The recession behind them, are CIOs facing an IT hiring crisis?

After three years of IT budget cuts and layoffs, are CIOs facing an IT hiring crisis? For CIOs at a recent conference, the answer is yes.

Steven Sheinheit, who's in charge of business strategy and technology at QBE the Americas, is about a year into a five-year strategic transformation of the property and casualty insurance company, and he has a big concern: IT hiring. He needs another 200 IT people to execute the plan's 10 initiatives, and it's not clear where he's going to find them.

"We're not going to be able to source it locally, in the states. It will have to be done with a combination of local and offshore partnerships," said Sheinheit, speaking to a roomful of CIOs and CEOs at the recent Fusion 2011 CEO-CIO Symposium in Madison, Wis., about the integration of business strategy and IT solutions.

QBE the Americas is the $8 billion New York-based division of the fast-growing QBE Insurance Group Ltd., a $16 billion business that's headquartered in Sydney, Australia, and has operations in 49 countries. As the division's chief strategy officer and chief technology officer, Sheinheit is coordinating its plan to revamp operations, improve distribution and expand the business organically. A big part of the transformation is building new systems to automate underwriting, said Peter Logothetis, head of technology services for QBE the Americas, who works hand-in-glove with Sheinheit.

"Resources, as you all know in this room, are very much a challenge. The supply is no longer there, and even if we find supply, the right skills might not be available," Logothetis said. "It is always a challenge to find the right person for the right job, and when you are growing as fast as we are, it is very hard."

With nearly a dozen specific initiatives covering people, processes, technology and its robust growth, QBE the Americas' IT transformation project is no doubt bigger than the ongoing projects of some of the 200-plus IT and business leaders at the Fusion conference. Nevertheless, it was striking how many attendees also expressed concern about IT hiring.

That anxiety crossed industries and was voiced by CIOs in both the private and public sectors: from David Cagigal, chief information technology officer at Alliant Energy Corp., to Frank Ace, CIO at the Wisconsin Justice department, where more than half his staff is nearing retirement. "My biggest project at the moment is figuring out how to get them to stay," Ace said. Indeed, when audience members were asked whether they were looking to hire in IT, some 75% raised their hands.

IT hiring crisis or a skills shortage as usual?

After three years of budget cuts and layoffs, can it be that CIOs indeed are facing an IT hiring crisis? According to SearchCIO.com's most recent IT salary and career survey, the responses of senior IT executives answering the survey indicate that 31% of firms are actively hiring, 27% have a hiring freeze and 14% are shrinking by attrition -- that's not an IT hiring crisis, in other words. Among industries that are hiring, health care, financial services and the government lead the way, according to the survey.

The concern over IT hiring doesn't surprise Rick Davidson, however. He's director of the information services practice at AlixPartners LLP, a Chicago-based management consulting firm specializing in corporate turnarounds and business and IT transformations. As the firm's bankruptcy business has tapered off, the mergers and acquisitions business has taken off. Companies are looking to invest in technologies that will give them a competitive edge, he said.

"There is $2 trillion dollars sitting on the sidelines. That money is going to get invested somewhere pretty quickly. Rather than focusing on only cost reduction, companies now are identifying what they need to do now to develop new capabilities -- how do they come out of this recession ready to grab market share and customer mind share," Davidson said.

CIOs are thinking about how to build capability and how to build a strong IT team, Davidson said. "The last three years, they've hunkered down and hung on. Now it is about, 'How do I support the business in terms of growth?' The show of hands [at the Fusion conference] on hiring is an indicator that CIOs now are trying to staff up and bring in both new capabilities and train up their people, too."

Dice's research continues to see the IT hiring environment tighten, "and that's not just limited to Wisconsin," said Alice Hill, managing director of the Dice.com jobs website for IT and engineering professionals. The current 76,000 current job openings on the site represent a 30% year-over-year increase and 13 straight months of gains, she said. (In Wisconsin, job openings are up 54% over last year at this time.)

It is always a challenge to find the right person for the right job, and when you are growing as fast as we are, it is very hard.

Peter Logothetis, head of technology services, QBE the Americas

The unemployment rate for technology professionals is currently 4.7%, about half the rate of the overall unemployment rate of 8.9%. In Dice's most recent survey of 2,700 hiring managers and recruiters, 54% expected IT poaching to get more intense this year.

"[Job openings] started early in Silicon Valley and New York, where we started to see an uptick in job requisitions last year. Now we're seeing it across the country," Hill said. Despite the increased demand, however, salaries for the most part have not increased -- one exception being Wisconsin, where IT salaries are up 9.1% over last year, she said.

"Another thing that hasn't let up is that CIOs are not willing to take a chance on somebody from a slightly related field. They want someone who is dead-on in terms of their skill set, so they can plug them into their organization right now," Hill said. The newer the area -- cloud or mobile, for example -- the harder it is to find the right skills. "That is why poaching is such a risk," she said.

Gartner Inc. analyst Lily Mok, who tracks IT employment at the Stamford, Conn.-based consultancy, has not seen an uptick in hiring, but rather a continuing struggle to find certain skills. Based on survey data collected in March 2010, the most recent available results, CIOs are facing shortages in technology areas including SAP and Oracle enterprise research planning, or ERP, implementations; service-oriented architecture, or SOA; Web services; virtualization; business analytics; Microsoft SharePoint; Java; and Microsoft .NET, she said.

Mok doesn't expect the new survey results coming out in August to show much difference. "We have tracked the list of skills for quite some time, and though the rank ordering might change, the required skills remain the same," she said.

Technology investment a job killer?

The investment in technology might -- or might not -- be boosting tech employment, but it appears to be doing little to improve overall unemployment, according to Forrester Research Inc. analyst Andrew Bartels. The combination of robust corporate profits and persistent unemployment suggests that companies are putting their cash flow into technology instead of hiring, he speculated in a cautionary report published in February. "That would be a departure from past practices, when companies have treated hiring and new tech investment in parallel: cutting both in bad times, for example, during the 2001-2002 recession; raising both in good times, like the 2003-2007 expansion," he said. But that thesis, he rightly notes, is based on correlation rather than causation, and requires deeper analysis.

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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