Bob’s Blog: An Executive Journal

Want Some Positive Employment News?

Wed, 09 Jan 2008 12:19:27 +0000

When it comes to employment news today, there are some reasons for gloom. The December 07 employment report showed the lowest non-farm payroll gain since 2003. Meanwhile, the Writer’s Guild strike is keeping us all a little less entertained and with fewer late-night laughs.

But amid the humorless gloom is continued good news for IT professionals. The trends that made IT professionals hot-ticket hires in 2007 are predicted to continue through 2008. Unemployment remains very low among IT professionals, which means the field of skilled candidates is very narrow. As the article “No Break Seen in the IT Talent Wars” on CIO.com points out: “Ongoing business expansion and increased reliance on technology are resulting in a strong demand for IT professionals with real-world experience.”

Talented, experienced IT professionals should have no problem finding good opportunities in the months ahead, especially with the help of talent experts--like perhaps Harvey Nash:-).

Businesses and their CIOs also will continue to experience the war for IT talent as one of their primary challenges for 2008.

Harvey Nash -- Far Ahead of the Outsourcing Curve

Thu, 15 Nov 2007 21:54:34 +0000

In the world of technology and innovation, being first can make you a legend. Consider the Wright brothers or Steve Jobs, who (despite fields of contemporaries working and succeeding at the same time) became household names because they were “the first.”

My industry, the IT services industry, may not be the staging ground for grandiose legend-making, but we at Harvey Nash continue to innovate far ahead of the industry pack. Take for example offshoring. A decade ago when IT services businesses were flocking to India as a place to deliver lower-cost solutions, Harvey Nash decided to go to Vietnam. Today, we run three world-class development centers in Vietnam that employ more than 2,000 IT specialists.

As Paul Smith, Harvey Nash Global Managing Director-IT Outsourcing, writes in his blog, Harvey Nash was “literally the first offshore software development company to open up” in Vietnam. Now global powerhouses like Intel, IBM and Microsoft are today heading to Vietnam and advisory firm PWC just named Vietnam an offshoring destination of choice over India and China.

But rather than rest on our laurels, we continue to push forward and innovate. In the U.S. marketplace, our latest push forward was last week’s acquisition of Atlanta-based TechDiscovery. With TechDiscovery, we have achieved our vision of becoming a full and comprehensive “Right Shore” IT services provider. The addition of TechDiscovery’s proven onshore development, deployment, integration and maintenance solutions means that Harvey Nash can now deliver the full spectrum of IT services on the shore that makes the best business sense for our clients. It’s what’s called the Right Shore approach to IT services delivery.

Again, we are in very good company as we strengthen our IT professional services capabilities within Atlanta’s technology hub. Leading IT services businesses are expanding in this area of the U.S. Take for example Wipro Technologies’ recent announcement that it will soon open a software development center in Atlanta. Wipro Technologies’ U.S. expansion underscores the importance of being able to deliver services in locations that best suit each customer’s specific timeline, budget and resource and management needs.

From Vietnam to across the U.S. to right inside the IT departments of our clients, Harvey Nash is equipped and resourced to deliver world-class IT application, infrastructure, consulting and staffing services to a global clientele. We have chosen to expand our capabilities onshore because it is our belief that today’s businesses will always need a range of delivery options (onsite, offsite, nearshore and offshore) due to changing business strategies, timelines and budgets as well as the dynamic nature of the global marketplace.

And while this expansion is a milestone for Harvey Nash, we are not slowing down one bit. Stay tuned for more innovations to come…Harvey Nash is always on the move.

Throwing Money & Opportunity across Our Borders

Mon, 23 Jul 2007 08:07:56 +0000

Where will American businesses go when they can no longer bring the skilled global workers they need here to work? This month, Microsoft provided us with one possible answer: Canada.

In early July, Microsoft announced that by the fall of 2007 it will have opened a software development center in Vancouver, Canada, which is less than 150 miles from its global headquarters in Redmond, Washington. It’s close to Microsoft and close to the U.S. But, it is still on the other side of the border, which puts the U.S. on the losing side of this opportunity.

As Deborah Perelman explains in her eWeek article, “Uh-O Canada: The Newest Nearshore Threat?” one of the key reasons for the move was frustrations with the numerous challenges in bringing skilled global talent to work in the U.S. So instead, Microsoft, one of the crown jewels of American innovation and leadership today, is opening a Canadian location designed to be a beacon for the world’s leading technology talent.

