May 29, 2000

http://www.informationweek.com/788/location.htm

IT Recruiting
Lifestyle, Location, And IT

With demand for IT talent continuing to outpace supply, companies are finding that where they are is as important as what they do

By Marianne Kolbasuk McGee and Larry Greenemeier

assim Oueida came to the United States from Lebanon two years ago with a scholarship to Boston University to study for his master's degree in computer science. While in school, another student introduced Oueida to PHT Clinical Networks, a provider of Web-based clinical research systems for the medical and pharmaceutical industries. He began working there part time as a programmer, and after graduation took a full-time job. The 24-year-old eventually plans to go back to Lebanon either to start his own business or to launch a Lebanon branch of an American high-tech company. But right now, he's enjoying his time at PHT and in Boston. "Beirut and Boston have similar lifestyles," he says, which made his adjustment to the United States a smooth one. There's one big difference, though: "There are too many educated people in Beirut--and not many companies," Oueida says.

The shortage of IT workers in the United States--or flip that around and make it the increasing demand for IT talent--has forced companies to reconsider every aspect of the employer-employee relationship. Salary, benefits, hours, working conditions--they're all on the table when hiring or trying to retain talented IT workers. But one aspect of the equation that until now has been pushed into the background is beginning to play an increasingly critical role: location.

On the one hand, talented IT workers, especially young people like Oueida, gravitate to the "hot technology" sectors of the country such as Boston, New York, San Francisco, Seattle, and Silicon Valley. Part of the reason for this is the changing nature of the workforce, and part of it is a changing value system. "The days of getting your gold watch from IBM after 25 years are over," says Mike Phelan, human capital advisory services leader for the Texas region at consulting firm Deloitte & Touche. "Location has become increasingly important to today's workforce because many of them are looking past the current offer on the table to their next career move."

On the other hand, a pre-IPO dot-com in Silicon Valley may wave a fistful of stock options, but not every IT worker is willing to sit in traffic for three hours every day for a chance at hitting the IPO lottery. Good schools and ample recreational amenities, combined with challenging work and a competitive local salary, are sometimes what keeps talented IT workers in seemingly less-glamorous regions.

It all adds up to a competitive landscape for IT resources--one that demands flexibility. Companies in the hot technology sectors have to contend with a cutthroat competitive environment; worker turnover is common, rapid, and disruptive. Companies in the less-attractive areas of the country--the Rust Belt, the Deep South, the Great Plains--have to offer creative options to attract and retain talent, such as relocation, telecommuting, and branch offices. So, while different cities and regions of the country offer a range of IT job opportunities, employers increasingly compete for IT talent based on what their location can offer employees in terms of quality of life.

The hot technology sectors undoubtedly get the most attention. "The market is so busy that, to the disadvantage of some of our clients, we have to turn down some assignments in regions where people are less likely to go," says Paul Daversa, president of Resource Systems Group, an IT recruitment firm in Stamford, Conn., that handles talent searches nationally. "We won't take a client unless we know a move is likely," he says. Examples of hard-to-place areas: Oklahoma and parts of Michigan.

While those places may be tough for IT recruiters, the need for IT talent in those areas is great. Although the Midwest and parts of the South may not immediately conjure up futurist tech images, those places are the hungriest for IT talent due to their size and their population of both user and technology companies. The Information Technology Association of America, an IT trade group, says the South and the Midwest combined are home to more than 6 million IT jobs--more than the Northeast and the West Coast, which combined have less than 4 million.

Regardless of geography, the majority of IT jobs don't come from technology companies, but rather from user companies, says ITAA president Harris Miller. There are about nine IT-related jobs at user companies for every IT-related job at a technology company, according to an ITAA research report released in April and titled "Bridging The Gap: Information Technology Skills For A New Millennium." That translates into about 1 million IT jobs at U.S. technology companies and more than 9 million IT jobs at non-tech companies. Those figures don't include government IT jobs or IT jobs at nonprofit or small entrepreneurial firms, the ITAA says.

When considered by region, the disbursement of IT jobs across the United States is eye-opening. The South has 3.45 million IT jobs, more than any other region, according to the ITAA. Surprisingly, there are more IT jobs at technology companies in the South than there are on the West Coast, which has Silicon Valley, San Francisco's Multimedia Gulch, and the Los Angeles media factories. The West Coast, in fact, has the second-fewest number of overall IT jobs: 2.2 million.

The second-largest number of IT jobs--2.87 million--reside in the Midwest, according to the ITAA. That's because the Midwest has a high concentration of nontechnology companies, particularly large manufacturers such as automakers and steel manufacturers, says Harris. Among the differences in the regional mix of IT talent: The Midwest uses more programmers and software engineers than any other region, while Web developers and administrators are used slightly more in the West, the ITAA's findings show.

Although the Northeast is home to Boston's famous Route 128, the high-tech regions around Washington, and New York's advertising and multimedia firms, that region has the smallest number of IT jobs, about 1.5 million. It also has the smallest gap between demand and job vacancy. The ITAA estimates there's a demand to fill 277,079 IT jobs in the Northeast, but a "skills gap"--or shortfall--of 145,272 IT workers.

Finding new talent is often easier when you're close to the breeding ground. "Proximity to educational systems is key to finding IT talent," says Victor Janulaitis, president of Positive Support Review, a management-consulting firm in Santa Monica, Calif.

E.P. Rogers, VP and CIO at Mony Group Inc., says the financial-services company's ability to recruit for its Syracuse, N.Y., IT hub has been enhanced in part because "there are about 20 private and public colleges and universities within a two-hour drive." That also brings recreational and other perks to Mony employees, says Rogers. "We have college basketball, lakes, streams, the symphony--there's a little bit of everything here," he says.

