IT staffs are stretched thin. Finding the right IT resources gets tougher every day. The HR hiring strategy that sufficed in the past isn't up to the task. Those have been perennial CIO complaints for years, but heading into 2013, these laments are starting to sound more like a wail.
IT staffing expert Melisa Bockrath is not surprised. She oversees the operations of the IT product group for the Americas at Troy, Mich.-based Kelly Services Inc., providing IT staffing services to diverse industries: manufacturing, consumer products, energy, big pharma and financial services. She said today's CIOs are up against a "confluence of three pressures": the rapid changes in technology (cloud, mobile and "big data"); the ever-heightening expectations placed on IT to align with and understand the business; and a very real talent shortage. On this last point, she points to data from the U.S. Bureau of Labor Statistics (BLS) showing that IT employment increased 86% from 2000 to 2010. Over the past two years, in the midst of a recession, IT growth has averaged 23%. Meanwhile graduation rates for computer science degrees, although starting to rebound, declined 35% from 2006 to 2010.
In this SearchCIO.com Q & A, Bockrath elaborates on the forces behind the hiring crunch, the reasons traditional outsourcing strategies won't help, and how CIOs can start devising a hiring strategy for 2013 and beyond. The data is derived from the annual Kelly Services IT workforce survey of more than 100,000 people worldwide, BLS data and studies solicited from other research firms. She will present her findings at the annual meeting of the Society for Information Management in Dallas this week.
New technologies, sky-high expectations from the business, a dearth of talent: What do you recommend as a hiring strategy for dealing with this perfect storm?
Melisa Bockrath: It's quite a challenge. For those who are successful, it is really going to change how the CIO and IT are looked at by the company: as an asset that can drive revenue and growth of the company. Those who don't quite meet that challenge? I think they will continue to be seen as a support function that focuses on cost savings and productivity, and they will see IT-like budgets appear in other areas of the company. The integration of technology will be in all facets of the business. You hear today how marketing departments have ever-growing technology budgets. I think those CIOs who are successful will be responsible for technology across the enterprise. Those who are not will have only traditional IT technology.
So, we are recommending to CIOs a couple of different things. One, CIOs will continue to outsource. The way they should be outsourcing is looking at their 'run costs' -- what it costs to run and maintain systems -- and identifying how they can continue to outsource there and maybe shift some of those costs to cloud providers and use the reduction in cost to invest in other areas.
As they are doing that, CIOs really need to look at where they want to retain talent and knowledge to support some of those core services and internal systems they deliver to the business. Those should be the systems and services that drive revenue for the company, as well as align with the key strategic initiatives that come down from the board.
They then need to look at their ecosystem of service providers. The array of companies that provide resources today is large. No one CIO or even procurement sourcing group can keep track of all of them. We break it down into three areas: the large outsourcers for long-term systems outsourcing and maintenance; the small project companies that help CIOs flex up and down or provide support for their full-time employees; [and] the niche specialty companies that provide highly skilled consultants you don't retain internally -- a PeopleSoft consultant or an architect to help you with integration on a Salesforce CRM [customer relationship management] implementation.
If CIOs can't keep track of all these outsourcing providers, who does?
Bockrath: A multisource strategist is someone who helps manage that talent ecosystem -- helps companies manage their talent supply chain. This is someone who can help you look at the landscape and understand where the talent is needed, the best way to contract for it, and how to benchmark performance and price.
How exactly is this different from what CIOs and their staffs do today in coming up with an outsourcing strategy?
Bockrath: CIOs have spent a lot of time understanding what it is they need from a strategic supplier. They are highly engaged with those strategic suppliers and benchmark them. But there are hundreds or thousands of other vendors who supply services to them every day. It's the mass that they have trouble being able to benchmark. These are the mom-and-pop companies, all of the independent contractors, the contract consultants out there; and CIOs don't have the visibility into that group that they do for their strategic suppliers. It is bringing that group under an umbrella and trying to manage them in a much more thoughtful, strategic and planned-out way.
Let's break down the talent-shortage piece of the hiring strategy pressures. What kind of applicants do you see now?
Bockrath: We see more and more people in the IT area who want to work as free agents, in part because there is very steady work out there for technology talent. They can move from contract to contract to contract. Another model, which is very interesting and it's gaining traction, is crowdsourcing. That gives somebody the ability to bid on the type of work they want -- and only the type of work they want to bid on it, and when they want to bid on it.
