Inside the Enterprise: Start ups are fuelling wage inflation for IT and engineering jobs in the US. Will Europe catch up?
In parts of Silicon Valley, it seems as if the recession never happened. According to a study carried out by Silicon Valley Bank, reported this week in the Financial Times, start up businesses are falling over each other to hire talented young engineers and programmers.
Funky offices, catered lunches and five-figure bonuses are not enough. Companies are seeing the salaries they have to pay increase by 25 to 30 per cent, and in some cases, 50 per cent, to entice the talented to join.
Silicon Valley is, in many ways, unique. There is a high concentration of hi-tech businesses in a small area. Established names such as Apple, Cisco and HP have been joined by the likes of Google and Facebook in a war for talent. New business ventures are once again attracting serious venture capital money, and that is driving up demand, and pay.
The European outlook is less attractive. Nokia recently confirmed 4,000 jobs will go, and more could follow. Europe's other large tech companies are only just finding their feet again after several years of tough trading.
But supply and demand for high-quality, IT-literate staff remains finely balanced. In some sectors, CIOs are already reporting shortages of skilled staff. Paradoxically, whilst US-based start ups are chasing young recruits, in Europe it is often older workers' retirement that is causing an issue. Employees who had held off retiring during the downturn are now leaving, and firms are struggling to replace them.
At the same time, businesses' demand for IT skills is growing: the move to e-commerce and online services, as well as the need to support mobile devices, and cloud computing, is forcing companies in markets such as retail and banking, as well as government and public sector bodies, to update their IT skills.
Large technology vendors, such as SAP, report that a growing number of their customers are increasing IT investments, either to save money elsewhere in the business, or to support growth.
This contradicts other reports, which suggest that IT graduates were the most likely to be unemployed six months after graduation. If businesses are looking for skilled IT people, why are these graduates out of work, and why are European start ups not fighting each other for recruits, in the way their US competitors appear to be?
The answer may be that even after the dot com boom and bust, and the financial crisis, we are still doing a bad job of matching skills to vacancies, and capital to start ups. The universities and employers' organisations need to look at the first problem, the banks and government at the second.
For now, though, for bright young IT graduates perhaps the best advice is "Go West, Young Man (or Woman)". And that's a missed opportunity for us all.