Jun Group CTO Fears Salary Bubble Pushing Tech Sector to the Brink

8/30/12Follow @jpruth

(Page 2 of 2)

tech talent, so they invested heavily and early and made themselves a recruiting and retaining company for developers. Get the best ones, make them very happy, and make sure they never leave.

X: How are you trying to cope in this hiring climate?

W: When you’re having this much trouble hiring, you have to nervously explain yourself to your executive team. It might seem crazy that you’re trying for so many months to fill nice looking positions. You have to compile data, ad after ad, and prove this where the market was and that his bubble happened.

You look for opportunities [to be attractive to tech talent]. Developers hate going into some big companies because they are tiny cogs and have very little autonomy. It’s nice to go into a new place, get in on the ground floor, and make your mark. Of course you have to match or beat on compensation packages. Some companies like to give away equity and I recommend that to my friends when they are starting a new business. I tell them this is not the “hired help” anymore. You want a really strong technical team that’s in early. This is now a top level core part of your executive team and should incentivize them accordingly.

You can maximize your dollars and make the job more attractive by giving people flexibility about when they work and how they work.

X: Where do you think this trend is headed?

W: It was just like this in the 1990s and 2000. In the year 2000 this industry looked like it was unstoppable. Money was pouring in and people were streaming into the field. A year later it was Armageddon. Half a million people hit the job market in one six-month span. I saw MIT graduates not working for 18 months. I saw an ad in Silicon Valley for a Linux, Apache, PHP programmer—paying minimum wage. One hundred people applied from what I heard.

I thought this [current trend] would have cooled off sooner. What I expected twelve months ago was a gradual return to normalcy. Instead, I saw somewhat of a dip, but I’m still getting calls from friends in fashion, media, and finance looking to hire. I got a call yesterday from somebody struggling to fill a mid $60,000¬–$80,000 salary junior operations position job that requires no experience.

The larger companies are hiring earlier and earlier. We had a summer intern with no experience looking to get into Jun Group, who asked “what are you going to pay me?” He wanted $6,000 [for the internship]. “Microsoft and Facebook pay $6,000,” he said.

Of course the top ten engineering schools are all mined out [for talent]. The computer science degree programs all over the northeast and certainly the New York area are mined out.

After 2001 and the five years following, there was a sense that IT was going overseas and probably never going to be a domestic industry. It was not a good career move to get a computer science degree. I think that caused part of the angst in high-tech businesses. You have this enormous demand but the forces that drive supply did not work as well as they should.

Since we did not gradually cool down, we could have something like a 2001-style pop.

If we don’t see a gradual deflation really soon—probably by the end of the year—I’ll be really worried.

X: Given that overall economy is not moving at the same pace compared with the boom in the tech sector during the late 1990s, will it be different this time around?

W: People in finance say we’ve been through this already, that they are much smarter about where the money goes. Also when macroeconomics gets bad enough, even if there is rational exuberance that wants to express itself, ultimately venture capital and private equity will dial down the risk factor. However, any time you have a massive retreat, anything that is already fragile can shatter into a thousand pieces.

João-Pierre S. Ruth is the editor of Xconomy New York. He can be reached at jpruth@xconomy.com and followed on Twitter @jpruth. Follow @jpruth

Single PageCurrently on Page: 1 2 previous page