A Seller's Market
First of two articles
For Tech Jobs
By Rajiv Chandrasekaran
Washington Post Staff Writer
Sunday, Nov. 30, 1997; Page A01
Earlier this year, Ellen Kong persuaded Scott Routt to quit his job and join the high-tech company where she works. She did the same thing with Pamela Hawe. And Deborah Basha. And Laura Babbitt. And Nate King.
To reward this exemplary service, Kong's employer, an Arlington computer systems company called SRA International Inc., gave her a present: a check for almost $50,000. It was a bounty, pure and simple, $10,000 per head. "They really want to get their hands on more people," said Kong, 38, an information engineer who is using the money to prepay college tuition for her children.
Across the Washington area, a shortage of computer-skilled people has companies doing all sorts of outlandish things. The scarcity is cramping the expansion plans in many businesses, whether they're technology firms like SRA or auto repair shops that need people to run computers that diagnose ailing exhaust systems.
Despite the money it's offering, SRA today has almost 100 unfilled positions. As a result, executives there have had to turn down work with the U.S. Army, International Business Machines Corp. and BellSouth Corp. "We simply can't find enough of the people we need," laments Edward Legasey, SRA's president. "And it's no different for any of my competitors."
Indeed, many business leaders say the shortage has reached near-crisis proportions. In the Washington area alone, industry groups estimate that 25,000 technology jobs are going unfilled, a deficit that economists say is costing the region more than $1 billion a year in lost wages.
The shortage bedevils the companies that have been the Washington area's engine of economic growth for the '90s -- the information technology firms that are clustered at virtually every interchange on the Capital Beltway. They already employ about 260,000 people; forecasts that they would have close to 400,000 on their payrolls by 2002 are in now in doubt.
Those companies are particularly important to the region's economic health because many sell their products and services outside the area. Others are hired to work here by federal agencies on contracts that are financed by taxpayers from all 50 states. Either way, they channel dollars from elsewhere into the area, and that money, in turn, helps create jobs at stores, schools, hospitals, restaurants and other enterprises. Researchers at George Mason University estimated recently that each new technology worker who joins the area economy supports a job for nearly one additional worker outside the tech industry.
"The key economic assets in this region are based on human capital, not its machines and equipment." said Roger Stough, director of regional analysis at George Mason. "If we can't find better ways to compete for workers, or train them better, we run the risk of missing the boat."
Almost daily, there's new evidence of the shortage and its impact:
Infodata Systems Inc. of Fairfax has had to postpone release of products because it has been unable to find enough software engineers who are proficient in the cutting-edge programming technologies known as Java and C++. "It used to be that you'd place a classified ad and you'd get flooded with qualified applicants," said Eva Franklin, the company's human resources director. "Now it's almost impossible to find the right people."
Difficulties in hiring skilled engineers recently led video-phone maker Objective Communications Inc. to move from Chantilly to Portsmouth, N.H., where executives believe they will be able to tap into a richer market for such workers near the Boston area. "We couldn't find the people we needed in this area," said Steven Rogers, Objective's chief executive. "We're hoping our odds will be better somewhere else."
Some companies, such as Blacksburg, Va., software firm VTLS Inc., have decided against moving to the Washington area because of the shortage. VTLS wanted to open a 12-person office in Northern Virginia, largely to have a crew of sales and technical-support employees close to Dulles International Airport. "Then we looked at the availability of workers and the cost of recruiting them," said Vinod Chachra, the company's chief executive. "We figured it would be cheaper to pay the extra air fares from Blacksburg."
As a result of all this, many computer specialists who have the sought-after skills are jumping from job to job every few months, getting companies to bid up their wages and extracting signing bonuses like professional athletes; others have opted to sell their services to high-tech temporary agencies for exorbitant rates. Unable to find full-time computer programmers at what was long the going rate of $40 an hour, firms such as DynCorp of Reston have been forced to hire these temps for as much as $70 an hour.
The companies generally have passed most of the increased labor costs to their customers, creating a ripple effect through the economy as these customers in turn hike prices they charge their customers. In some cases, primarily in years-long, fixed-price contracts with the federal government, info-tech firms have had to pay for the salary increases out of their profits. "For many companies, this is going to hurt earnings," said William Loomis, an analyst with investment bank Legg Mason Inc. in Baltimore. "You can't pass along all the wage increases to your customers."
Barring a recession, there is no end in sight to the demand for more computers and networks. And there is no reason to think the U.S. work force will catch up with this expanding demand easily, said Mario Morino, one of the region's original software entrepreneurs and head of a Reston think tank that promotes technology-based economic growth. "There's nothing on the horizon," he said, "that will slow this down."
Even in this seller's market, technology companies try to be choosy.
