Tech Hiring's Spring Thaw?

While it's far from the late '90s-style sellers' market, recruiters are seeing signs that the freeze is easing

The phones are starting to ring again at Management Recruiters International's Mill Valley (Calif.) office, which specializes in finding tech execs for Silicon Valley companies. The demand for talent is nothing like it was in the hurry-scurry days of the late 1990s, when headhunters regularly fielded panicked calls seeking 10 to 20 recruits at a time, says Eric Wheel, the office's general manager.

Still, requests for an engineering director here, a marketing vice-president there, are an encouraging sign after most companies spent the better part of last year laying off managers. Silicon Valley actually lost an estimated 25,000 jobs last year -- the first net job loss in nine years, according to Joint Venture: Silicon Valley Network, a regional business and community organization. "Companies a few months ago were saying, 'We have a freeze,'" Wheel says. "We're not tropical yet, but the thaw is starting."

Indeed, the hiring climate for techies seems to be warming up just as the nation emerges from its first economic funk in a decade. Tech companies are shopping for experienced sales and marketing execs who can help boost their market share as the economy recovers. And corporations that put information-technology spending on hold when the economy went south are realizing that they can't afford to delay that spending for much longer if they want to stay competitive.


  "What we're hearing from clients is that they're so lean they don't have the staff they need to develop new projects or new products," says Wheel. Jeff Campbell, a principal in search firm Heidrick & Struggles' Atlanta office who recruits for tech and communications companies, says in recent days his firm has received calls from five major corporations looking for execs with tech expertise.

As normally happens when business first recovers, the jobs now opening up in technology are for select occupations in a handful of industries, experts say. Any broad-based pickup in tech hiring will hinge on a resumption of business spending, since corporations, not consumers, buy the bulk of products that tech companies sell, such as database software, network systems, and PCs. So a true surge in demand for tech employees may be six months off, experts say.

The key to any surge in hiring: A rebound in business confidence

Indeed, only 15% of respondents to a National Association of Manufacturers survey released on Feb. 20 said they plan to increase capital spending by more than 5% in this year's first half. Harris Miller, president of the Information Technology Association of America -- a trade group that represents some 500 tech companies, including Microsoft, Oracle, and AOL Time Warner -- doesn't expect to see big increases in tech hiring until the fourth quarter of 2002 or the first quarter of 2003. "Capital spending is the issue," Miller says. "If business confidence comes back more rapidly, we could see a more rapid increase in hiring."

Chicago-based DiamondCluster International, a tech-consulting firm, typifies the current situation. "We see some positive signs," says Pete Pesce, whose title at the company is chief people officer. "But we can't say we've turned a corner." The company has brought back about 50 consultants it furloughed in August -- with benefits but reduced salaries -- and plans to welcome back 90 more as business improves. To keep the talent pipeline flowing, DiamondCluster is also looking to hire about a dozen MBA students around the globe as summer interns. "We're still bullish on technology," says Pesce. Even so, the company continues to observe a hiring freeze that took effect in May, 2001.


  Companies that are adding to payrolls in a meaningful way are concentrated in the hottest areas in tech, such as photonics -- a fiber-optic technology -- and Wi-Fi, or wireless networks. Take HereUare Communications, a Wi-Fi company whose service enables users to connect to the Internet wirelessly via laptops from places such as airports and coffee houses. The San Jose (Calif.) company plans to expand its 50-person staff by up to 40% this year, hiring as many as 20 employees in marketing, operations, and other functions. "This sector is really taking off," says Clark Dong, HereUare's co-founder and chief executive. "You don't want to miss the market window."

Other areas where recruiters are seeing an uptick include network security, computer games, semiconductor manufacturing, and data storage, which "is hot right now," says Mark Jaffe, a partner at executive search firm Wyatt & Jaffe in Minneapolis. "There's demand for people at all levels, since the amount of data continues to multiply exponentially, and there's a constant need for new ways to organize and retrieve it."

At the same time, "hardware companies are starting to do strategic hiring, especially in sales," says Heidrick & Struggles' Campbell. "What they're looking for is salespeople who know the space, have a book of business, and currently are selling to [the hiring company's] target customers. They don't want to have to bring people on, train them for six months, and hope they hit their numbers."


  Indeed, companies are a lot less willing to take a chance on inexperienced tech hires than they were during the dot-com boom years, when a labor shortage made any warm body look appealing, hiring experts say. That helps explain why many rebounding tech companies are first turning to contract workers to get critical work done -- which lets them both save money and size up a potential employee before making an offer. In fact, HereUare's Dong says many of his new hires will likely come into the company via the contractor route. "You want to make sure someone fits exactly right," he says.

Tech companies are particularly cautious about hiring MBAs

Scot Melland, president and chief executive of New York-based Dice, the largest online job board for technology professionals, says his listings for available contractor jobs have risen 10%, to 31,000, since mid-December. It's the first time in 12 months that the company has experienced a jump in job postings. "Companies are trying to do more with less," says Melland. "They're trying to maintain systems and also create new things with lower headcounts."

Tech companies seem to be particularly cautious about hiring MBAs, who two or three years ago sometimes had a new job offer every week. Ken Keeley, director of the Career Opportunities Center at Carnegie Mellon University's Graduate School of Industrial Administration, says the decline in tech company demand for MBAs seems to be bottoming out.


  True, some 11 tech companies that recruited on campus a year ago didn't show up this year. But seven others that avoided Carnegie Mellon last year did, including KLA-Tencor, a semiconductor equipment company. "At least it looks like the bleeding hasn't gotten worse," Keeley says. At Pennsylvania State University's Smeal College of Business, Kathleen Welch, the director of marketing, says this year's grads are getting offers -- though often only one, vs. as many as six per head two years ago.

MBAs who can sell themselves to tech companies as specialists in finance, supply-chain management, or quality- and cost-control may have the best prospects for now. "Even though cost-cutting has wrung out many excesses, companies are still looking at improving their processes and driving out costs," says Heidrick & Struggles' Campbell. They're also looking for generalists more than specialists. "What's different about a project manager today vs. a year ago is that in addition to managing a project, the person will be expected to roll up their sleeves and program in C++ or Java," says Dice's Melland.

In a sign of the times, tech salaries aren't likely to rise much if at all this year, despite the fact that employees will be expected to do more work. The good news is that at least there'll be some hiring, in place of the cutbacks that made 2001 such a bummer.

By Eric Wahlgren in New York

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