It confounds us all in the IT industry that the U.S. government does not see the losses piling up by complicating and impeding the process of bringing skilled, educated foreign workers into the U.S. Let’s not forget the fact that the U.S. is educating thousands upon thousands of foreign professionals every year at colleges and universities nationwide. Nevertheless, we make it next-to-impossible for the majority of them to stay here and use their education to further enrich American businesses and the American economy.

When American businesses are forced to go offshore, whether it’s just a few miles across our borders or thousands of miles away, innovation and tax revenues are walking out the door along with them. By allowing skilled foreign workers to come into the U.S. to help American companies grow and build, we are investing in the U.S. We are making American businesses, and therefore, America, stronger. The more limits we put on how much innovation can enter our borders, the more American innovators will seek friendlier and more sensible shores.

H-1B Update: Immigration Reform Bill Fails to Pass

Mon, 02 Jul 2007 15:16:11 +0000

In mid-June I shared with you my concern and frustration that Congress would not expand the H1-B visa program, which issues temporary work visas to highly skilled professionals in technology, science and engineering fields. Last week the Immigration Reform Bill failed to advance in the Senate, which means it will not likely go to vote this year. As InfoWorld reported last week, Microsoft and other large technology giants have shared their frustration with the failing of the bill as it would have expanded the “H-1B cap from 65,000 to 115,000 and exempt all foreign students who have earned a master's degree or higher from a U.S. university from the annual cap.”

You may expect that I would have the same frustrated reaction, but in some ways I am relieved. I remain frustrated that our country has not found a strategic, positive way to work on our mounting immigration problems. I remain frustrated that many people do not see how much we need to leverage specialized skills from the global talent pool in order to remain competitive in today’s most competitive fields: technology and science.

That said, I am also relieved that H1-B did not make it through the Senate. Why is that? It’s because of the restrictions some lawmakers were hoping to place on the program.

There was momentum to add restrictions to the H-1B program that would have prohibited IT staffing and consulting companies from placing H-1Bs with clients, which would absolutely be detrimental to American corporations. American companies need specialized skills and talent, which are in dire short supply nationally. For American businesses to maintain and foster a leadership position in the world, this talent shortfall needs to be addressed. And in the short term, H1-B’s are the only primary and immediate means for addressing the issue.

The IT staffing and consulting industry is designed to help businesses find the specialized temporary and long-term IT skills they need, which is why this is such an important issue for us in the industry, and for all American companies. Businesses with gaps in their IT teams rely on IT staffing and consulting companies to help fill critical IT skill needs. It makes no sense to limit the ability of IT staffing and consulting firms to accomplish their mission of delivering the best professionals for the job to their clients. In fact, what better institution is there for placing temporary foreign technology professionals than the IT staffing and consulting industry, which specialize in the placement, management and administration of contingent talent?

What the proposed restrictions, as well as the Bill’s failure to advance, tell me is that more education on the issue is required. The nation is fearful of an influx of foreign talent, believing that it means job losses for Americans. We in the technology, consulting and staffing industries need to educate the public and the Congress on how skill-short the country is, especially in the technology, engineering and science sectors. Hopefully, we can take advantage of this pause in the reform battle to help people, businesses and lawmakers understand the skills shortages we face today and the more dire ones ahead.

The Information Path to CEO – How IT Cultivates Business Leaders

Wed, 13 Jun 2007 18:36:14 +0000

Recently in the Asian edition of CIO.com (CIO Asia), Peter Hind provided several good insights on why CIOs, with the right focus and experience, are some of today’s top candidates for CEO positions. The article, “From CIO to CEO,” focused on the broad business experience today’s top technology leaders must have (such as knowledge of all departments and their operations as well as business goals and strategy). According to Hind, this business intelligence and experience is the kind of knowledge foundation today’s most influential business leaders should have.

I agree with Hind that technology departments today are fertile grounds for growing strong leadership. In fact, I believe the recent transformation of so many IT departments shows how CIOs are rapidly becoming highly effective agents of change and strategic business managers. Just a few short years ago, most businesses were fairly cut off from their IT departments. IT played a key and costly business role (everyone knew the Y2K conversions worked but not how). Still, IT was distanced, even sheltered, from the overall business organization.

