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ComputerWorld (Print 02/02/98)



Pressure Gap: Transforming the IT workforce
Rochelle Garner



Numbers, schmumbers. The Information Technology Association of America (ITAA) last month proclaimed that one in 10 computer-related positions goes unfilled, which will amount to 346,000 job vacancies this year.

When you look at it that way, it's a miracle that U.S. industry hasn't ground to a halt. But those figures don't take into account the fact that companies routinely open job requisitions and then, for whatever reason, close them.

"I may have a job opening one month that isn't needed the next," says Jimmy Webster, senior manager of technical staffing at MCI Communications Corp., in Washington.

Webster is responsible for finding technical people to fill MCI positions around the country.

"We put projects on hold, delay them and open requisitions in anticipation of signing on business that doesn't get signed. Plus, the requirements and skills sets we need can change completely. Those factors make it impossible to know whether we have one vacancy for every 10 jobs," Webster says.

Still, the ITAA's numbers are impressive enough to persuade the Clinton administration to ante up $3 million in grants to retrain laid-off workers, $17 million to bring technology resources and training to

the poor and $8 million to build an Internet-based job bank. The ITAA's drive to increase the visa cap for qualified foreign nationals, which critics say is its main agenda, has been met with an icy shoulder.

Quite a few of the ITAA's assertions regarding the so-called IT labor crisis have come under scrutiny. Many critics - notably the American Engineering Association (AEA) and the Institute of Electrical and Electronics Engineers (IEEE) - maintain that the industry doesn't face a labor shortage. But demand for computer scientists, computer engineers and systems analysts is increasing.

"Recent history also suggests that the pool of available talent should be sufficient to meet industry's needs now and in years to come," says Paul Kostek, president-elect of the IEEE. The source of that talent? IT retirees and laid-off technical workers who can learn new skills - fast.

The ITAA's response: "Obviously there were people on the Titanic who thought they'd only hit an ice cube - and that's the mind-set at the AEA and the IEEE," says Harris Miller, ITAA president. "I've known some of these people for 20 years, and they thought the Earth was flat then and still think so. Our numbers are from the U.S. Bureau of Labor Statistics, and the [bureau] is no friend to business. But whether you believe our numbers or not, we are in the process of trying to dramatically increase the domestic supply of IT workers. Only simple-minded people say the market will solve the problem."

But people disagree on what "the problem" is. If you talk to many observers, analysts, educators and hiring managers, they will say this isn't a labor shortage, but a skills shortage. They also say the demand will continue for more people who possess more sophisticated skills.

"I think the demand will be this way for a number of years," says Harvey Shrednick, former chief information officer at Corning, Inc., in Corning, N.Y., and now on the faculty at Arizona State University's College of Business, in Tempe, Ariz. "That's because technology is a continuously changing, continuously competitive environment."

Brainpower

Regardless of whether the ITAA's labor shortage numbers paint a true picture, there's one point on which everyone agrees: Companies in nearly every industry are reporting serious difficulty in finding and retaining qualified information systems staff, emphasis on the word "qualified."

"These are the most difficult recruiting times I've ever experienced," says Webster, who remembers the labor shortage that occurred 10 years ago. "The demand for different skills sets is so much broader now."

And therein lies the root of the problem, many claim. Companies today demand a heaping smorgasbord of skills from their IT departments, from the cutting edge to the mundane. Embodying those skills is a broad spectrum of professionals - from heads-down programmers and computer scientists to individuals who combine business savvy and technical smarts in nearly equal measure. In any case, brainpower matters.

Consider Computerworld's annual job forecast surveys from the past three years. Two and three years ago, the message from those polls was that everyone was hiring, but they wanted their hires to have more skills. In the most recent hiring forecast survey, the message was desperate: Managers want, but can't find, all those skills. They have to settle for less.

Higher expectations

The upshot is that companies are always raising the bar - for both skills and experience - of the IT professionals they seek.

"For our company to stay nimble, our IT folks have to specialize in four or five skills at one time," says LeRoy Pingho, vice president of IS planning and strategy at Fannie Mae, in Washington. "Specializing in one skill just doesn't cut it anymore. But having technical aptitude is only a ticket to play here. We also look for creativity, innovation and the mind-set to apply technology to business goals."

Sound impossible to find? Perhaps, but it's a call sounded by almost every business in America.

"We are moving into a knowledge economy, where working capital is intellectual capital," says Dominique Black, CEO of Advanced Technology Staffing, Inc., in Redwood Shores, Calif. "And a knowledge economy is a high-wage economy."

Bingo. Recognize that last point, and you realize this is no aberration. Yes, good help is hell to find. Yes, salaries and compensation are going through the roof. And no, colleges and universities can't pump out enough students with the latest skill du jour. Deal with it.

"It's time companies realize that the old workforce model is dead," Black says.

All the king's horses

So what's the new IT workforce? It's a better-paid group, for sure. Its members are generally willing to leave their companies for better opportunities and with changing expectations about quality of life. The workforce is also increasingly populated by independent contractors.

In the decade that Computerworld has tracked salary trends, it has seen precious little growth in IS workers' pay. Annual increases in IT salaries have often been below the national average for all industries.

That is, until two years ago. Then, IS salaries began to jump - 8% to 10% for less-skilled job titles and 16% or better for highly skilled jobs, according to Computerworld's tally.

