Industry Downturn Hasn’t Killed Tech’s Big Appetite for Top Talent

Though more than 600,000 workers have lost their jobs with technology companies this year, it took Kevin Gibbs only six weeks to find one.

Gibbs, a Stanford University senior who will graduate in June with bachelor’s and master’s degrees in computer science, interviewed with such high-tech all-stars as Apple Computer Inc., Raytheon Co. and NASA’s Jet Propulsion Laboratory.

After considering opportunities that would pay from the mid-$60,000s to the mid-$90,000s, Gibbs took a job with IBM Corp. in Cambridge, Mass., where he will be a software engineer in Big Blue’s advanced technologies group.

“It used to be that people were banging your doors down, and now you have to actively go out there and look,” said Gibbs, a 21-year-old from Porterville, Calif. “But I wasn’t too nervous. I felt pretty sure I’d be able to find something.”

Obscured by the constant drumbeat of layoffs and red ink that has marked the worst downturn the high-tech industry has ever faced is another reality: There is still a shortage of skilled workers.

In one sense, technology companies are like the products they sell. Obsolete equipment is continually replaced by newfangled gear. In the same vein, workers whose skills no longer are deemed critical are let go even as a new wave of hires comes on board to create the next generation of products.

The Information Technology Assn. of America estimates U.S. firms needed more than 900,000 additional tech workers this year--and were able to hire only 475,000.

The losers in this harsh equation of supply and demand have been the troops in the e-revolution: rank-and-file Web site designers, marketing experts whose services now are considered a luxury, and consultants whose dot-com clients have gone kaput, among others.

The winners are specialized engineers who help wring out costs and salespeople who can inject revenue Other industries scrounging for technical workers include biotechnology, aerospace and defense and petroleum, headhunters say.

“There’s a common misperception that there are a ton of people available,” said Richard Spitz, managing director of the advanced technology practice for executive search firm Korn/Ferry International. “There are a lot of people available, but they’re available in sectors that aren’t hot.”

As companies tightly focus their businesses, they also search for workers to fill highly specialized niches. But they’re demanding that workers come with business and management skills, not just heads-down technical chops.

Despite the grim headlines of the last year and a half, the demand has barely slowed for top-tier talent.

“Companies are still hiring, just lower than normal,” said Scott Santoro, director of corporate recruiting at Keane Inc., a Boston-based technology consulting firm. “It’s geared around company goals: Save money, decrease the time to get product out the door, lessen inventory. It has to be tangible.”

Salaries, though not declining, are not advancing as rapidly as they did two years ago, when pay increases clocked double-digit growth. These days, salary hikes range from 0.6% for network administrators to 6.2% for chief information officers, said William M. Mercer Inc., a compensation consulting firm. Total compensation is often lower because stock-option grants and bonuses have all but evaporated.

What the companies are facing is the long-standing reality that universities cannot turn out new engineers fast enough to keep up with the demands of a rapidly evolving--and still-growing--industry.

The number of bachelor’s degrees in computer science and engineering has doubled over the last four years, from 8,000 to an estimated 16,000 this year.

But that is still tiny compared with the positions available. In addition, the number of doctorates in computer science and engineering has been on a downward slide for a decade, due in part to the lure of potentially lucrative high-tech start-ups.

The shortfall has been partially offset by highly skilled foreign workers who come to this country under a special work visa program known as H-1B. More than 163,000 visa applications were approved during the last fiscal year--about 60% of them for technical jobs. The program has drawn intense criticism from some labor and immigration groups, which claim the visas have been used to bring in cheaper overseas talent, and not to fill specialized positions for which there are no American workers.

Political fury aside, the program barely begins to make up the shortfall in the supply of technical workers.

For some companies, demand still exists at all levels. Only the number of openings has changed.

“The listings we have are across-the-board, from sales to customer service to engineering, financing and marketing,” said Sondra Magness, a spokeswoman for 3Com Corp., a Santa Clara, Calif., computer networking equipment firm that has cut 1,200 jobs this year. “It really does run the gamut. Ultimately, it’s at significantly reduced levels from what we’d be looking at a year ago.”

More typical is the experience of Vivian Vitale, senior vice president for human resources at RSA Security Inc. in Bedford, Mass. Though overall hiring is down by two-thirds this year, the computer security firm has more than 30 jobs to fill for very specific needs such as sales.

Industrywide, slumping tech firms are trying to reinvigorate their sales teams because it’s the fastest way to bolster the bottom line.

“People are trying to move revenue,” Spitz said. “They’re knocking on doors and focusing on strategic clients and key accounts.”

The flip side of boosting revenue is cutting costs, and that has put a premium on supply-chain managers and operations engineers.

“If the revenue line has dropped, where’s the best place to get costs out and improve profitability?” said Charley Geoly, managing director of the technology sector at Russell Reynolds Associates.

Running an efficient warehouse operation is crucial for electronic commerce giant Amazon.com Inc., which has laid off 200 people this year. As the economy sours, the money-losing Seattle firm is looking for workers who can zero in on inventory optimization, retail forecasts and operations at its 10 warehouses around the world, Chief Executive Jeff Bezos said. “We put a lot of emphasis on productivity improvements,” he said.

As companies focus more sharply on their core businesses, many look for workers with highly specialized skills who can help move projects off the drawing board and into production.

“The skill sets we need are very defined and very tight,” said Rich Fino, recruiting director for EarthLink Inc. in Atlanta. “A lot of times we look for what we call ‘purple squirrels’--people with skill sets that are extremely hard to find.”

Among specific skills in demand are database administrators, Java programmers, disaster recovery specialists, network engineers who link computers, and systems engineers who can galvanize a company’s many disparate technologies. This is particularly important as companies freeze capital spending and try to make do with the technology they already have.

Companies that depend on inventing the next big thing can’t afford not to invest in the future. Even though a slowdown in spending on its core computer-networking gear forced Cisco Systems Inc. to announce 8,000 job cuts in March, the San Jose company is now hiring to prepare for products that may be years away, said Matt Schuyler, Cisco’s global recruitment leader.

“The hot areas we’re focused on include wireless and optical,” said Schuyler, who declined to be more specific for fear of tipping off his competitors. “They require skill sets that are different than what we currently have on staff.”