Tighter and harder times following the dot-com fallout and economic slowdown required business leaders to understand both the work and the expenses of the IT organization. In addition, businesses have desperately needed the expertise of IT to help improve a wide range of operational areas like compliance, customer management and data management. In short, IT leaders were asked to rapidly integrate their operations and knowledge with the business. They were tasked with providing more efficient, secure and cost effective IT solutions to the whole organization.

I would say it is nothing short of impressive how many CIOs and IT leaders have succeeded at fundamentally changing how they and their staffs operate. Few organizations today would say their IT operations are islands unto themselves. IT departments have made tremendous efforts in improving how they serve the business and create competitive advantage. Venturing far beyond transaction processing, IT departments have integrated technology into every aspect of business functionality, from accounting and sales to marketing and executive analysis. And as technology has expanded its reach across the business organization, CIOs have accompanied it. They have increased their business acumen at functional levels as well as at hierarchical levels, earning a seat in the board room next to their c-level peers.

For me, that ability to rapidly adapt is another reason why CIOs are strong candidates for CEO roles. We work in a market of instant change. IT leaders are old hats at seeing change coming and assessing how an organization must react, absorb and leverage change. They also have learned to drive change, retooling their organizations to focus on business needs and retraining technology staff to understand business operations and strategy. And executives who come from the IT side of the business are excellent learners. They know how to learn new skills and adapt to changing environments. In fact, many of them thrive when learning and change are required.

In today’s world, the best business leaders must be both fast learners and executives ready to understand and drive change. Many CIOs are demonstrating those leadership skills in abundance, and as Hind hints in his article, they are giving top finance and sales executives some serious competition when it comes to earning the CEO job.

H-1B: Immigration Reform Should Not Prevent Brain Gain

Thu, 31 May 2007 15:52:40 +0000

As we see and hear from the TV, radio, newspapers and Internet each day, the United States Senate is deep in the throes of debating immigration reform legislation. For many people, this debate centers on border security and the flood of undocumented workers crossing U.S. borders. And while it’s true that the majority of the Bill under scrutiny today does focus on border security, residency issues and a guest worker program targeting lower-skilled labor pools, the legislation is zeroing in on one critical issue affecting some higher skilled labor pools: the H-1B program.

H-1B has become a hotly contended issue for many lawmakers today eager to protect U.S. jobs. However, by cutting off the flow of skills to technical sectors (science, engineering and technology) that are already deep into a talent shortage, the Congress will deal a much bigger and longer-lasting blow to American competitiveness and to the ability of American businesses to create job opportunities.

The H-1B is a non-immigrant visa category. It allows American companies to seek temporary help from skilled foreigners who have the equivalent U.S. bachelor's degree in categories considered to be a "specialty occupation." Why is H-1B so contentious? It is blamed for displacing substantial numbers of experienced American science, engineering and technical professionals and for lowering wages in skilled professional categories.

I have personally witnessed this misdirected frustration toward H-1B myself in the halls of Congress. Just recently I joined the NACCB to lobby against the reduction of the H-1B visa program. One congressman I met told me he was against the H-1B program because it was taking away jobs from IT workers in the United States. The ironic part of the story is that unemployment stats from the U.S. government contradict this claim. For the first quarter of 2007, the Bureau of Labor Statistics reported unemployment rates for some IT occupations, such as computer and information systems managers and computer software engineers, at below 2%. Proving how high the demand is for IT professionals today, most IT occupations saw unemployment rates well below the national unemployment rate, which hovered between 4.4% and 4.6%.

If the supply and demand gap for highly skilled talent is allowed to grow too wide, America will find itself quickly losing its competitive position in the science and technology fields. That gap is already beginning to spread due to the most recent visa cutbacks. For 2004, 130,497 H-1B visas were approved and there were 116,927 approved for 2005. The total number of visas issued was reduced to only 65,000 H-1B visas beginning in 2006.

The demand for H-1B employees is so high that American corporations filed for H-1B applicants six months in advance of when 2007 visas were issued. For the 2007-2008 year, over 130,000 applications from U.S. corporations have already been received, far exceeding the quota of 65,000. Despite this undeniable demand and clear evidence of a talent shortage, the Senate is considering curtailing the program further and limiting the potential of American ingenuity and growth by cutting off much-needed resources. A lack of resources at home is not only a recipe for mediocrity, but also more incentive for U.S.-based businesses to move their operations abroad.