At American Management Systems Inc. in Fairfax, one of the many local information technology firms hunting for highly skilled programmers, hiring manager John Otroba has no shortage of incoming resumes. When he logs onto his office computer every day, he has at least 50 in his electronic mailbox.
Otroba, who recruits people for AMS's management systems and technology group, eagerly clicks from one document to another, quickly scanning them, looking for pay dirt.
But only about one in 12 resumes leads him to pick up the telephone to call the job seeker. Some don't pass that screening step. Of those who come in for an interview, fewer than a quarter are offered jobs. But because those candidates often have several other offers, not everyone accepts. "It's really frustrating," Otroba bemoaned recently.
Part of the problem is that AMS, like most technology companies, is very particular about what it wants in an applicant. Of the 60 jobs Otroba currently needs to fill, he said, 45 require "hard-core programming skills." That means people with at least five years of experience in writing software in the modern, complex C, C++ or Visual Basic "languages," complex systems of words and symbols that programmers use to create software. And lately, programmers who know the older Cobol and Fortran languages are in demand to fix the world's "Year 2000" computer bug, which threatens havoc in systems that aren't reprogrammed to recognize dates in the next century.
"We're looking for people with some very specific skills," Otroba said. "They're not that easy to find because everyone else is looking for these people, too."
The Washington Post's classified ads bear that out. Of the 628 ads in the computer employment opportunities section of The Post's classifieds on a recent Sunday, 134, or 21 percent, required experience with database software made by Oracle Corp., according to an analysis of the ads performed by Junglee Corp. of Sunnyvale, Calif. Almost 20 percent asked for experience with the C++ programming language, while 9 percent called for Java skills, according to Junglee's study.
Of the 289 ads that mentioned educational requirements, 76 percent called for a bachelor's degree and 16 percent asked for a master's.
Sometimes, having the right jargon and degrees on a resume still isn't enough. "Often, what companies want is not any C++ programmer, but a C++ programmer who has skills on a specialized [system] building a certain type of application," said Chris Dunne, a senior accounts manager at the Consortium Inc., a technology recruiting firm in Bethesda. "They have very unique requirements."
Critics, however, accuse the technology industry of exacerbating the problem by asking for very specific skills while failing to provide enough on-the-job training. "Employers are over-defining job requirements," said Norm Matloff, a computer science professor at the University of California at Davis. "They're saying you have to have experience in specific software technologies, and if you don't, don't bother applying."
Matloff contends many younger computer scientists -- as well those in mid-career who only know less fashionable languages -- can pick up the new skills with a few months of schooling. "But these companies don't want to wait," he said. "They don't want to train people. They want them now."
The companies' demands, employment specialists say, reflect the dramatic changes in skills that evolving technology is forcing on the American worker. Faced with shortened product-development cycles, companies say they don't have time to hire employees with basic skills and give them the training they need. And training costs pay off for a company only if an employee stays for a few years -- something many workers aren't doing these days.
"We live in a world of accelerated schedules," said Yale R. Brown, president of Intelligent Interactions Inc., a software firm in Alexandria. "It used to be that computer systems lasted seven to 10 years. And then it got down to one or two years. Now, with the Internet, it's every three to six months. At that pace, you can't afford to train people on the job."
Brown has been searching since July for five C++ programmers who also are proficient with databases to create a software product for use with the Windows NT operating system. For one of the positions, which he advertised in newspapers, he received 60 resumes but called in only four candidates for interviews. And none of the four, he said, wound up having the specific experience he was looking for.
It's not just computer companies that share Brown's predicament.
Because cars now have enough microchips and circuitry under the hood to rival a desktop computer, auto-repair chain Merchant's Inc. of Manassas has been forced to look for mechanics who can use both a wrench and a disk drive. "The era of the shade-tree mechanic is gone," said William A. Craig, the vice president of administration at Merchant's. "If you want to know whether the spark plugs need to be replaced on a car, you've got to know how to use software on a PC that's running Windows."
Supply Forever Lags
For Merchant's and many other local employers feeling the shortage, the problem is a matter of simple economics: a lot of demand, not so much supply.
In the past two years, the number of technology firms in Northern Virginia alone has jumped from 1,292 to 1,591, according to a George Mason University study. That part of the Washington region now has the highest concentration of technology services firms in the nation, according to the Wefa Group, an Eddystone, Pa., economic analysis firm.
At the same time, the number of graduates with technical degrees in Virginia and Maryland has been dropping. From 1992 to 1996, the number of students who received bachelor's degrees from state colleges and universities in disciplines within computer and information sciences or engineering fell 4 percent in Virginia, from 2,396 to 2,300, and 5 percent in Maryland, from 1,665 to 1,580, according to state agencies.
Nationally, the number of bachelor's degrees awarded in computer science has fallen 43 percent from 1986 to 1994, according to the National Center for Education Statistics.
