Talent Wars: How Boston-Area IT Companies Are Dealing With A Severe Staffing Crunch

12/5/07Follow @wroush

The bad news in a jobs study released last week by the Massachusetts Institute for a New Commonwealth is that Massachusetts lags every state in the nation save Michigan when it comes to creating new jobs. Manufacturing in the state has been in especially bad shape since the 2001 recession, leading to worries that, as the MassINC report puts it, a “boutique economy” is emerging “with great rewards for those with the requisite levels of education and skills and fewer options for everyone else.”

The good news from Xconomy’s own recent interviews with a host of area firms—if you happen to be one of those people with the requisite education and skills—is that the information-technology section of the boutique is booming. Human-resources managers at IT firms in the Boston area say they’re hiring more people than at any time since the feverish dot-com days. Demand is so great, in fact, that many companies say they’re having to pull out all the stops to find qualified job candidates—and the situation is getting worse (or better, depending on which side of the hiring fence you’re on).

“It’s absolutely harder to hire great people than it was a couple years ago,” says Microsoft’s Reed Sturtevant, who’s setting up a special innovation group based out of Microsoft’s new digs in Cambridge. Part of the problem is that so many big companies are trying to staff up their Boston-area operations all at once: while Microsoft is hiring aggressively, so are many other companies Xconomy has talked with recently, including Google, Akamai, IBM, and EMC. But “the competition I still see more of as I’m trying to pry people loose to join me is the startup world,” Sturtevant says, citing the boom in young Internet and software companies. “It’s very active.”

“The market feels like it did back in 1999 or 2000,” says Mark Minichiello, director of global recruiting at Cambridge-based Akamai. The networking company is nearly doubling the size of its Kendall Square headquarters and expects to hire over 300 people globally in 2008, about half of them in Cambridge. “You have to have a machine-like recruiting infrastructure to deliver those kinds of numbers,” Minichiello says.

And the machine is having to work harder. Executives say that fewer good resumes are circulating, partly because the most talented workers are getting snapped up faster—before they even have a chance to polish up their resumes. (Joe Chung, CEO of e-commerce startup Allurent, tells us that when he finds talented candidates, he has to make an offer—and a good offer—right away. Otherwise, they’re gone.) There’s also a shortage of generalists who have mastery of all the technologies that go into running a modern technology company. Hiring IT support people, for instance, has been a “real challenge,” says Jason Gasdick, owner of employment consulting firm Gasdick & Company and interim vice president of talent at Sermo, a Cambridge-based online community for physicians. “What was good three years ago really isn’t so hot now.”

A few companies are still lucky enough to have the pick of the litter, though, enabling them to bring on people as they’re needed. “I feel like I have complete control over my growth rate,” says Stephen Vinter, engineering director and site manager for Google’s Cambridge lab, which has expanded from a handful of employees to more than 100 in the last year. “We’re only limited by the number of people we can effectively absorb,” Vinter says.

But for everyone else, it’s important to have a range of strategies in place to find the best candidates. In talking with recruiters and HR executives around Boston, we’ve heard a few tactics mentioned repeatedly. So here’s a brief Xconomy guide to the best thinking on hiring amidst the IT talent crunch.

Use every recruiting outlet available.

“You need every channel operating so you can find that talent wherever it exists,” says Akamai’s Minichiello. That means, among other things, attending college job fairs, plastering campuses with posters, bringing on consultants and contractors, moving temps into permanent roles where possible, andscouring both job sites like Monster and business-networking sites like LinkedIn and ZoomInfo. “If you can get all those pieces going…then you have a chance of competing in a hot market,” Minichiello says.

Don’t look for people to fill specific positions—hire on a rolling basis.