American farms cannot run without water. American schools cannot teach without teachers. American technology businesses cannot lead the world’s most competitive industry if they are crippled by a lack of skilled technical experts. While support for increasing the H-1B program may seem like an anti-American labor position, a little research shows that it is about helping American labor pools and businesses by ensuring American companies can compete, innovate and grow in order to create more opportunities for all. H-1B is in fact a promoter of brain gain, not a creator of brain drain.

The Media Buzz on Harvey Nash’s Survey

Mon, 02 Apr 2007 20:20:06 +0000

Just over a week ago, we released the second ever Harvey Nash USA CIO Survey in partnership with KPMG. It’s an exciting time for those who are part of the U.S. arm of the global Harvey Nash organization. In Europe, the CIO Study is almost a decade old and has become a powerful benchmark of IT trends across the UK.

While our study of IT leaders in the U.S. is only two years old, I am excited to see that interest nationwide is high. For example, InformationWeek published a write up on the survey titled, “For CIOs, The Pay Is Good and the Hours Are Long.” As its title reveals, the article focuses on the long hours worked and general satisfaction of CIOs today. In the article “CIOs Like Their Jobs, Not Their Outsourcers" published on both eWeek and CIO Insight, author Deborah Perelman also focuses on the job and salary satisfaction of CIOs and underscores their dissatisfaction with outsourcers.

For me, the satisfaction of today’s IT leaders is also one of the most important findings of the survey. We all know how extremely hard the role of an IT leader is. These executives must constantly balance the demand for innovation and greater value with the need to keep budgets low and increase cost savings.

It reassures me that those who have climbed to these top IT leadership positions are happy to be there and ready to take on the many challenges ahead. Those are the kind of people we need in tough leadership roles today, and it looks like businesses are doing a good job of getting the right professionals and keeping them.

In fact, the survey underscores the fact that these leaders are more than IT leaders. Our CIO Survey found that 43% of technology leaders have responsibilities outside their IT departments in areas such as finance, marketing and operations. This expansion of responsibilities shows that more and more CIOs are now strategic business leaders who are able to support and manage a wide range of organizational initiatives.

As for outsourcing and the general dissatisfaction with performance, we at Harvey Nash see it as an expectations and communications issue. Because outsourcing solutions are managed locally or on-site, clients have very high expectations of transparency in the process. They expect to see and understand progress, processes and challenges. However, most outsourcers are failing to meet this demand.

Outsourcers must over-communicate, constantly report on progress, implement escalation trees, create project triggers and build strategic operational procedures for managing client expectations and needs. When clients better understand what is happening, they are better able to recognize progress. It’s amazing what excellent communication processes can do to change the fundamental success of an outsourcing and offshoring project.

As the 2006-2007 CIO Survey continues to be discussed in local and national forums, I look forward to sharing with you what the pundits, business writers and business leaders are saying and how we at Harvey Nash respond to their insights. If you are interested in commenting on the survey yourself, you can read in online here or attend one of our upcoming local market events where the survey findings will be discussed. A list of events occurring in the next month is listed here.

Even the Snow Was Whiter in My Day

Sun, 25 Feb 2007 12:52:10 +0000

Ever notice how the older generation always feels that yesterday was far better than today. “People were more sensible then, they took care of things and had better taste in music and clothes. People behaved better back then and, of course, they worked much harder.”

For those of us in the people business, we are forever interested in how we can increase productivity, especially among the younger generation. Many business leaders and managers of the Baby Boom and World War II generations are frustrated by generational workplace differences. They feel that GenX and GenY employees are less dedicated and don’t work as hard as they did.

Here is a question: Is it our standards and expectations that are off? Or, is the work ethic of today’s younger generations not where it should be? Do we properly assess and align performance expectations to results? Do we really have a handle on worker productivity or what an employee does or does not do at work?

These all may be relevant questions to ask, but the answer I am looking for is bigger. I search for a proven formula, the master key, a secret sauce or whatever magic potion it will take to make today’s workers “go the extra mile.”

