In 2000, one of the hot issues in IT was how to attract and retain staff. After the Nasdaq correction, fears of an economic slowdown and continuing lay-offs in the IT sector, has the issue now gone away? The numbers still look clear-cut.
The Information Technology Association of America (ITAA) estimated 1.6 million IT positions were needed in the U.S. in 2000. It believes that half of these went unfilled. Gartner Group produced a report in May suggesting that in the U.S., the market demand for relevant IT skills and know-how will outstrip market supply by at least 20% to 2004. Figures in Europe have shown similar shortfalls, and even slow-moving European governments have felt compelled to adapt immigration laws to attract foreign workers with IT skills.

Yet some see January 2001 as a turning point. Lucent announced the global reduction of 10,000 jobs, and Amazon.com of up to 1,300 jobs. Amidst European Internet companies downsizing and closing down, LetsBuyIt.com announced it was sacking 200 of its 350 European staff.

But these figures hide the fact that it is going to get far harder to attract people with skills in leading-edge technologies. Mike Lynch, CEO of Autonomy, believes that “people who think the U.K. is difficult [to hire staff] should try San Francisco.” The European situation will get far worse as the need for Internet skills increases. To look at lay-offs in the IT industry is misleading for two reasons: first, the lay-off are often for those involved in legacy industries – for example, in the voice services market – and second, IT and Internet. After all, we are now seeing the truth of the prediction that there is no old and new economy – just the economy. The importance of IT requires all companies to embrace the Internet.

So what can companies do?
First, wake up to the problem. A survey by the451, in association with Durlacher, the specialist securities group focusing on technology and media areas, found that many Internet companies believe that recruitment is a problem for other companies, but not their own. Frighteningly, many have made little or no investment in a personnel or human relations department. The problem is also far worse for smaller companies – the ITAA found that 70% of the demand for IT staff in 2000 came from 50-99 employee companies. Smaller IT companies often make exponential jumps in staff numbers, and for them retaining and recruiting staff should be of critical importance.

Second, lobby governments. Countries are competing for global IT talent. In October 2000, the U.S. Senate voted to nearly double the number of H1-B temporary visas for highly skilled foreign workers, from 115,000 in 2000 to 195,000 in each of the next three years. Working with universities and helping to improve IT education are actions ignored by many TMT companies.

Third, retention is far easier than recruitment. According to research by Meta Group, turnover rates for U.S. IT staff jumped to 11.4% in 2000 from 8.4% in 1999. Developing innovative ways to increase staff motivation is a key skill. Training and education are also becoming far more cost-effective with Internet-based learning.
Fourth, market your company to potential recruits. Employees see the cycles in the marketplace – if the investment community turns against your sector, then it becomes very difficult to recruit staff, and stock options become unattractive enticements. IT companies need to work hard to ensure they are seen as attractive places to work, and that they sell themselves to potential recruits. A lot of companies will be looking for people at CeBIT 2001 – so don’t be surprised if someone asks for your CV!