IT workforce insights
70% prefer to work remotely -- 5% more than any other profession
55% say changing employers is key to their career growth and development
65% intend to look for another job in the next year -- a 5% increase from 2009
81% derive meaning from work by their opportunity to excel or develop -- 75% more than others
55% use social media network when making career decisions -- 41% more than average worker
78% say a flexible IT workforce is as important as directly staffed IT organizations
63% say the impending IT skills gap and shortage will have a negative effect on their organization
80% work with their internal HR department to address IT workforce planning needs
33% say the IT workforce is comprised of flexible options
Source: Kelly Services, IT Resources
The competition for talent has broadened and it's not the same type of competition CIOs have seen before.
We've heard lots of complaints about HR just 'not getting' the IT hiring strategy.
Bockrath: HR departments have historically looked at full-time hiring as their responsibility, but they have not really brought into the fold contractors, free agents, other ways of sourcing for talent. Their eyes are opening, though. They need to look at all of the different talent pools they can have access to. Some could be retirees who can be brought back to work on part-time projects.
You have data on how new employees differ from older employees in the way they like to work.
Bockrath: Especially with the younger generation coming in, if you are an iconic 75-year-old company and you're trying to attract IT talent, you are competing with the startups, with the Silicon Valley companies. How do you create an environment in IT that has that type of culture of innovation, that has the kind of flexibility that younger generations are looking for?
So, how do you?
Bockrath: You have to reinvent yourself a little bit. The younger generation is not looking for the employer who's going to give them job security for the next 30 years. They're looking for cool places to work on some of the latest and greatest technologies, and they want to work with people they like. So, there is that kind of environment/HR [human resources] component that CIOs really need to think about. And that is not a strength typically for CIOs. That touchy-feely thing is not something they've focused on, but creating that kind of work environment is going to be important to attract and retain that talent.
Can outsourcing solve these problems?
Bockrath: That isn't as easy as it used to be. If you take a look at where a lot of the talent pools have been coming from over the last decade -- offshore, the pressure in those countries is the same as here. Finding top talent in India is difficult. They are graduating people, but they don't have the high-level talent needed -- in architects, in engineers, in senior developers. So, just taking the work offshore is not a de facto solution anymore. That means CIOs need a lot of that resident talent internally; they can't just outsource it.
The fast-paced change of technology is also a factor. Some of the cloud-based companies are exciting because they help CIOs bring products and services to market more quickly, but they are rapidly changing. Take a company like Workday, which just had its IPO; it's a brand-new company that is growing exponentially, and it is a very interesting model to run an HR/ERP-type system in a cloud-based model. But finding the talent to support that isn't easy. So, you really need to think about how you will also grow that type of talent within your organization.
What is the CIO hiring strategy for getting the talent required for IT transformation?
Bockrath: A lot of companies will want to hire kids out of university and train them themselves. These kids will know their systems, their business processes and their corporate culture. That is a feeder system that outsourcing companies, systems integration companies like an IBM or offshore, a Wipro or Infosys, have been doing for a long time. IT departments need to think of that as an avenue as well: recruiting young new talent into their companies. They need to look at retiree pools; as they have valuable resources retiring, CIOs need to be thinking about how they can bring them back on projects. They understand your systems completely, and a lot of them, because of what has happened with the economy and retirements and pensions, are more than willing to come back to work part-time on projects when it works well for them -- and remotely too.
Then, CIOs have to look at the full range of suppliers in the industry and where they can go to get the talent they need. The need to understand what's required internally in their full-time workforce as resident knowledge, what it is that they can outsource and what resources they can engage to flex their workforce up and down as needed. The full-time hiring in IT is very selective right now. No one is hiring back en masse, other than maybe GM's [General Motors's] strategy, and they're really kind of the only one hiring back hundreds of people into their organization. It will be interesting to see how that works out for them.
What about retention of talent?
Bockrath: A key component of what CIOs must do is to retain the people they have. As we looked at the research we did, it was amazing to me that almost 60% of middle management within IT organizations feel that in order to advance their careers, they need to go to another company.
So, how do CIOs retain the talent? A lot of it is investing in that talent. We've talked about the need to leverage cloud computing. CIOs are meeting mobile demands for both consumer-facing applications and from employees for business applications. Bring-your-own-device programs compound that. There is pressure on CIOs to turn big data into intelligence so companies can make real-time decisions. As CIOs are deploying new technologies, they must be retraining their existing resources and keeping them challenged.