A common perception is that in the aftermath of the dotcom crash of 2001, the market remains flooded with information technology (IT) workers with skills, but no jobs.
However, the reality is just the opposite. In fact, an IT worker shortage is hitting companies across the nation, including southeastern Wisconsin.
As the baby boom generation drifts off into retirement, the next generation is not as large, and the talent pool is not as deep. That equation recently prompted Microsoft Corp. founder Bill Gates to declare that North America has a “pretty significant shortage” of IT workers.
The Wisconsin Department of Work Force Development projects that there will be approximately 12,745 IT jobs in Wisconsin by the year 2014, which would be up 12.3 percent since 2004.
However, the pipeline of workers is not keeping pace with that rising demand.
According to the Computer Research Association’s annual Taulbee Survey, “In the 2005-2006 academic school year, bachelor’s degree production in information technology fields was down more than 15 percent, following the 13 percent decrease reported last year.”
College enrollment in IT-related majors across the nation, according to the survey, is more than 40 percent lower than it was just four years ago.
“The problem is a direct result of the dotcom bust in February of 2001,” said Phil Gardner, director of the Collegiate Employment Research Institute at Michigan State University. “There were a huge number of people with IT skills that all of a sudden were dropped on the economy with no place to go. The economy didn’t need them. The message started to get out that you don’t want to be in IT, and immediately enrollments in computer science and IT-related courses in colleges and universities across the country plummeted.”
According to Gardner, Michigan State University is graduating fewer IT graduates in 2008 then it has in recent years.
Marquette University is seeing similar results, as are the schools in the University of Wisconsin system.
Most colleges and universities, however, are seeing an increase in the current number of freshman enrolling in IT related courses, which may provide some stabilization to the IT worker shortage in the future.
Marquette University’s annual Work Force Career fair boasted 120 companies and organizations, most from the Midwest. Forty-eight percent of those companies were looking for graduates to fill IT-related careers.
As a result of the shortage, students graduating with degrees in IT are finding jobs quickly with attractive salaries, educators say.
“Especially with supply and demand, salaries are going to go up. Our computer science students have the highest starting salary of any graduate,” said Robert Horton, coordinator of the Management Computer Systems program at UW-Whitewater. “It is a huge salary compared to other careers, but even more than this, people who are in IT have the ability to really be catalysts for change within their company.”
Gardner said the demand for IT graduates will create pressure on employers to provide bonuses.
“I know all of our December graduates had jobs lined up, and I suspect it is the same for those in May,” he said.
According to Adonica Randall, president of Connection Strategies Enterprises Inc, (CSEI), a professional IT staffing service in Pewaukee, the situation has somewhat of a cascade effect.
“The business pipeline is directly impacted by the college and university pipeline, and now because of the low enrollment, there is all this discussion on how to try to fix that,” she said. The answer for many is to look for people in other places to fill those positions. The situation is dire, because, according to John Markworth, executive vice president at CSEI, even with the slight increase in enrollment increases in IT majors this year, the universities and colleges are still two to four years behind for companies that need to fill these positions now.
For many companies in Wisconsin, the answer to the problem lies in expanding the search area for qualified individuals to outside the region, state or even the country.
“We have really started to see the shortage in the past two and a half years or so and have had to expand the region of our recruiting,” said Michael Gengler, software development manager for Sussex-based Quad/Graphics Inc. “We had been doing the bulk of our recruiting from the University of Wisconsin-Whitewater. The numbers we have recently recruited from there are equal to the numbers from the other state schools now. We are even looking outside of the state.”
According to Gengler, having to recruit from farther distances costs the company extra time and money to establish those relationships for additional recruiting opportunities.
“I find that the salaries I have to promise to get them to move here are pretty high,” said Dave Southgate, director of engineering and services at Master Link Corp. in Menomonee Falls. “I do think the market is driving it. I think the market demand and probably supply vs. demand is definitely forcing me to pay more for those individuals. I guess if I’m willing to pay the price, I can find the right people.”
Jennifer Wolf, manager of staffing and human resources for Fiserv Vision, a business unit of Brookfield-based Fiserv Inc., expressed similar concerns about finding qualified IT workers for the job.
“We’ve noticed that there is a big demand for mid-level IT workers,” she said. “As our business changes, we are searching for talent with a specialty-focused background. The tough part is that many specialized, mid-level employees are already invested in their current positions.”
Meanwhile, employers are feeling the pressure to raise salaries, bonuses and benefits to keep the IT workers they do have.
For some of the region’s larger IT companies, going offshore to hire workers is an option, even if it is costly.
However, according to Phil Zwieg, retired vice president of information systems at Milwaukee-based Northwestern Mutual Life Insurance Co., outsourcing is not the most viable option for most companies anymore.
“Off-shoring continues to be a place that people look. However, the workforce in India is a little stressed at this point, as well,” he said. “It is a viable option for organizations but doesn’t have quite the significant cost savings as it did in the early ‘90s. It takes more effort and work to get into that ballgame today.”
Randall of CSEI agrees that off-shoring is not only becoming more expensive for the company, but he says it has an even bigger impact by taking away jobs from American people and knowledge and skills out of the American economy.
“We are just now experiencing an intellectual succession of knowledge capital. We haven’t had to worry about that, because up until 20 years ago, people stayed with companies for decades. That just isn’t the case anymore. So with outsourcing, you have this intellectual capital that is in constant flow out the door.”
For others, the solution to the IT shortage comes back to young people. Many companies have started to provide more internship opportunities for IT workers, Zwieg said.
“For the last six or seven years, companies have gotten away from the internship idea because they could hire just about anybody they wanted with a particular skill or specialty,” he said. “In 2006, when the excess dried up, the demand went up and companies started looking to college interns to fill some of those gaps.”
According to Kate Kaiser, associate professor of IT at Marquette University, internships help employers they are potentially broadening their staff, while students gain the real world work experience that employers seek.
“Internships are a win-win for everybody,” Kaiser said.
Wolf at Fiserv Vision said internships are a good way to supply the talent for the worker pool of the future.
“To feed into the internal growth cycle, we’ve capitalized on our employee referrals and broadened our internship opportunities,” Wolf said. “So far, we’ve been able to retain 90 percent of that talent upon graduation.”
