xScion Blog

Looking Back to Look Ahead: Talent Lessons from the Dot-com Era

Dec 13, 2018

Talent Lessons

During the Dot-com era the talent pool was so scarce we used to joke that the technical screening process was reduced to having the candidate breathe on a mirror, and if they could fog it, they were hired. That is a slight exaggeration, but they were desperate times, and companies compromised hiring practices because there was more work than qualified workers and there was money to be made.  If you were in the IT Consulting business in the late 1990s, I’m sure you have stories to share.


The world is more sophisticated now and the industry has matured, but today we are again facing some of the challenges faced during Dot-com era. Last week I did an informal, non-scientific survey of some of my contacts on LinkedIn, and 100% of the respondents said that their team is experiencing a shortage of talent that is impacting performance. Worse yet, they expect it to be more difficult to hire in 2019. Plus, with Amazon coming into the New York and DC markets, effectively bookending the megalopolis along the 95 corridor, things could get even more interesting.


In the 1990s, IT talent was migratory and mercenary. Meaning, they would move to where the best work was and/or to the project that paid the most. It was not uncommon for someone to jump projects for $2 per hour or to get the latest and greatest technology. And who could blame them? Clients were desperate, bill rates and pay were going up drastically, new companies were popping up daily offering BMWs and options, and people simply took advantage of the times.


While I don’t see that sort of frenzy on the horizon, we have seen a steady increase in pay rates, a reluctance by some clients to increase bill rates to support the pay rates and increased demand overall. The result is that top talent goes to where the money, is creating a talent vacuum where pay rates are lower. Eventually, companies that are not increasing pay rates for Consultant or for FTEs realize they are not attracting and retaining the talent they need, and they too increase pay rates across the board and the process spirals upward.  


So, how should companies react to what is already a battle for talent that could escalate to a full-blown war on talent? First, you must understand that you do not control the market. Sure, if you are Amazon, you can affect the market, but even an organization like Amazon cannot control it. Therefore, you must adapt your hiring process, benefits and overall talent management strategy to support the mercenary and migratory resources that you will need to achieve your strategic IT goals.


This could mean that if you are a large company with a big IT shop you may need to ease up on the usage of a commoditized Vendor Management System and engage in more project-based solutions with true consulting companies. It may mean that you will need to allow Consultants, or Contingent Workers as some companies call them, to occupy management positions typically only available to FTEs. If Amazon comes in and skims the cream off the top of your IT management team, you will have to do something to fill those roles.


As we exit the planning stages for 2019 and enter January, how is your company preparing? How will you find the talent you need? Ultimately it will be those companies that build flexibility into their overall hiring practices and offer the best combination of benefits, pay and technology that thrive. This is nothing new, but many companies are not prepared or are reacting slowly to the gathering clouds of war and they will be the first causalities. Hopefully a fogged mirror won’t be your solution.


by Barry Dwyer, co-founder