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IT labor crisis continues

The apocalypse nears � at least for IT recruiters.

Despite the recent collapse of many dot-com startups and a slowdown in the economy, any significant growth in the pool of viable IT professionals is not likely, say many experts.

The demand for skilled, experienced IT labor has so far outstripped the labor pool this year that analysts are predicting close to 900, 000 IT jobs will go empty.

Looking back on the IT labor crunch of 2000 is like reopening an old wound for the recruiters and human resource managers who have been tap dancing for the last year to fill critical job openings.

They know full well the problems caused by the worker shortage over the last year, which they say may be doomed to repeat themselves in 2001.

Some experts say investing in training programs or outsourcing the empty jobs to foreign workers may be the only way that IT America will keep its head above water in 2001. The market favors the job seeker and employers are beginning to see that money is not everything to workers that can save them from going from a dot-com to a dot-gone, they say.

The cause

The skilled worker shortage is due to the simple economics of supply and demand.

"The massive onset of Internet technology startups and large companies getting into the Internet has [scooped up] all the talent," said Doug Berg, president and "Chief Techie" at Techies.com, a technology career website.

He said losing people to startups is the biggest complaint he hears from companies.

IT workers often jump around in order to follow the action and go where the technological advances are happening. The prospect of working on shorter projects is a lot more appealing to the technologically gifted than working on a two-year project. And with the explosion in Internet growth there is always another more interesting and challenging opportunity just around the corner.

"Techies want to work on two month projects, not two year projects. With the Internet [growing so fast] there are all of these new people and companies all of a sudden offering new opportunities,'' said Berg.

The impact

The lack of experienced job candidates has caused more than just headaches over the past 12 months. It has had a major impact on start-up companies. With the mood on Wall street changed from funding ideas and concepts to looking at the bottom line, dot-coms were under pressure to produce. But the skilled workers they needed to help them were not available.

"Because the talent wasn't there many companies couldn't get their ideas and concepts into a launched place," said Berg.

While the demand for just about any skilled IT position is hot, the market landscape has sent the demand soaring for Web development and design positions.

"Web developer is the most plentiful job. Not HTML, Java script , VB script, or ASP developers," said Berg.

According to Techies.com, 45% to 50% of the IT jobs they recruit for are in web development. The most critical positions in demand are database, warehousing, and system administrators. Berg has seen some positions go unfilled for 10 to 14 months. And that is a problem, he said, when the average IT project only lasts six to nine months.

Web design also tops

Web site design also tops the list of jobs in demand at VertiCity.com, an IT career website that specializes in outsourcing IT projects overseas. Jeff Mason, CEO of VertiCity.com, said while his company handles requests for a lot of testing and conversion work, Web design and development is where the biggest hole lies.

Staffing experts say one of the most interesting trends in the staffing shortage is that big money offers do not have the same allure for recruits they once did.

Paul J. Mutschler, director of OEM sales for Peripheral Test Instruments LLC said big salary and compensation packages make very little difference in being able to nab talent.

"It has been very, very tough to get seasoned, senior software developers, period," he said. "And it doesn't seem to be a money thing, there are just not enough, good experienced software engineers looking for work."

Trends in 2000

That is because IT workers are growing more selective, say staffing experts. What were once some of the biggest draws for job seekers have become standard benefits.

Workers now demand telecommuting and flexible schedules. There has been a role reversal in the hiring process that has the job seeker interviewing the company, said Berg.

Big signing bonuses, high salaries and stock options continue to rise, but are losing their luster for many workers because they lessen the frequency of compensation reviews and salary increases.

Burnout has also added to the shortage. Many IT workers are being forced to undertake projects that use skills that they would rather put on the shelf in favor of newer, more intriguing work.

"The woo of money causes many to abandon their 'morals' and do the things that they hate. We're seeing IT workers burning out a lot faster because they're working on their least favorite things to do." said Berg.

What's the solution?

There's no quick fix to the problem. Long term solutions such as government funded IT training programs, education grants and a more concerted effort from corporate America to train the workforce in technology are what the experts cite as necessary steps toward bridging the IT labor gap.

The government has not been blind to the problem, but Berg and Mason say it is taking the wrong approach. Last fall the House and Senate voted to ease the importing of talent and increased the number of H-1B visas to allow more foreign IT workers into the country.

The visas, which allow skilled foreign workers to live and work in the United States, will rise to 195,000 during the next three years. But many say in the increase will barely make a dent in the overall IT skills shortage.

"It's a temporary band-aid on a chronic problem, '' said Mason.

Some innovations

Mason and his team said there are some innovations taking place that could help ease the crunch.

Outsourcing has gained popularity in 2000 as labor-starved companies farm projects out to services like Mason's VertiCity.com.

Clients post a project on the VertiCity auction site to workers in Pakistan India, Russia, China, and other low cost countries. The candidates who bid on the jobs have skills ranging from entry-level with rudimentary skills to people with Master's degrees in computer science.

VertiCity brings the contracted worker into its Pakistan office, supplies them with the necessary technology, and takes a 10% commission for making the deal.

Services such as VertiCity can offer dramatic savings to U.S.-based contractors because local wage scales in foreign countries are much lower than they are in this country.

"There are a lot of talented, skilled people there and the labor rates are low. We make our money on having a low wage employee."

Meta Group predicts 35% to 40% of IT personnel will be outsourced by 2004.

Training lags

Efforts to increase training still lag but there are some signs of improvement. Sixty percent of colleges lobby hard for their students to take one to two technology classes.

Some companies are discovering that they can lure new technology professionals with offers of ongoing training and certification, found a recent survey by Techies.com.

In its recent poll of site visitors, techies.com found that more than 96% of respondents considered the chance to learn new skills as either very or extremely important when evaluating an employer.

When technologists were asked, "When you evaluate an employer, how important is the chance to learn new skills?" 63% responded, "extremely important," while 33% said "very important."

"Technologists are as driven by the desire to take on new projects and skills as they are by dollars. It makes sense to make training an important component of a company's benefits as money," said Berg.

Let us know what you think about the story, e-mail Kevin Komiega, assistant news editor

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