A recent study by Carnegie Mellon professor Richard Florida indicates that college graduates are drawn to IT jobs in regions that offer a variety of recreational, cultural, educational, and environmental amenities. His report, released in January and called "Competing In The Age Of Talent: Quality Of Place And The New Economy," finds that quality-of-place, particularly natural, recreational, and lifestyle amenities, are "absolutely vital in attracting knowledge workers and in supporting high-tech firms and industries."

The availability of job and career opportunities is necessary but insufficient in itself to attract young knowledge workers--there needs to be quality-of-place amenities in addition to "a thick job market," says Florida. Because of the long hours, fast pace, and tight deadlines associated with their work, knowledge workers prefer places with a diverse range of outdoor recreational activities, such as rowing, sailing, cycling, and rock-climbing. According to the report, there's a striking correlation between regions that are home to a large concentration of knowledge workers, and those with lifestyle amenities. Top high-tech regions such as Austin, Texas, and Seattle have aggressively pursued strategies to bolster their environmental quality, natural amenities, and cultural diversity to attract and retain technology talent.

Colleges students are one source of IT talent--but not the only one, and in some instances not the most desirable. The hardest finds are "experienced people who have had four or five years" working with particular technologies, says Jim Giancola, workforce planning manager at United Parcel Service of America Inc. in Atlanta. Those include people with skills as Oracle database administrators, Unix systems operators, or working with system-management software.

Experienced IT staffers--especially those with families--are focused on working and living in communities known for good schools and safe streets. More-experienced workers--again, especially those with kids--are also less likely to risk a new job at a pre-IPO company that offers potentially generous stock options in lieu of a more competitive salary, says Kurt Wilkinson, president of IT job recruitment firm Wilkinson SoftSearch. "I placed a few people recently who were worth a lot on paper before the company's stock dropped," says Wilkinson. "This may not be so bad for a younger person, but for many more experienced people, brick-and-mortar companies seem a lot more stable."

When companies can't find IT talent in their own neighborhood, they often expand their search outside their immediate geography. That means relocation.

Generally, companies first try to look for talent locally to avoid relocation costs, says Wilkinson. Also, companies such as Mony and Federal Express say they pay IT workers in the same job but working in different cities different salary ranges based on the local cost of living. Key considerations for relocating employees are compensation and local standard of living: Obviously, a systems analyst living and working in St. Louis, Mo. won't live as comfortably on the same salary if relocating to Silicon Valley, says Wilkinson.

Another solution companies use to address geographic IT issues is opening satellite offices in regions where the competition for IT talent isn't as intense or the supply of IT people is more plentiful. For instance, clothing retailer The Limited Inc., which struggles to find technology talent near its Columbus, Ohio, headquarters, has small satellite IT offices in Boston, New York, and Hong Kong to relieve some of the pressure on its Midwest IT staff (see story, "Demand For Talent Grows In The Midwest").

GE Power Systems, an Atlanta company that makes energy products ranging from home generators to nuclear power plant systems, is finding success with opening satellite offices in other cities. But GE Power's tactics are somewhat different than other companies with regional IT offices, says Alan Boehme, the company's CIO of E-business. "In this day and age, there's no reason for IT people to have to move for jobs," he says. "We need the same kind of high-skilled people that the Suns and the Oracles in Silicon Valley have." But those people won't move to Atlanta, he says. So, if GE Power finds someone it wants to hire, the company also looks to hire four or five of that person's friends. "We'll open an office where they are," says Boehme.

Some companies also fill IT positions with supplemental staff from third parties. Tom McFadden, The Limited's group VP of services and operations, says his company has 100 temporary workers supplementing the IT staff at any given time.

IT staffing firms face the same location issues as their customers, and many rely on foreign workers who obtain H-1B visas to work temporarily in the United States. Comsys, for example, has contractors from India and other countries who are assigned to its clients wherever specific talent is needed, says Caress Kennedy, senior VP of marketing. Most foreign workers are willing to work in any U.S. city, in part because the work is temporary and the relocation not permanent.

For some larger IT services firms, the impact of the talent shortage isn't as bad as it is for smaller IT organizations, according to Chris Ryan, director of human resources, Southwest region, for EDS, which has a presence in every state within the United States, as well as many foreign countries. "With a global presence such as we have, the battle for IT talent becomes easier," Ryan says.

The Upshot

Geographic location increasingly figures into the mix when IT professionals choose jobs and when companies seek to recruit and retain IT talent Every geographic region--even the hottest ones--have their own assortment of challenges in the IT talent war Young IT workers prefer to work in locations that have lifestyle amenities--but that doesn't rule out companies in less-favored regions from attracting younger talent Companies in less-desirable locations reach outside their regions to obtain talent, whether it's importing people from other areas, supplementing staff with contractors, or opening satellite IT offices Universities and colleges are treasure troves for hiring and developing new IT talent

For EDS, the primary challenges to retaining talent--keeping workers interested in their jobs and making sure they're comfortable with their economic situation--are handled through relocation, travel, and telecommuting. When relocating employees, EDS is sensitive to a worker's financial needs given the local economy, according to Ryan. But ultimately, a move comes down to career opportunities, and EDS has been successful selling its employees on this, Ryan says.

GE Power's Boehme says people are looking for three key things from their jobs: Fair compensation, technology challenges, and "to work with their friends, people they can get along well with." For many IT workers, this means job location plays a prominent role. So be it, says Boehme. "Corporate America has to adjust and understand that there are new motivators for employees," he says. "There's no reason for most companies to insist on keeping their people within earshot and eyeshot. People will work where they prefer to live."

Illustration by Jim Dandy
Photo of Oueida by Stephen Sherman

---