button on its home page takes prospective employees to a searchable database of job openings at the San Jose, CA-based company’s offices throughout the U.S. and 75 countries worldwide-including far-flung locales like WuHa, China, and Budapest, Hungary.
Innovative methods notwithstanding, the rapid march of technological development and the exponential increase in Internet commerce raise the question of whether the global pool of skilled workers can satisfy demand at the current rate of acceleration. H-P’s Mary Kumar suggests that it may not. “We still haven’t been able to redress the human resource shortage completely,” she says. “Networking, e-commerce, and other emerging technologies are all areas where resources appear to be lacking globally.”