Having Trouble Finding Tech Employees?

Why are so many entrepreneurs struggling to find qualified tech employees?
Magazine Contributor
6 min read

This story appears in the April 2006 issue of Entrepreneur. Subscribe »

After three months of looking for a technician to install phone systems, Sheila Mayer Tobier has yet to find one she wants to hire. Those she has found through a combination of networking and online job banks have either lacked the skills she wants, not returned her calls, or been lured away by other offers of employment. "It's always hard to find people," says the 50-year-old co-founder of Proactive Solutions Inc., a seven-person, $1 million telecommunications and home automation business in Plantation, Florida, that she started with Richard Tobier, 45. "But it seems to be a little more difficult now."

The supply of technically trained employees started shrinking last year, according to Tom Gerace, CEO and co-founder of Boston-based Gather Inc., an online source for user-generated content. "Last year, hiring technical workers didn't pose a problem for this company," says Gerace, 35. "We found terrific talent and were able to recruit people on schedule. This year, we're seeing the market as much more competitive for talent."

Jobs calling for skills in Java programming, database systems and quality assurance have been harder for the 25-person company to fill, says Gerace, who attributes the shortage to revived venture funding for tech startups and bigger companies restarting shelved IT projects. "The number of applications coming in has dropped," he says. "We're still getting quality people, but they often are coming in with an offer in hand or looking at two or three other opportunities."

These entrepreneurs' experiences are far from unusual, according to Charlie Jones, vice president of operations for Yoh Co., a technical and professional staffing company based in Philadelphia. Jones singles out data warehousing and internet portal technology as two of the areas where companies are scrambling most to find people. "High-level architects and designers are at a premium," he says. "And though there is greater demand for some of the [more advanced] technologies, demand is increasing across the enterprise." Another hard-to-find employee is the worker who combines business savvy with technical expertise, he adds.

Companies that can't find the technicians they need suffer a variety of ills. Completion dates for current development projects may be pushed back, and new ones may be delayed. The projects likely to be affected nega-tively are precisely the ones most companies can't afford to have hurt, Jones says. "What you're seeing right now is a shortage in the critical skill areas," Jones adds. "These are areas of high technology that are leading-edge or bleeding-edge, that really drive a company's profitability."

A worker scarcity should also drive up wages, and some evidence suggests that is occurring. According to the Yoh Index of Technology Wages, which tracks wages of highly skilled workers, pay for these employees rose a sharp 2.7 percent in one month, July 2005. Although wages grew a more modest 1.1 percent the following month and fell slightly in September, Jones expects 2006 to hold more strong hikes.

"By the end of this year, we're going to see a pretty significant swing in terms of wages and hourly rates for IT consultants and IT professionals," Jones says. "I wouldn't be surprised to see double-digit gains in the near future."

So far, we haven't seen a return to the dotcom days of lavish and often frivolous perks offered to tech candidates by companies desperate to get them onboard. "Power has shifted more to the employer with the economic downturn," says Peter Koutroubis, a data team leader who manages sales and recruiting for Yoh. "Five years ago, a lot of people had pool tables and a refrigerator stocked with beer, and people could wear flip-flops to work. Now it's, 'You're going to dress in a certain way, and we're going to cut back on the fringe benefits.'"

Instead of perks, employers are resorting to offerings that enhance work-life balance and help employees see how they fit into the business. "At the companies that are most successful, you are seeing some flexible work schedules," Jones says. Employees are also attracted to companies that can show them a plan for how they will be used at the company for the short and long term. Rather than just a paycheck, today's tech workers want to feel they are making a difference and are treated fairly, he says.

Not everybody agrees there's a less than adequate supply of technicians. Richard F. Tax, president of the Ameri-can Engineering Association, a professional organization in Fort Worth, Texas, says those who cry shortage are repeating misconceptions and misstatements by people who hope to benefit from the perception of a shortage. "Everybody's been yelling about shortages for years," he says. "But if they looked, they'd find there is no shortage."

As an example, Tax points to a widely circulated 1987 National Science Foundation report that warned of a massive shortage of engineers and scientists in the coming years. Although the basis of the report was later largely discredited, it led to considerable public debate and legislation aimed at increasing funding for engineering education and boosting the NSF budget. The report has also been cited in efforts to raise the number of foreign technicians allowed to work in the U.S. under the H-1B visa program.

Other reports since have falsely stated that fewer college students were seeking engineering, math and science degrees, or that there were other signs of a current or future shortage. However, no serious, long-lasting shortage has appeared. Demand and supply of engineers and other technically trained workers fluctuates, with more students seeking computer science and related degrees when demand is high, and vice versa. This alarm is no different, Tax says: "Nothing has really changed."

Across the country, however, recruiters and employers say technically skilled workers are getting harder to find. One reason may be that employers' demands for the positions have been ramped up. Mayer Tobier, for example, doesn't want just any technician. She wants someone with experience working on the Panasonic equipment she sells. It may be that employers aren't quite needy enough yet to pay technicians what they want, or to accept that they will have to train technicians in some skills.

At Proactive Solutions, Mayer Tobier says she'll muddle through with what she has until she finds what she's looking for, although she doesn't consider the situation ideal. "I'm taking my time because I seem to be able to get the work done with the people we have," she says. "But I think I'd be able to give better service to my clients if I had more people."

Mark Henricks is Entrepreneur's "Staff Smarts" columnist.

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