John Gerdelman, president of MCI Communications Corp.'s networkMCI Services Div. in Washington, is accustomed to high-tech raids. Every year, he shepherds about 40 computer tenderfeet through his division's six-month training regime at a cost of $50,000 per pupil. No one bothers the recruits much while they're in MCI classrooms in Colorado Springs and elsewhere, he says. But once the training is done, other companies starved for high-tech talent rush to lure away the newly minted techies with big contracts. Attrition? "If half of them are here two years from now, we'll be very excited," Gerdelman says.
Gerdelman's travails are just one sign that America's computer revolution could soon be sputtering on a near-empty tank of knowhow. As U.S. companies race to revamp their vast computer networks, log on to the Internet, and try to avoid a digital debacle before the year 2000 throws off their computers, they're sopping up talent--and still coming up short. A new study by the Information Technology Association of America (ITAA) estimates that 190,000 info-tech jobs stand vacant in U.S. companies--half in the information industry. And the crunch may get worse as U.S. universities produce historically low numbers of computer scientists.
The result? A bidding war for digital talent that could eat into corporate earnings and stunt growth. One example: Maynard Webb, chief information officer at Bay Networks Inc., a Silicon Valley communications company, just lost a five-year programmer making $80,000 to a consultancy offering two years guaranteed at $300,000 per year.
FINDER'S FEES. There's scant sign that the bidding will cool off, either. Even as consultants stream in from Ireland and South Africa, and digital job shops in India work extra shifts, demand far outstrips supply. In the ITAA survey, fully four-fifths of the high-tech companies hope to hire more computer experts.
The shortage is more than a costly annoyance. In the ITAA study, two-thirds of the tech companies surveyed cited the shortage as the greatest barrier to growth for their companies. That labor pinch was mentioned as a hurdle twice as often as the state of the economy.
And it's not just hurting technology companies. At times, says Frederick E. Matteson, senior vice-president for technology at Charles Schwab Corp., "we're unable to respond to business needs as quickly as we'd like because we can't get people on fast enough." In October, Schwab began paying employees a $3,000 finder's fee for referrals to technology applicants.
How has that great labor-saving device, the computer, managed to spawn a worker shortage? First, there's the Internet. According to a study commissioned by the Global Internet Project, an Arlington (Va.)-based Internet industry group, 760,000 techies are now working at Net-related companies--up from virtually none five years ago. Some are running startups. Many are signing up with outfits such as Microsoft Corp. and America Online Inc., which are continuously tweaking their online offerings.
At the same time, competitive pressure is pushing all kinds of businesses to get more efficient. They're using computer networks to forge direct links to suppliers and customers and stringing together operations into common systems so that finance managers in Cincinnati, say, can check out inventories in Milan or sales in Singapore. Such "enterprise-wide applications" gobbled up some $42.5 billion worldwide in corporate spending last year and fueled explosive growth in consulting.
The Big Six consulting firms and hundreds of boutiques are doling out six-figure salaries for technicians. The most prized are programmers who are adept at enterprise programs, such as software by German's SAP or its U.S. rivals, Oracle Corp. and PeopleSoft Inc. "We're growing at 100%," says Karl Newkirk, the managing partner at Andersen Consulting who heads the enterprise applications unit.
Corporations and consulting firms are spending millions on recruiting--and raiding one another. "My team is getting recruited like crazy," gripes Bay Networks' Webb. To protect against predators, companies are showering computer experts with stock options and promising them continued training--vital in brainpower industries. Last year, pay for info-tech workers rose by 12% to 20%, according to consultants William M. Mercer Inc. Average annual pay for software architects, who design complex systems, hit $85,600.
In this market, even digital dinosaurs are hopping out of the tar pits. Experts in mainframe computers, whose prospects had been dimming with the advent of low-cost client-server networks, are now in hot demand. The reason: At the turn of 1999, thousands of computers that only recognize two-digit years will go on the fritz--unless they're replaced or reprogrammed to read the year 2000. Companies that aren't ready to ditch the old systems--often the ones that still run central functions, such as accounting--are hiring scores of mainframe experts to rewrite millions of lines of code in the now-antique COBOL language.
POOR MARKS. The cost of rewriting the "legacy" systems for 2000 and testing them: a mind-boggling $600 billion, reports Gartner Group. Already, mainframe experts are landing hefty salaries. "A year ago, you could find COBOL experts in D.C.," says MCI's Gerdelman. "Now, they're getting scooped up."
The only cool zone in this hot market, oddly enough, is at U.S. universities. Undergraduate degrees earned in computer science dipped 43% from 1986 to 1994. That's partly because of a glut of programmers in the mid-1980s and partly due to American students' well-documented aversion to math. Also, students gripe that computer-science curricula aren't sufficiently market-oriented. The rising salaries in the market should persuade students not to worry--but probably not in time to give industry the next shift of high-tech workers it needs.