Strategic IT talent: Offshoring is not the answer

Offshoring appears to have little effect on openings for project managers with sought-after skills

It’s been a common refrain for years, growing to a chorus in the election year of 2004. As technology workers rail against the exporting of IT jobs to India, China, the Philippines, and beyond, their would-be bosses bemoan an ever-shrinking IT talent pool.

Who’s right? Well, both are -- but not for the reasons you might expect.

Offshoring has had less of an effect on IT jobs than many people commonly believe, says Dice.com CEO Scot Melland. In part that’s because the overall percentage of IT jobs that has been exported is relatively low, according to Melland. Those jobs are mostly commodities: help desk, database administration, and some application development. Higher-end, more strategic jobs are still kept in-house and continue to be in great demand.

Another reason: Offshore is rapidly becoming “dual shore,” as Indian-based outsourcers expand their U.S. operations. For example, Mumbai-based Tata Consultancy Services says it plans to hire 1,000 stateside employees in 2006. As the Earth grows flatter, global companies find themselves in desperate need of project managers who can communicate with clients on one side of an ocean while managing employees on the other side.

Hiring to fill a niche

If there’s a talent gap, it’s at the high end, says Harry Wallaesa, founder of tech consultancy The W Group.

“I think the talent gap exists at the really innovative technical positions that are driving new business models and helping companies compete on a different level,” Wallaesa says. “They’re not the ones whose jobs get outsourced.”

The shortage lies not in the number of tech-savvy workers but in the types of skills and experience they possess. IT needs have become so granular that it’s difficult to find people who fit a particular niche, says Jim Lanzalotto, vice president of strategy and marketing at Yoh, a $367 million talent and outsourcing company based in Philadelphia.

“The talent gap is really a ‘specificity gap,’ ” Lanzalotto says. “Five years ago companies were looking for anyone with any experience in CRM. Today they want a CRM project manager with experience in a particular industry, such as manufacturing or pharmaceuticals. When you get that precise, you start to develop supply issues.”

Lauren Barker, manager of staffing at USi, an ERP managed services provider, says her company’s biggest challenge is finding .Net consultants. It’s not easy to find someone with the right mix of technical, business, and communication skills.

“It’s easy to find developers who make $60K or $70K to do coding,” Barker says. “It’s much harder to find a senior principal consultant who is able to travel to a client’s office, articulate what our developers will be able to do for them, then come back here to develop the project.”

A touch of gray

On the other hand, as baby boomers retire, companies face the opposite problem. “Twenty years ago you couldn’t get enough mainframe guys,” Yoh’s Lanzalotto says. “Now companies can’t find them at all. It’s not a cool technology, but it’s something companies still need to have in place.”

Federal and state governments, with their combination of aging workforce and legacy applications, will be especially hard hit, Dice’s Melland says.

“If you’re a tech professional in the D.C. area with an active government security clearance, you can basically write your own ticket,” Melland says. “Agencies have had to slow down certain programs or shut them down entirely because they can’t find people qualified to do the work.”

As a response to the looming shortage of workers with knowledge of legacy apps, IBM user group SHARE launched the zNextGen initiative to offer career guidance and mentoring to young IT professionals. Its goal is to attract 20,000 new techies to the mainframe by 2010. Meanwhile, the Computing Technology Industry Association has joined forces with American Association of Retired Persons to create the Alliance for An Experienced Workforce. Its aim is to encourage the graybeards to stay on as consultants and part-time workers until a new generation of mainframe wonks arrives.

Bottom to top

The talent gap reaches the very top of the IT org chart, says Paul Groce, who heads up the CIO recruiting practice at Christian & Timbers in New York. But it’s not due to a lack of tech savvy.

“There’s no less [technology] talent today at the CIO level than there was 10 years ago,” Groce says. “The difference is that CEOs are demanding a different type of CIO for the future. Very few of today’s CIOs are trained to be general managers. That’s where the talent gap is.”

Groce says his company was engaged by a major corporation that needed to replace a CIO. The corporation has internal candidates with excellent technology backgrounds, but the CEO wanted to look outside for someone with more business experience.

“He wanted a CIO who had the skill sets to grow within the company and eventually manage a P&L,” Groce says. “It’s a shame the CIO had not trained and prepared a suitable replacement.”

If anything, the talent gap is only likely to grow wider, Dice’s Melland says. Post-9/11 restrictions on foreign worker visas, coupled with a dearth of tech-trained college grads and the retirement of the boomer generation, will drive more companies to seek expertise overseas.

“We seem to be headed into an era of not having enough highly skilled people at the same time we have this need for these people,” Melland says.

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