Add to that the 20% to 28% salary projections, according to the ITAA's poll of its high-tech members.

What's happening here?

A dramatic increase in IS spending, that's what.

In fact, Gartner Group, Inc., a market research firm in Stamford, Conn., predicts that North American companies will spend 9% of their revenue on IT by next year and then will reduce that to a "more reasonable" 5% to 7% by 2002.

Quite frankly, salaries have nearly caught up with IT's business value.

"About two-thirds of U.S. companies still perceive IT as a back-office function, completely ignoring IS's contribution to enterprise revenue, growth and competitive advantage," says Diane Tunick, a senior analyst at Gartner.

"If I can put three people together to give me a $25 million advantage over the next three quarters, what are they worth?" Black asks.

Probably close to what they're finally getting paid.

And although companies may fervently hope that adding IT workers to the workforce will bring back the old days, they aren't about to put Humpty-Dumpty back together again.

"An increased supply of workers would force down salaries only if advances in technology were to slow down," says Greg Scileppi, executive director at RHI Consulting, Inc., in Palo Alto, Calif., a division of Robert Half International, Inc.

R-E-S-P-E-C-T

Remember the downsizing mania of five years ago, often disguised as "re-engineering"? In a frenzy to make themselves lean, companies became downright mean, cutting up the corporate contract that rewarded employee loyalty with job security.

As a result, workers learned that job security, career paths and workplace satisfaction rested with themselves. Now, companies just can't seem to hold on to staff. Tunick reports that turnover rates are approaching 22%, up from 15% last summer.

"Companies point to a mercenary IT market of professionals selling themselves for the highest dollar," Tunick says, "but few are willing to take a real close look at whether they are either recruitment- or retention-worthy."

So people leave, increasingly to go off on their own. And they immediately give themselves a 25% pay raise and ample time off, Black says. They also take only those assignments that interest them - a luxury that an average hourly rate of $63 can easily afford. No wonder more IT professionals find themselves drawn to this lifestyle. The contractor workforce, Black says, is expanding at 17% per year. Make no mistake, everyone predicts the trend is likely to continue.

"A big paradigm shift in the workplace is supplementing a core IT group with consultants," Scileppi agrees. "That way, companies get immediate technology transfer and don't risk forfeiting the expenses they've invested in permanent staff."

FUTURE WORKPLACE

What that means, according to Gartner research, is a future that divides companies into the haves and have-nots. But in this case, the have-nots will have made the conscious decision to shed their dependence on employees and contract workers.

"Except for a cadre of highly paid IT business managers, these enterprises will give external services providers and process outsourcers the reins for designing, developing and delivering IT activities," writes Tunick in the Gartner report "Does an Insane IT Labor Market Demand Insane Measures?"

According to that report, the base salary for 75% of IT positions in 2002 will be 25% to 30% higher than today's rates; 20% of IT positions will regularly remain vacant for longer than six months; and 20% of all enterprises nearing completion of their year 2000 projects will "cool the demand for contract labor, temper the staff's expectation of high salaries and reduce the frequency of exceptions to the corporate [salary] policy. . . . Bonuses for skills, knowledge, retention and sign-up will wane and eventually be eliminated."

One trend that isn't so easy to figure out, though, is the number of students graduating with degrees in computer science.

At last month's ITAA Workforce Convocation, for example, industry and government representatives often cited the 40% decline in bachelor's degrees seen between 1986 and 1994. Although computer science degrees are genuinely down from a decade ago, that number doesn't take into account the number of master's degrees or doctorates in computer science awarded during that time. That makes the decline only 25%.

And it doesn't address the fact that the number of computer science degrees has been rising since 1992 or the fact that a growing number of students are pursuing other IT-related degrees, not computer science degrees.

Also left unsaid: the assumption that the decline will continue. And yet, all three of the principal academic speakers at the ITAA

confab disputed claims that enrollments remain low, saying instead that enrollments are up nearly 40%. Anecdotal evidence from around the country seems to support that claim.

The trouble is, no one knows because there aren't any current numbers to analyze. And projecting into the future is impossible.

But if the anecdotal evidence is to be believed, 45,000 to 50,000 students per year will graduate from universities during the next few years with IT-related degrees, potentially filling half the pipeline. Add in the potential numbers of people who can be retrained, and it's quite possible that the nation could get its annual dose of 95,000 workers.

COMMUNICATION BREAKDOWN

There's just one wrinkle: Computer science represents one small piece of the education puzzle. And although high-tech companies can't get enough of those deeply technical professionals, corporate IT typically craves people who understand business. And, oh yes, graduates also should have mastered the art and skill of writing and communicating in English - and being grammatically correct.

"Clearly, this is a problem in education," says Eli Cohen, a visiting professor who teaches MIS at Seidman School of Business, Grand Valley State University, in Grand Rapids, Mich. "I think education is in a crisis, but education isn't aware of it yet. And I'm not talking about producing computer science graduates. Instead, we have to teach IT students how to use technology to sequence information, format it, to understand business needs and to communicate. Working in business is a completely different skill set from designing a compiler."

So what does it all mean? Only that the IT worker crunch lies somewhere between the ITAA's likening of the situation to a crisis and the IEEE's contention that the talent pool is ripe for the dunking.

Where your company falls on this continuum probably depends on whether it views IT as an uppity back-office function or a critical business value that must be rewarded.