Tuesday, March 13, 2012

Startups Struggle to find Technical Talent, Why?

I read this interesting article by Laura Baverman on her EnterChange blog.  The essence of the article is that companies in SW Ohio and the Tri-state area in general are starved for talented IT staff.  It goes on to discuss the numerous grass root activities that are being started at the High School and College levels to encourage our youth to enter IT as a career, all of which I laud.  However it devotes all of two sentences to the reason for a lack of skilled workers in an industry where the ability to command $80,000 to $100,000 salaries is not unusual.

Perhaps the reason for this is to avoid offending the sensibilities of some of the companies mentioned whom are undoubtedly Cincinnati Enquirer advertisers.  I have a simple theory as to why there is a shortage of Technical Talent, a shortage which hurts the very engine of growth that will get us out of the recession the quickest, startups.  My core belief behind this phenomena however is given cursory coverage in the article, but is probably the key, "Others fear IT functions will be outsourced overseas."  A simple search of Google will return study after study citing dramatic declines in enrollment in Computer Science and Information Technology Undergraduate Degree Programs at Colleges.  I know for a fact a major local College contemplated cancelling their programs due to diminishing enrollment.  Even though there have been modest increases in enrollment in recent surveys as shown by the figure above, the damage has been done, and it may well take a decade or more to fully recover, and meet the burgeoning demands of the ever growing Information Technology sector.

Why are students shying away from IT as a career field?  In my opinion it is because during the first decade of this millennium potential employers were rampantly outsourcing the very jobs these students would aspire to hold, outsourcing to India and China and elsewhere, and it has not stopped yet.  In fact the article cites Paycor, a company that has just resumed Outsourcing to India, under the leadership of its new CIO, Vinay Mehta.  Likewise CincyTech has invested money in local startups that has been used to fund offshore product development, and Ascendum employs far more workers in Bangalore, than it does in Blue Ash.  Don't get me wrong, I am a vehement Capitalist, businesses have a right to do with their revenues whatever they choose, but the problem they are now complaining about was principally of their making.

Until the youth believes that IT again represents a real and stable career, that is not subject to legislative action on temporary worker programs, or the economic fluctuation of the value of the dollar that is currently making outsourcing less attractive I don't believe the talent shortage will abate. I also do not believe that the intentions of the larger companies mentioned, that are promoting the various programs are totally honorable.  The reality is that the majority of them would prefer a massive expansion of the H1-B Temporary Visa program so they can import cheaper foreign labor, than hire more expensive local talent.  One only has to walk the floors of companies such as Lexis-Nexus or Tata Consulting Services to suspect this to be true.

Meanwhile the startups, and small business such as Ample that recognize that true innovation comes from employing local labor, not labor purely in volume, suffer the most, as they struggle to compete for the handful of bright and talented workers willing to face the challenge of startup life, many of whom are heading for Silicon Valley.

1 comment:

  1. Good point Karl. As I read the article, one thing that came to my mind is that they're emphasizing job creation in the wrong places - or rather, expecting it to happen in places where it's a diminishing trend. What I'm noticing more of is jobs being created at vendors who solve problems for these big companies - and the big companies are learning that they should focus on their core competencies rather than trying to staff up a software development shop internal to their organization. As we both know, "software is hard", and I think instead of encouraging (governmentally or otherwise) large companies to try to get into the software biz by hiring a bunch of developers (which, let's face it, if it was so successful they wouldn't try shipping things overseas), we ought to be focusing only on the small - startups, consulting vendors, VAR's - these are where the jobs will be in software development in the next 10 years, not at "old school" large companies.