As it scouts for talent, more than Microsoft is feeling the pinch.
Sparks flew--along with accusations of flying chairs--in one of the first hearings last week in Microsoft's lawsuit against Google Inc. over the hiring of former Microsoft executive Kai-Fu Lee. In written testimony, former Microsoft engineer Mark Lucovsky claimed that CEO Steve Ballmer threw a chair in anger when Lucovsky said he was going to Google, and Ballmer vowed to bury Google CEO Eric Schmidt and kill the search company. (Ballmer says Lucovsky's account isn't accurate.)
Google is doing the killing lately, at least when it comes to recruiting star talent. And it's not just from Microsoft. The company's aggressive search for brilliant engineering talent has created an intellectual fuel shortage for competitors. Google's latest coup: hiring Vinton Cerf, one of the founding fathers of the Internet, away from MCI last week. Research scientist Daniel Russell, formerly with IBM, Apple, and Xerox, also recently joined Google.
In a blog posting, Cerf mentioned Google's success in hiring top IT people. "My recent interactions with many of Google's senior staff have simply underscored my admiration for the extraordinary talent at Google that has been assembled in a short amount of time," he wrote.
Microsoft chairman Bill Gates, in an interview last week with InformationWeek, downplayed the impact of any shortage of homegrown IT expertise. "We're able to hire most of what we want, it just now takes a few months more than would be ideal," he said, suggesting international talent helps fill in the gaps.
That may be understating the case. Lucovsky testified to Ballmer's reaction about Lucovsky leaving Microsoft. "Just tell me it's not Google," Lucovsky recalled Ballmer saying. The hearing is for an injunction to restrict Lee's duties at Google until next year's trial.
Other companies are courting talent, too. Yahoo Inc. recently hired former IBM researcher and Verity Inc. CTO Prabhakar Raghavan to run Yahoo Research. It also brought former Apple Computer and Amazon.com Inc. executive Larry Tesler and IBM search researcher Andrew Tomkins on board. But Raghavan doesn't see much of a change in the competition for top-tier talent. "It's more of the same, and it's always hard," he says. "And that's as it should be."
Google has headhunters "contacting virtually every luminary," says Stephen Arnold, a consultant and author of The Google Legacy, an E-book. Though Google has high salaries and rising stock, Arnold argues that Google's allure isn't primarily about money. "Microsoft has created kind of a backlash against working there," he says. "There's been an undercurrent that when big projects end, people get let go."
Microsoft begs to differ. "We have very low turnover of our researchers and architects and people who are doing the key product work," Gates said. The company ranks 57th among the Best 100 Places to Work, according to the Great Places to Work Institute. Google isn't listed. Microsoft ranked No. 8 as an ideal employer this year in a survey among U.S. undergraduates (down from No. 1 last year). In August 2004, the company issued a press release to trumpet a study of more than 14,000 students at 88 universities that rated the company as the No. 1 employer of choice among U.S. undergraduates.
But it's Microsoft's position at the top of the computing pyramid that's been called into question by the migration of top talent--and by the industry's megatrend move toward software as a service. Microsoft knows it has to remain a cool place to work to stay on top of the industry. It just has to get there before the best engineers decide there's more than One Microsoft Way.
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