I too wonder at times if all the professors of the “better in my day” theory are right. Was there something in the past that motivated younger workers, which is now long gone? For the majority of the working class many years ago motivation was simpler: the need to put food on the table and a roof over heads.

In today’s world, professionals can easily achieve and surpass the goal of supporting a family. In fact, opportunities abound to achieve increasing levels of affluence. Given our market economy, it is much easier to identify and realize the lures of affluence, and it is getting more so every day. From what I see, GenX and GenY workers clearly want the luxuries that come with achievement, but the challenge is getting them to extend the effort necessary to earn these rewards..

While no panacea to underperformance, what has worked for me in recent years is to model the capitalistic market economy within the workplace. I find out what incentives, needs and challenges truly motivate my staff, such as competition, recognition, compensation, etc. I then set their workplace goals beyond current expectations and provide mechanisms that can help people to achieve established goals and receive well-earned rewards and benefits.

Just as our market economy and capitalism have proven to be the model that works best on a macro level, many of its principles apply on a micro-individual level. I believe managers who are able to create “demand” for achievement and success within the workplace will be able to push performance higher among workers of all generations.

However, if you do know of a cure-all for motivational lows (among any and all generations), feel free to call me directly.

Debunking the “IT Offshoring Costs U.S. Jobs” Myth

Mon, 04 Dec 2006 21:06:26 +0000

There is a growing wave of concern that America is turning inwards, becoming isolationist and protectionist. It’s something we Americans cannot let happen.

What drives this irrational, isolationist push? It’s a number of news and media sources misrepresenting offshoring and its effects. The message often conveyed by the media is that American jobs are being taken overseas, which is causing significant job and economic loss here in the States.

However, the marketplace facts do not support these claims. For example, there is Lou Dobbs, CNN anchor, who writes, “…so-called free trade has come at an inordinate cost to working men and women in this country. We've lost three million manufacturing jobs as a result of these so-called free trade agreements that enable corporate America to export plants, production and jobs to cheap foreign labor markets. Millions more American jobs remain at risk of being outsourced.”

To that, I would ask Mr. Dobbs to go back to school and review the basic macroeconomics of “comparative advantage” to understand how he is misleading the public. It’s a widely accepted understanding that the world benefits when there are no barriers to free trade. Every nation should seek the lowest prices for comparative goods and services as it benefits the world economy. Adam Smith espoused this concept in The Wealth of Nations, and our forefathers saw the wisdom in the model, making it a core principle in building our market-driven economy.

But what if you are someone who doesn’t care about the rest of the world? What if you only want to focus on what is good for America (as some in the media seem to suggest is the best approach)? Then, I invite you too to get in the offshoring game as well because its impacts have proven to be good, good, good for the USA.

The U.S. Bureau of Labor Statistics (BLS) reports that during the push to offshore IT jobs, IT unemployment rates have fallen. In 2004, the unemployment rate for computer and mathematical occupations was at 4.2%. It fell to 2.9% in 2005. In the second quarter of this year, the unemployment rate for computer programmers was at an incredible 2.1%. Contrary to the “job loss myth” so many would have us believe, corporate America and IT jobs opportunities are expanding at a steady rate.

My hope is that cooler, forward-thinking heads prevail when it comes to offshoring and the World Trade Organization’s Doha Development Round negotiations. Lowering trade barriers around the world will result in better business and work opportunities across the globe. Whether you’re an isolationist or a fan of the growing global marketplace, offshoring is here to stay. With strategic offshore solutions in place, the U.S. will succeed, the world will succeed and all our boats will rise together.

Tony Blair for President?

Wed, 29 Nov 2006 02:15:35 +0000

This week I attended (on 11/28/06 and 11/29/06) what was truly one of the most impressive business symposiums of my career: the CBI Interactive Conference held in London.

Being an American, I was truly awed by both the prestige of the speakers and the high-level business executives in attendance. It was a most remarkable compilation: some of today’s most renowned CEOs intermingled with UK’s highest levels of politicians and government representatives…all in one forum. Tony Blair, Gordon Brown and our own U.S. Treasury Secretary, Henry 'Hank' Paulson, were just a few of the headliner politicians.