The potential pay might suggest that college students would flock to technology classes. Last year, students with bachelor's degrees in computer science, on average, commanded a $34,462 starting salary and had the largest starting salary increase of any field, according to the Collegiate Employment Research Institute. But educational experts say that hasn't been enough to sway many students.
They blame parents and grade-school teachers who increasingly fail to cultivate an interest in math and science at an early age, as well as high-school and college counselors who aren't as likely to steer students toward computer-related fields. And, several experts say, technology jobs, despite the overwhelming wealth of Microsoft Corp. Chairman Bill Gates and some other entrepreneurs, still have a nerdy image.
"It's mind-boggling," said SRA's Legasey. "These kids have grown up with computers, but they don't want them to be their job."
While the number of new graduates entering the work force has declined, local companies have been hit with two additional, distressing trends: Similar shortages in other parts of the country have made it tougher to bring workers to the Washington area, and few of the firms' existing workers are learning new skills fast enough.
Despite those problems, the Washington metro area still has managed to add tech jobs since 1990 at a faster clip than Silicon Valley, Boston, Chicago or Los Angeles -- and this technology employment has pulled the rest of the region's economy along behind it. Although technology workers fill only one in 10 jobs in the region's economy, Labor Department surveys indicate that nearly one-quarter of the 40,000 net new jobs added in the region over the past year were in technology-based occupations.
Games Companies Play
For SRA's Legasey, the challenge isn't just attracting new programmers -- it's keeping the ones he already has. In what has become a vicious cycle, desperate competitors have been doing the same things SRA is doing to add employees: dangling high salaries, signing bonuses and other emoluments to qualified programmers, trying to get them to jump ship.
Although SRA has adopted a raft of defensive strategies -- from salary increases to a new casual-dress policy -- defections have become common. From July 1996 to this past June, the company hired 450 people but lost 310, including two of Kong's five referrals. "Retaining your existing employees is just as important as recruiting new ones," Legasey said.
With workers increasingly jumping from employer to employer -- and vacancies taking longer to fill -- many companies have started posting job ads weeks, if not months, in advance. Businesses also have turned to the nontraditional. In addition to referral rewards for existing employees, there are postings on Web sites, booths at job fairs and headhunters on the prowl.
But with companies increasingly listing positions before they're actually open, some people in the industry feel that estimates of unfilled jobs -- compiled by consulting groups and economists through surveys of companies -- are inflated.
Some of that overcounting may be due to recruiting firms, which have sprouted up over the past two years, using ads and the promise of staggering salaries to reel in as many sought-after techies as they can find. "You see all these companies with a laundry list of Cobol and C++ and PowerBuilder programmers," said Dan Davis, the vice president of human resources at V-One Corp., a computer-security software firm in Germantown. "A lot of these people are advertising for the same job."
The recruiting firms offer the services of those workers -- known as consultants -- to desperate companies by the hour -- at rates 15 percent to 40 percent higher than what companies pay comparable full-time employees.
But for many businesses, the cost is irrelevant. The people are a godsend.
"When you're up against the wall, consultants are the last resort," said Infodata's Franklin, who eventually turned to $60-an-hour temps to fill two vacancies that she had hoped to fill with full timers at $35 an hour. "But you're paying a premium."
Rather than completing weeks or months-long stints as in the past, consultants increasingly are being asked to spend a year or longer on the job, said Jill Klein, a vice president at Aetea Information Technology Inc., a Rockville consulting firm. "The word on the street is that you can make more if you're a consultant, so it draws people out of the full-time market into consulting," Klein said.
But, with all the shortages out there, consulting firms often have the same difficulty signing up people.
So when they land a candidate such as Chuong Le, they pull out all the stops. Le had been working for AT&T Corp. in Northern Virginia as a mainframe programmer for 12 years, pulling down $67,000 a year. A few months ago, thinking he might be ready for a higher salary and a change of scene, he posted his resume on the Internet. Within a week, he got 50 calls, one of which was from Aetea.
A week later, he was in a small cubicle at the firm, saying he wanted to make at least $80,000 a year and holding court as a parade of the firm's account managers dropped in, each pitching a different job to him.
There was the chance to work at a telecommunications company only five minutes away from his Chantilly home. There was the financial-services firm in Reston that would let him show up in shorts every day, set his own schedule and eat in a subsidized cafeteria. There was the company in Silver Spring that promised a "fast-paced work environment."
Le told Aetea he'd think about it.
Eventually, he decided to leave AT&T and join the telecommunications firm in Chantilly, where he's making more than $80,000 a year working on billing software.
"If only there were more people like him to go around," lamented Klein. "But there are not, and that's the heart of the problem."
© Copyright 1997 The Washington Post Company
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