Vinter says Google hires qualified people as they find them, then gives them time to figure out on their own where they fit into the company best. Melissa Lawrence does something similar at ITA Software, a fast-growing Cambridge company that builds comparison shopping, reservation, and ticketing systems for airlines and other travel companies. “We interview our engineers not with a specific job in mind, but asking ‘Are they going to raise the corporate average?’” says Lawrence, who is the company’s director of human resources. “Then we figure out which team needs them.”

Minichiello thinks of it as a numbers game. “I don’t always know which group [the new hires] will be in, but I do know I’ll need to hire x number of recruiters and that I’ll need to spend y dollars to get the word out. I look at it from the standpoint of how many candidates we need to be speaking with to keep [the growth] moving.”

Aggressively exploit employee referrals.

At ITA, 35 percent of all new hires started off with a referral from a current employee, according to Lawrence. “It’s really important to us to hire people that we know are good and talented, and referrals are our secret weapon,” says Lawrence.

Bill Andrews is CEO of ExaGrid Systems, a disk-based backup systems company in Westborough, MA, that recently raised $20 million in Series B funding in order to expand its sales, marketing, and technical hiring. “I’ve talked with dozens of CEOs, and what we are all finding is that it’s a very risk-averse workforce out there,” says Andrews. “People have been burned—they’ve all made the mistake sometime in the last five or 10 years of going to a company without really knowing how healthy it was. So they are tending to move to where they know people. So the thing that’s working better than anything else [when it comes to hiring] is networking.”

Referrals are so important to ExaGrid that the company pays employees a $3,000 bonus when a tip leads to a position being filled—and up to $9,000 for hard-to-find specialists. That’s still a bargain, Andrews points out, considering that using a headhunter will usually cost a company 20 percent of a new hire’s first-year salary. “We’ve gone from 30 employees to 85 in the last three months, and 75 percent of those hires came through referrals,” says Andrews.

Hire from within.

Vinter says that as he looks for the best people for Google’s Cambridge office, he considers employees currently based at the search giant’s Mountain View headquarters to be fair game. Indeed, employees who already work for a company, or who have recently left, have the advantage of being known quantities, and are often easier to woo.

Sturtevant says he’s collected quite a few references for former Microsoft people who had to move east to follow a spouse to another job or get closer to an aging family. “The ones that I kind of latch onto” are people who have already had a high career trajectory in Microsoft, Sturtevant told Bob last week. “They’re absolutely looking to stay with the company and the more we have going on in Boston the better it is for these kinds of folks.”

These kinds of people are great, Sturtevant says, because they already know Microsoft and have networks and an appetite for work. “That’s the best situation for me,” he says. (While Sturtevant hasn’t actually hired anyone yet, he says he has a number of good prospects and expects to have a core team in place this year.)

Poach unabashedly from other companies.

ITA’s Lawrence says one of her company’s strategies is to target riders of Boston’s Red Line, many of whom have high-tech jobs and have plenty of time to ponder their dissatisfaction with their current positions as they ride the subway to work. “We’re frankly trying to attract people who have other jobs,” Lawrence says.

Other companies are more active about their poaching. Andrews, at ExaGrid, says it’s important to be on the lookout for local tech companies where employees are starting to eye the lifeboats. “There are two ways that a lot of employees get freed up,” Andrews says. “One is when companies are starting to struggle. You can tell, because the sales and marketing people are always the first to jump ship—the engineers down in the engine room tend to go down with the ship. The other way is when companies get acquired. Everyone knows that when their company gets bought, they might not have their jobs in six months.”

In fact, Andrews says ExaGrid has already hired at least one engineer from Westborough-based business forecasting software maker Applix, which was purchased in September by Canadian business intelligence company Cognos, which was in turn purchased by IBM this month. “A lot of developers are wary” in such situations, says Andrews. “They don’t know if they want to work for such a big company.”

Don’t be afraid to recruit candidates who are considering going to startups.