I was most impressed by the caliber of the business panelists who spoke about issues of monumental importance to us all, such as globalization and the rise of new economic giants like China, India, Brazil and Russia. Presentations were designed to be intelligent exchanges of ideas and stimulating debates on whether these countries present threats or opportunities. Other topics of the conference included free trade, protectionism (during which a few shots were levied at us Americans), energy security, global warming and more.

While the topics were weighty and broad, the atmosphere was intimate and approachable. The audience and speakers interacted on a level playing field, discussing and debating with spirit, graciousness and reciprocity. I for one don’t know of an equivalent forum here in the U.S. that provides such an open platform for business and government interaction.

And on a personal note, I was thrilled to have Albert Ellis, the CEO of Harvey Nash, introduce me to Tony Blair. He presented me as the President of the U.S. (as I am president of Harvey Nash, USA), which I think momentarily took Mr. Blair back. Maybe he thought President Bush had shrunk and taken on a serious tanning regime. But he recovered quickly and asked me what state I was from, to which I replied New Jersey. I could see him mulling over in his head whether he was going to zing me with a cheap quip about NJ, but fortunately he spared me. I then asked him if he would come to the U.S. and run for President. (I believe he’d win in a landslide.) He just smiled. We were both probably thinking the same thing, but he’s too much a polished politician to jump on the softball I tossed him!

In Admiration of London Cabbies: The Self-reliant Talent Factor

Tue, 22 Aug 2006 22:27:50 +0000

Ever taken a cab in London? There is no better place to hitch a ride. First of all the famous black cabs are cool, old-fashioned vehicles that look like they rode right out of a 1930’s detective novel. Second, the drivers are genius at what they do: getting you where you need to go. Every driver has passed “The Knowledge,” a test that requires the memorization of more the 25,000 streets and the location of every hospital, government building, theatre, hotel, metro and train station in the city.

Navigation systems are taking off worldwide but not in cabs in London. As the recent CNN.com technology article “London cabbies: Brain cell mightier than microchip” points out, London drivers take pride in their expert city knowledge. And hey, a London cab driver has “a larger hippocampus” (section of the brain responsible for navigational capabilities) than the average person, the CNN article points out. So why turnover that big brain to a computer?

As someone who has worked in the technology sector for decades now, I still find myself thinking a little more “old school” than “cutting edge” at times. I admire the London cabbies who say no to navigation systems and yes to brainpower. However, I much prefer that New York cabbies—who have an easy entry test to take, know limited locales and often depend on their passengers to know exactly where to go—hook up their cabs to today’s state-of-the-art navigation systems ASAP!

As a business professional working in the human capital industry, I take an important lesson from the London cabbies and their commitment to knowing their jobs and their city. Too often in the workplace today, we rely on systems and high-tech tools to feed us information and forget about the TALENT it takes to make that information valuable and accurate. The applications and gadgets we use so liberally in business today are only as effective as the talent of the people who built them and the skills of the people operating them.

As business leaders and managers, hiring a self-reliant go-getter is one of the smartest moves and best investments we can make. When it comes to measuring the collective drive of an organization, I believe you can look at the ratio of “self-navigators” to “auto pilots.” The more “self navigators” you have on staff, the farther your business will go.

CEO Blogs: Bring Them On

Mon, 31 Jul 2006 15:54:10 +0000

Yesterday’s Sunday, July 30th, 2006 NY Times article “All the Internet’s a Stage. Why Don’t CEOs Use It?” posits a timely question. As we see many corporate managers enter the blogsphere, there clearly is a lack of entries from the very top: CEOs of the Fortune 1K. Jonathan Schwartz of Sun Microsystems is a notable exception as witnessed by his ongoing industry dialogue at Jonathon’s Blog.

Why the lack of participation?

Maybe it is because CEOs are overly cautious of what might get put into print these days, or perhaps they are not at ease writing their own entries. But whatever the case, it is refreshing to see the leader of an organization comfortable and confident enough in his own skin to have an ongoing dialogue with all stakeholders. At Harvey Nash, our C.E.O., Albert Ellis, has not only started his own journal, but has also encouraged many of us to do the same.

Journals by CEOs can provide an un-sanitized view of the CEOs observations and thinking. Clearly this could present some pitfalls; however, I think overall the good will out balance the bad. We at Harvey Nash think blogging is the way of the future and a good way to communicate both internally and externally. Perhaps in time, this medium will become the norm, instead of the exception.

