High-tech industry is powering up again
It looked as if the economy had dealt a powerful blow to L.J. Mottel, a 35-year-old father of two, when his employer, the Fontainebleau hotel and resort in Las Vegas, filed for bankruptcy and laid him off.
But unlike other victims of the downturn, Mottel had the luck of a high-roller on a hot streak: He was the Fontainebleau’s director of information technology, and that made him a hot commodity. He didn’t have to wait long before getting a new job at Service-now.com, a Solana Beach, Calif., tech firm that develops Web applications to help companies automate their IT departments.
“I never got the panicky feeling,” Mottel said. “I felt the IT field is the right place to be.”
While unemployment continues to limp along at nearly 10% nationally and more than 12% in California, the high-tech industry is on a roll. Sparked in part by a series of acquisitions, start-ups are getting funded again, giving them the cash infusion needed to hire.
Some tech companies are even having a hard time finding qualified employees to fill their openings, a reflection both of the competition to hire talent and of some workers’ unwillingness to move.
“Due to the recession and the economy, people are reluctant to seek change,” said Robert Greene, a tech recruiter in San Mateo, Calif. “They become more risk-averse in times when the economy is not good. People got burned. They went to companies and then got laid off. They don’t want to have that situation happen again.”
But now, he said, “I have seen that start to change a little. The floodgates have started to open a little.”
Greene has been able to recruit and place employees in new jobs within weeks -- instead of months, as was the case last year.
“Recruiters are the canaries in the coal mine. We’re the early bellwethers,” said Andy Lewis, a principal at Levinger Lewis, which places executives at high-tech start-ups. He said he could see in 2007 that the economy was ready to dip, which was borne out in a sluggish 2008 and a “pretty abysmal” 2009.
The job search
Of course, many people are still looking for work.
Jobnob Inc., a San Francisco company that has established an online community to match tech companies with job seekers, put on an event last December at the Air Conditioned Supper Club in Venice, and 350 people attended to hear hiring pitches from about 100 companies.
Similar events last month in Palo Alto, New York and Chicago drew more than 100 employers and 350 job seekers.
“Part of the problem is that recruiters and tech companies have such a long laundry list of qualifications right now, that it would be hard for anyone to qualify,” Julie Greenberg, a Jobnob co-founder, said in an e-mail. “In leaner times where the unemployment rate is lower, the list of ‘must haves’ shrinks.”
The recession hit the tech industry hard. Employers -- which include computer, electronics and telecommunications firms -- announced 174,629 planned job cuts in 2009, according to Chicago outplacement consultant Challenger, Gray & Christmas Inc.
But the worst of those cuts were in the first quarter, said the firm’s chief executive, John A. Challenger. Leading the comeback, he said, are smaller companies.
“Small companies are more nimble and are responsible for much of the job creation in the U.S.,” he said.
Kevin Kimball lost his job at Hitachi Global Storage Technologies Inc. in August 2008 and began aggressively networking online. He landed a job recently as senior director of marketing and communications at Force10 Networks Inc. in San Jose and has mentored six other people through successful job searches.
“It’s only anecdotal, but hopefully the trend of my mentees is a microcosm of something larger,” he said.
Maria Ross, who runs Red Slice, a Seattle marketing and branding company, said she and her husband, a Microsoft Corp. employee, have been inundated with headhunter calls in recent weeks.
“Those who laid off their marketing teams during the bust now realize you can’t grab new market share and grow the business without effective marketing back in place,” Ross said. “Marketing seems to be the first to go when job cuts are made -- until the high-tech companies realize they can’t reach their revenue targets without it.”
Back in the game
For a while, the venture capitalists who provide the financial lifeblood of Silicon Valley had a big problem: no exits.
They depend on companies to either go public or get acquired, which lets them sell their stake and reap a return on their investment. But with a moribund market for initial public offerings, and a paucity of mergers, the venture capitalists were stuck.
In recent months, however, acquisitions have picked up, and the venture capitalists are back in business. Late last year, Google Inc. bought mobile advertising company AdMob, Electronic Arts bought social games pioneer Playfish, and Apple Inc. bought music tech firm Lala.
“Acquisitions are a sign that things are turning,” said Greene, the San Mateo recruiter. “Companies now have money or stock and can afford to go out there and acquire companies. . . . And companies that have funding are hiring, and the first place they are hiring is engineering.”
Greene said last week that he had three times as many openings to fill as he’d had in November.
Growth in start-ups has helped offset the massive layoffs from large companies, said Steve Fredrick, general partner with Grotech Ventures in the Washington, D.C., area and a co-founder of StartUpHire, a job board that worked with the venture capital group on the study.
“Numbers from the Kauffman Foundation for entrepreneurship show that two-thirds of the jobs created every year in the U.S. are at companies that are less than 5 years old,” Fredrick said. “If it weren’t for these start-ups, job creation would be negative.”
The Society for Information Management, an organization of more than 3,800 chief information officers and IT executives, said that 34% of the 250 organizations surveyed had more dollars to spend on staffing in 2009 than in 2008, and that 45% would have more to spend on staffing in 2010.
New York tech consulting and placement firm Bluewolf said salaries are on the rise as well. In the New York area, executives -- chief information officers and chief technology officers -- will command $140,000 to $200,000 this year, up from $120,000 to $175,000 last year, it said.
