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If There's a Shortage of Techies, Let's Train Some
Some say small biz should invest in education — not headhunters and signing bonuses

If you're about to offer a Mercedes to lure that desperately needed techie to your company, you're hardly alone. The February U.S. jobless figures confirmed that the unemployment rate blipped up a bit to 4.4%, from 4.3% in January -- the first increase since June. But the U.S. economy still created 275,000 new jobs. Meanwhile, closer to home, the National Federation of Independent Business' February survey found that a record 31% of small businesses had job openings.

So who would blame you for doing whatever you can to get staff, especially in the information technology area, where talent is difficult to find? In the latest PricewaterhouseCoopers study of hot technology businesses, two-thirds of the 376 companies surveyed -- most of them small businesses -- said they've come up short in high-tech hiring in the past 12 months. Now, some companies and experts say that beggaring your neighbor is a zero-sum game that only drives up the stakes, and it does nothing to ease the shortage.

What's the alternative? Train people yourself -- or at least link up with industry groups or institutions that can help, says Kelly Carnes, the U.S. Commerce Dept.'s Deputy Assistant Secretary for technology policy. But that's a solution that doesn't often appeal to entrepreneurs, who feel training is a luxury they can ill afford -- especially in feverish environments such as Silicon Valley. After all, it's cheaper to pay a headhunter and a signing bonus, many feel, than to train someone who might jump ship for a higher offer -- thanks to those new skills you gave him or her.

THE PINCH. That kind of thinking doesn't cut it with Carnes. "I'm not saying this is easy," she says. "The problem with recruiting strategies and retention strategies and signing bonuses and giving people cars -- and some of the things that are happening -- is that it's just moving people around from one place to another. So eventually, firms that just rely on strategies that lure trained workers from someone else are going to fail -- and probably small businesses are going to feel the pinch first." Not least because small companies depend more on high-tech workers. According to PWC's survey, 32% of the smaller companies' workers are in those sectors, vs. 23% for the larger companies polled.

The high-tech world is slowly coming around to new recruiting ideas, Carnes says. A group of semiconductor companies, for example, has succeeded in meeting skilled labor needs by publicizing their requirements and working with community colleges in areas around their plants, Carnes says. And some small and midsize companies are taking similar tacks. PWC's survey showed that 37% of the small tech companies that had labor shortages joined regional training alliances, and 54% of the large companies had done so.

Taking on that kind of responsibility is a tough pill for small businesses to swallow, she acknowledges, and it's probably not a viable solution for startups. But, she says, given the limitations on importing skilled foreign workers, small companies will have to start tapping new talent pools or do without. Who might that be? Downsized aerospace engineers, for one, who could probably acquire a high skill level in many IT areas quite rapidly. Some small high-tech companies may be reluctant to bring in someone who's not part of the Internet culture, she acknowledges: "Companies have to come to grips with reality. Your choice may be retraining that mid-career engineer or having no one." That's something the Commerce Dept. hopes to facilitate with information and advocacy. Job-retraining programs are now mainly aimed at disadvantaged populations, she points out -- not educated workers who need an upgrade to the Internet economy.

In any case, how easy will it be to instill long-term thinking about hiring at young companies where the pace seems to be going at the speed of light? Peter Seidler, chief creative officer at Razorfish, a New York company that provides Web and other digital communications services, says his company considers training to be part of the lure of working at the company. "It's a very important part of our development process," he says. "There's always the leverage of higher salaries. We want to build a culture that's not always about compensation." Even so, he adds, it's not easy to get the right people: "We're still stretched."

Seidler says he hears plenty of people reject training as a waste of money because of the high turnover in info tech businesses: "A lot of people say they'd rather pay a headhunter." Describing two billboards he saw in Silicon Valley -- from competing companies that were trying to lure each other's programmers -- he says: "It was amazing how blatant they were." It sounds like we'll still be reading about Mercedes as signing bonuses for a while.

By Julia Lichtblau in New York
julia_lichtblau@businessweek.com

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