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Ken Hill, vice president of information technology at General Dynamics Corp., is having déjà vu all over again. Any day now, if management approves a major project aimed at wiring up the company's purchasing operations to the Internet, Hill will face a huge but all-too-familiar staffing challenge. He'll have to beat the busheshardto find the IT help he needs to pull off the project.
Top IT pros are hard to find at any time, but now Hill needs to find an ever rarer kind of technologist: a quick learner who can both collaborate with vendors and users, and simultaneously manage five competing project schedulesall while developing new systems using myriad disparate technologies. Hill is not alone: CIOs across the corporate landscape are finding themselves having to scramble harder, even now, for good help. "E-business projects raise the bar on the skills you need to get your projects off the ground," Hill says. "These days, you need technologists who are also good at managing business change, finding the business payoff and anticipating the business needs." In other words, says Hill about e-business: "It's not about the technology, stupid. It's about process change."
For years, CIOs like Hill have suffered from a chronic shortage of skilled IT professionals, but the big surprise now is that the shortage is still bad, and it's about to get worse. Even with the economic slowdown, new foreign-worker visa laws and the sudden availability of thousands of former dot-com tech whizzes, there's still an IT job-shortage crisis and, says McKinsey & Co. senior partner Bruce Roberson, large companies in particular are just beginning to enter the early stages of a decades-long shortfall.
To be sure, the current economic slowdown has eased the immediate crunch a bit: The Information Technology Association of America, the computer industry trade group, says vacancies are down 51 percent. But there are still some 303,000 tech jobs unfilledand some experts say those estimates are far too conservative. Former Labor Secretary Robert B. Reich, for one, estimates that there are more than 600,000 openings in IT organizations right nowand that number could double when the economy recovers. Says Reich: "We can say with certitude that the shortage is still there, it is still quite large, and it is likely to grow much larger when the economy is back on track."
It's not that there isn't any tech talent out there. According to dot-com headhunter Allison Hemming, president of New York City-based The Hired Guns and organizer of the now-popular Pink Slip parties for displaced dot-commers, plenty of young technologists are out floating their resumes, eager to hone their skills in a traditional corporate environment. Trouble is, traditional companies aren't all that crazy about former dot-commers. Sure, they're welcome in some jobs. But there's some skepticism among top HR executives about how well they'd fit into high-level positions. Michael Haefner, senior vice president of human resources for travel systems company Sabre Inc., will only hire dot-commers if they can demonstrate an ability to anticipate future business needs and build systems sophisticated enough to meet them. Many dot-commers, he says, "never had to deal with the problem of scale"systems that can handle higher volumes or speeds as a business grows and more demand is put on them. Adds TRW Inc.'s CIO and vice president Mostafa Mehrabani: Many techies who went the dot-com route will either abandon a corporate IT job when the next hot trend comes along, or they'll have a hard time adjusting to the traditional corporate culture because many went straight to a dot-com right after graduation. "The ones who have the most difficulty adjusting are the 23-year-olds who had a title of vice president of strategy or technology or HR, and had huge stock options and no sense of the reality of the normal workforce. These are the kids who do not want to go work for large companies and become a number," he says.
But that skepticism is only a small part of the problem: What's continuing to daunt CIOs the most is a lack of people with both technology and business strategy skills, still in chronic short supply. And thanks to the push by more and more companies to rewire themselves to the Internet from the ground up, that shortage is being felt now more acutely than ever. Says Reich: "People who have insight and experience both at the cutting edge of IT and at the cutting edge of strategy in a particular business are extremely hard to find." Just ask Hill. In e-business projects, Hill says, "you have more constituents to satisfy in a shorter time frame. The learning curve isn't a curveit's a cliff. There aren't many who have gone up that cliff."
How bad does it get? Companies are paying high premiumsup to 18 percent above salaryto IT pros who possess the right mix of tech know-how and business strategy skills for their needs. For large companies in particular, that reflects the fact that today's IT labor shortage is as bad as ever, if not worse. An April CIO Insight survey found that while only 28 percent of companies with fewer than 1,000 employees are hiring IT staff, 55 percent of companies with more than 1,000 employees are still hiring. And of those larger companies, 78 percent say finding qualified staff is as difficult as it was a year ago, or more so.
According to Robert Zawacki, a retention expert and professor emeritus of management and international business at the University of Colorado in Boulder, CIOs and IT executives at large firms such as Alcoa Inc., The Kroger Co. and Johnson & Johnson anticipate no letup in the IT talent shortage, and have seen no increase in applicants for IT openings. Zawacki, who runs a network for CIOs and IT HR executives, says there is a prevailing sense that this is no time to roll back employee perks such as extra health benefits and telecommuting privileges.
What to do? There's always money. In 2000, CIOs boosted IT salaries by 10.1 percent, according to David Foote, president of Foote Partners LLC, a Stamford, Conn.-based employment research firm. That's well above the 4 percent average for other workers cited by WorldAtWork, a Scottsdale, Ariz.-based professional compensation and benefits association that tracks compensation at Fortune 500 firms. Companies are still paying more to land MIS grads: Their average salary increased by 5.4 percent, to $45,167, according to a survey released in April by the National Association of Colleges and Employers.
The problem with money, of course, is that it doesn't buy loyalty. Other factorsincluding a challenging work environment and a strong relationship with the bossmatter far more when it comes to retention. Employment experts say the data suggests that CIOs, especially when budgets are tight, may need to adopt a compensation strategy that rewards high achievers instead of warm bodies.