Economics and Hiring: These ARE the Best of Times

Mon, 10 Jul 2006 15:05:36 +0000

The simple fact is we are living in the best of times—especially those in the employment industry. Sunday’s New York Times article by Edmund L. Andrews features the revealing, not widely published, fact that a surprising jump in tax revenues is actually curbing the U.S. deficit. As the article points out, an “unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year, even though spending has climbed sharply because of the war in Iraq and the cost of hurricane relief.”

The national debt is actually predicted to decline this year as corporate tax receipts have nearly tripled since 2003. Additionally, Andrews points out that continued interest rate hikes really haven’t had a negative effect, as companies are carrying historic levels of low debt and are flush with cash.

And what’s more, computers are drastically improving worker productivity.

So what does low debt and greater productivity equate to? U.S. companies are prospering and as they prosper, they HIRE more. The more companies hire, the tighter the labor market becomes. And that is in fact what we are seeing at this very moment in time as most staffing firms report the following talent shortage indicator: a flattening of temporary worker engagements as organization are now seeking to hire full-time staff.

The question for employment market watchers is this: Will this permanent hiring trend going to continue? Almost certainly not. Economic history tells us these hiring patterns are always cyclical. What normally follows the hiring phase is a move to employing contingency workers.

Barry Asin (Chief Analyst with Staffing Industry Analysts) revealed at the latest SIA seminar data that showed businesses will clearly be using more contingent IT workers in the future. In the next two years, the percent of contingent workers is forecast to grow to 12 percent from 10 percent today. The main reason for businesses to increase their contingent workforce, according to a Staffing Industry Analysts customer survey, is “coping with a fast-changing workload” (the reason cited by 84% of buyers).

This means that we can predictably see a future of 1) more job hopping, 2) increased frustrations for companies trying to hire and 3) pressures of corresponding raises in pay rates.

So what can companies do to compete ? Well some companies are wisely investigating and moving to incorporate off-shoring to lower waged countries. But experience teaches us that there is never a single panacea for solving economic and labor issues. That is why it is essential for companies to develop comprehensive talent strategies and pick the right mix of on-shore, near-shore and off-shore approaches in order to address talent shortages and demands.

And at the same time, what can we in the staffing and human capital industry be doing to help our clients? I believe three things are essential:

1) We must educate our clients on the changing dynamics of the supply/demand labor equation.

2) We must urge companies to move quickly when they identify a suitable candidate. If you don’t move fast today, the candidate is gone.

3) We must understand that there is going to be a natural evolution towards increased salaries and bill rates, especially in the professional services arena of IT and finance and accounting.

I also think that this situation will shift companies away from Vendor Management Systems and rate cards so that they are able to meet the demands of hiring managers. But that’s a completely different and highly provocative topic for another day.

Sure Things: Death, Taxes and the IT Labor Shortage

Fri, 07 Jul 2006 23:06:23 +0000

They say the only sure things in life are death and taxes. In the world of economics, we know that things like inflation rates and interest rates will definitively rise and fall, but we never know with certainty when and by how much. However, the upcoming labor shortage is one of those vary rare economic events that is a clear surety. So with such a certain event unfolding, what are those concerned with IT hiring, staffing and employment industry doing?

Robert Morison’s interview of Kathleen Melymuka, author of Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent Harvard Business School Press, 2006, outlines a spot-on perspective and is a must read for those concerned about what’s around the corner for the fate of the IT workforce. The article “Workforce Crisis: Preparing for the Coming IT Crunch,” very neatly lays out the factors that all organizations need to be concerned with, especially those of us in the human capital industry that supply a great deal of the IT talent. The onslaught of the baby boomers is upon us, led by such luminaries as President Bush (about to turn 60) to those trying to defy and delay this reality (i.e. Rolling Stones).

Morison’s interview adroitly outlines the shift in supply and demand dynamics and offers some specific suggestions of what the industry can do to address the upcoming friction points. Organizations need to think about this in much the same way as preparing for Y2K. Although the eventualities of both events are similarly predictable, the impacts are not as clearly discernable at this time. Nevertheless, organizations that depend on a healthy IT labor supply, and organizations that supply this much needed talent, need to realize the inevitability and begin to formulate plans and/or alternatives to cope with the pending IT labor shortage.