High Tech: A Little Help Wanted

During the tech boom, Jay Weidner typically received three calls a week from recruiters trying to pry him out of his job as a consulting project manager for software maker Siebel Systems (SEBL ) Inc. The calls stopped when tech went bust -- a good two years ago. But a funny thing happened a few months back. "The headhunters started calling again. Not like they were, but two or three times per month," says Weidner, who started a new job in mid-September with RightNow Technologies Inc., a Bozeman (Mont.) startup that delivers call-center software as a service over the Net. "It was a good sign."

How good? It depends on what part of the tech industry you're talking about. With startups and small companies -- the likes of Salesforce Inc. and RightNow -- beginning to recruit again, and layoffs coming at a far slower rate than earlier this year, some economists are starting to venture that the long slide in tech employment finally seems to be leveling off. "It's still very early in the game," says Joshua Feinman, chief economist at Deutsche Asset Management (DB ) in New York. "But obviously, it's encouraging."

Elsewhere, though, the days of wine and roses have hardly returned. Many big tech manufacturers such as Hewlett-Packard Co. and Sun Microsystems Inc. continue to lay people off. As a result, the total number of people employed in the industry shrank by 0.1% last month, to 3.59 million.

Still, tech industry watchers are cautiously optimistic for two reasons. First, they cite the recent uptick in corporate spending on technology. Michael Englund, chief economist at consultant MMS International, estimates that spending on computers and electronic equipment grew at an annual rate of 15% to 20% in the third quarter, and will grow at the same rate in the fourth quarter. "With demand is going to come employment," he says.

Moreover, industry analysts note that startups, not industry giants, are typically the engines of tech job creation. In the 1990s, existing companies in Silicon Valley actually cut 121,000 jobs, while companies started after 1990 created 259,000 jobs, according to the Public Policy Institute of California.

That pattern seems to be repeating itself. Small tech firms are staffing up, especially software and computer systems design outfits. Salesforce Inc., a San Francisco company that rents software over the Internet, has doubled its workforce, to 400, this year and is expected to double it again next year. Companies such as Google, Intuit (INTU ), and Symantec (SYMC ) kept hiring right through the slowdown -- and are picking up the pace.

Another positive indicator: Companies are hiring more temporary workers, often the first step before a boost in permanent hires. "We have had more orders sent our way in the last couple of months than we have for the last 18 months," says Priscilla Azcueta, vice-president for business solutions at Manpower Inc.'s Silicon Valley franchise. Overall revenue for the franchise is up 30% so far this year over 2002 as temps get work doing everything from inventory planning to mechanical engineering. "There's been such a depletion of resources" at some companies that they can't handle new business without hiring people, she says.

Of course, there's no guarantee the hiring will last. Computer design firms boosted payrolls last fall, then cut jobs when demand didn't materialize in the spring. But as Weinder notes, he wouldn't have left Seibel were it not for five offers at smaller outfits -- prospects that weren't there a year ago.

By Jim Kerstetter in San Mateo, Calif., and Peter Coy in New York

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