“The small-scale startup scene around Boston is remarkable,” observes Sturtevant (who ought to know—the former Eons CTO has either started or worked for nearly a dozen of them). That makes recruiting harder, because the types of people who like entrepreneurship, and who are attracted to the idea of having a big chunk of equity in their companies, can be tough to attract to a big company. But “It’s a challenge I kind of brought on myself” by agreeing to head a Microsoft innovation group in Boston, Sturtevant says. “Because that’s the profile of the person I personally believe would be great to have in this environment.”

At Google, Vinter has a unique solution to the problem of attracting ambitious young entrepreneurs: let them start a business inside the business. “My philosophy is that somebody who is capable of building a startup should be given an amount of latitude to do that within Google—because that’s what they’re exceptional at,” Vinter says.

Try unconventional recruiting methods and messages.

Those Red Line ads that ITA Software has been placing? They’ve generated a huge amount of buzz for the company, Lawrence says, thanks to their unusual content. One series of ads features mathematical or cryptographic brain-teasers, such as “Write a program to compute the sum of all the integers between 1 and 1011 both divisible by seven and, when the decimal digits are reversed, are still divisible by seven” or “Given a T timetable, write a program to compute the quickest route that passes through every station on the Red, Blue, Green, and Orange Lines, ending at Kendall Square.”

The ads, which include URLs leading to the company’s careers page, attract people who like a challenge, Lawrence says. “The kind of person who likes to solve a puzzle is probably a good fit for the kinds of complex, algorithmically based computer-science problems we’re solving here at ITA,” she says. “It’s as much a screening tool as it is an announcement to the world that we’re a serious software company.”

Well, pretty serious anyway. The company’s latest series of ads has been a bit more irreverent, featuring pictures of real employees sporting scowls and tattoos along with enigmatic sayings such as “BOFHs Welcome” and “TANSTAAFL. Except on Fridays.” If the acronyms don’t mean anything to you, you probably aren’t cut out to be a systems engineer at ITA.

(Incidentally, Red Line riders happen to be the type of people ITA wants to attract. “We have a lot of people who live quite close—it’s a lifestyle choice,” says Lawrence. “They live in the Cambridge, Somerville, or Arlington area and they they want to be able to ride the T or bike to work. We’ve tried the Green Line and Park Street Station but we find that the Red Line is the right demographic.”)

Most important of all: promise people work that will energize them and suit their ambitions—and follow through on the promise.

Boston can be a beautiful and interesting place to live, but let’s face it: It’s no Palo Alto. Our winters suck, it rains a lot, housing costs are rising through the roof, and Boston drivers do their best to live up to their scary reputations. Attracting talented salespeople or software engineers who could just as easily find jobs in the Bay Area or Seattle means being honest about what your company offers, and giving all employees the opportunity to do something meaningful.

“You can’t hide the weather, you can’t hide the cost of living,” says Minichiello. “So I think you have to continually drive the conversation back to where your company is going, and what the work is that [the potential employee] is going to be involved in, and does the culture in your company provide everyone with the opportunity to have an impact.”

While today’s hiring frenzy may have the feel of the dot-com bubble days, people aren’t looking for all kinds of crazy perks, says Sturtevant. The real question on people’s minds, he says, is: “What can I get done? Can I really get people to use what I’m building?”

The number of ways to do that is multiplying, which means that from the qualified candidate’s point of view, today’s hiring situation could hardly be better. “This is a great time for very talented people to wake up and look around,” says Gasdick at Sermo.

But in fact, while the scramble for good employees may be exasperating for employers, the expansion drive is good for the whole high-tech ecosystem—especially right here on Xconomy’s home turf of Kendall Square. “We view Google and Microsoft as the new competition, and we keep an eye on what are doing, to make sure that we stay in the game,” says Akamai’s Minichiello. “But I actually view it as positive. Microsoft and Google, with their name value and their money, are going to pull more folks from the marketplace to consider opportunities in this area, and are going to help establish Kendall Square as a high-tech mecca. That can only help.”

Wade Roush is a contributing editor at Xconomy. Follow @wroush

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