Work force woes - Tech firms find local labor pool drying up fast

Tech firms find local labor pool drying up fast

Mass High Tech: The Journal of New England Technology - April 17, 2006
by Christopher Calnan
Mass High Tech

ITA Software Inc has a problem that even $100 million can't totally cure

The Cambridge company that produces software for distributing airline tickets, received the money from five investors in February, during its first and only round of financing

But the money is not enough

ITA needs computer programmers and program managers in order to keep up with all the business the 8-year-old company is being offered, CEO Jeremy Wertheimer said "Even with all the money, we can't hire enough people to spend it," he said "We turn away work all the time We just don't have the people for it"

ITA's dilemma isn't unique Many Boston-area technology companies are trying to grow but are running low on the workers needed to make it happen

Indeed, industry experts say the tech labor market has tightened -- and it looks as if it won't loosen anytime soon

As a result, tech firms are devising more creative recruitment tactics or, in some cases, opening facilities in countries that have more workers available

Cambridge-based Akamai Technologies Inc, for example offers substantial bonuses to workers who bring new employees to the Internet services firm Waltham's BladeLogic Inc opened a development facility in India last fall and plans to open another in Eastern Europe

Bedford's RSA Security Inc said it plans to open a facility in India in September in addition to existing facilities in Israel and Australia

A report released by the Massachusetts High Technology Council in January found that 55 percent of the Massachusetts chief executives surveyed plan to add workers this year -- and only 7 percent plan to reduce their work force

But there's a conflicting dynamic going on: While tech companies regain their footing after being staggered by the dot-com bust, the number of US-trained engineers is declining, said Christopher Anderson, president of the council

"We've been emerging once again," Anderson said "We're entering a new cycle, and the labor market runs cyclically"

The spike in job creation is a sign of a robust economy, said Joseph Donovan, spokesman for the Massachusetts Office of Economic Development The state sponsors several initiatives, such as a work-force training grant program and government-funded career centers, to help employers attract and retain workers Funding for several of those initiatives are now being debated on Beacon Hill

BladeLogic Chief Executive Dev Ittycheria said the lack of local engineers prompted his 5-year-old firm to open a research-and-development facility in India in late 2005 He declined to say how many workers it employs, but expects to make an announcement about the facility in May BladeLogic also plans to open a similar facility in Eastern Europe Ittycheria said he would rather keep all of his development employees in the Boston area, but the shallow worker pool has made that unlikely, if not impossible

"We just couldn't find enough people in the Boston area to expand our development facilities," he said

BladeLogic, which employs 180 people, plans to increase that number to between 230 and 240 by the end of the year, Ittycheria said

"The tight hiring market is expected to get worse in coming years as businesses grow and need more tech workers -- forcing employers to consider contracting and outsourcing work", said Joe Donahue, president of Quincy-based Microtech Staffing Group "If you truly want (your business) to grow, then you can't think of your business as 'here,' " he said

At Akamai, salaried workers can receive bonuses up to $3,000 for referring an engineer Hourly workers get up to $1,500 for referring hourly workers

The company has operated an employee-referral program since it was founded in 1998, although its current program has been in place for two years, said Akamai's director of global recruiting, Mark Minichiello

He likened today's hiring climate to that of the late 1990s, when technology companies were challenged to find adequate supplies of engineers

"Candidates are going off the market fast," Minichiello said, "and they're having several options to consider"

ITA started the year with 175 workers and plans to end it with 300 The Kendall Square firm advertises on Boston subway cars with placards challenging riders to solve problems that would indicate their qualifications for employment

But Wertheimer said the company hasn't considered opening a development facility outside the United States -- yet

Although the $100 million funding can't solve the tight worker market, he said the investors help ITA make more recruiting contacts while the money pays for contracts with human resource firms