Managers at Universal Dynamics Inc. had high hopes earlier this year for a new line of the industrial dryers the company sells to the plastics industry. The shiny new “Una-Dyn” machines had a batch of new features, and the overall plastics marketplace was booming. There was just one problem: The dryers need about 300 pages of custom software, much more than the company’s swamped software-development team could crank out. Universal Dynamics tried to hire reinforcements but couldn’t find qualified programmers. As a result, the dryers missed their June shipping date and the delay will cost the Woodbridge, Va., company several million dollars, nearly 5 percent of its annual sales.
While the dryers are on the cutting edge of new technology, Universal Dynamics itself is on the cutting edge of a disturbing trend: The much-discussed shortage of skilled information-technology workers is entering a new phase. This year, an estimated three out of every 10 computer-related vacancies will take six months or longer to fill, up from two in 10 a year ago. Because of those empty desks, companies are cutting back programming projects, delaying new products and trimming expansion plans.
The upshot? “This labor shortage isn’t just simply an inconvenience for businesses anymore,” says Carol Ann Meares, a policy analyst at the Labor Department, who co-authored a report on the issue this summer. “It’s starting to affect competitiveness.”
The shortage has an obvious bottom-line impact for companies in technology businesses. But it is just as pressing in many service and manufacturing fields not usually considered “high tech.”
Trying to boost productivity, companies everywhere have spent billions of dollars on information technology. But now, these new high-tech tools are often idled by a very old-fashioned labor shortage.
Xavier Fernandez, a computer-deployment manager for American International Underwriters, a division of American International Group Inc., says his company’s expansion into South America has been hot enough to justify six new computer centers on the continent next year. But he is so short of staffers that he will be able to open only two. “As people leave, we are left with an ever-growing backlog,” he says. “We never seem to be able to catch up.”
There are several reasons for the scarcity. The strong economy is creating competition for all types of skilled workers. Most big companies are diverting legions of staffers to fix the widely publicized Year 2000 computer problem.
And the problem is often self-perpetuating. Because of the labor shortage, many companies have to bring in outside consultants, often at six-figure annual salaries. When regular employees hear what they could be making as consultants, many jump ship.
The output of new talent from the nation’s computer-science departments isn’t keeping up with demand. According to the Labor Department, there are 100,000 new computer jobs each year, but only 25,000 computer-related bachelor’s degrees. Even adding in graduates of community colleges and technical schools doesn’t close the gap.
Because too few people are available, companies are cutting back on “discretionary” computer services, such as help desks for PC users or fancy analysis tools for managers.
William S. McNee, an analyst at Gartner Group, the Stamford, Conn., computer consultant, says the labor shortage could force companies to put off technology upgrades, such as installing new computer networks or moving to new versions of Microsoft Corp. operating systems.
Accompanying the labor shortage is an increase in salaries that itself is triggering new problems. Depending on geography and job types, salaries can range from $50,000 to $150,000. That is causing morale issues as staffers working side-by-side start to see the pay scales diverge. And it is leading to clashes between computer bosses, eager to pay whatever it takes to get good people, and human-resources departments, which press for consistent, companywide policies.
Some computer managers fear that, with labor costs rising, the shortage may cause lasting damage. “It’s getting tougher to sell technology projects to upper management,” says Mike Scott, director of information technology at Eisai Inc., a Teaneck, N.J., pharmaceuticals supplier. “Management always reads about technology costs going down. But now costs are going up, and it’s hard for them to digest this.”
