IT staffing woes mean higher agency costs

A deepening high-technology staffing crisis in Northern Virginia - detailed in a survey released last week - is expected to put the squeeze on federal government information technology budgets well into the next century.

Agencies will feel the crunch as they look to fill their IT ranks because they will be forced to pay higher salaries to compete with private industry. However farming out IT work to local contractors will provide no relief because vendors themselves are paying higher wages.

The survey conducted by the Northern Virginia Technology Council and Virginia's Center for Innovative Technology reveals that more than 19 000 high-tech jobs are vacant in Northern Virginia and that another 112 000 high-tech jobs in the area will need to be filled during the next five years.

The Lure of More Money

"I think it will be pretty severe " said Amy Callahan vice president of IT services at the Information Technology Association of America. "I don't think the federal government can afford to pay the salaries that private companies and integrators can afford to pay."

Already private industry is luring IT workers away from the federal sector with higher salaries. And the higher salaries that private companies are having to pay amid the worker crunch usually end up passed through to the government when it awards IT contracts.

"I think clearly it is a major issue for all of government " said Anne Reed chief information officer of the Agriculture Department. "We in government have to be worried because our salaries in truth are not competitive."

But the problems do not end with higher costs. Reed said competition among private firms for tech workers means that key workers on federal contracts are often wooed away resulting in work slowdowns at agencies.The problem is expected to worsen as the demand for technology workers grows in Northern Virginia. "The whole supply chain is going to be affected " Callahan said.

And it is not a matter of shifting human resources to fix the problem. Technology workers are in short supply nationwide. "You can only move people around so much " said Callahan whose organization estimates that nationwide there are at least 190 000 vacancies for IT workers.

As the worker crunch ensues vendors find themselves being crunched elsewhere. Renny DiPentima president of SRA Federal Systems said if firms escalate their salaries too much one of two things can happen: Rate structures can end up being noncompetitive or profit margins on fixed-price contracts can be eaten in to. "I'd say having a tricky balancing act is a good way to describe it " said DiPentima former deputy commissioner for systems at the Social Security Administration.

Add to that balancing act the one that the federal government itself is trying to pull off as it works toward operating more efficiently with fewer people. DiPentima said automation and technology services provided by contractors can help the government accomplish those goals. But agencies in the meantime still are watching their bottom lines and continuing to put the squeeze on vendors to offer competitive prices he said.

The Bidding Game

Jack Littley senior vice president for corporate development at BTG Inc. said the Northern Virginia worker shortage amounts to a zero-sum game. "When we hire a bunch of people then we've taken them from somewhere and those people end up trying to take them from us."

The situation is one that is pushing up salaries and leading to bidding wars Littley acknowledged. But the bidding wars are not always waged with dollars. He said offering prospective employees a vibrant work environment opportunities for advancement and interesting projects to work on are keys to recruitment and retention.

Likewise for federal agencies the answer to the shortage may lie in training and in positive work environments.State Department chief information officer Liza McClenaghan of the CIO Council's committee on education and training said the federal government is relatively limited in what pay benefits and bonuses it can offer. But agencies do have flexibility in teaching workers new skills and in creating a comfortable work environment.

Citing a recent study by The Gartner Group Inc. an IT consulting firm in Stamford Conn. McClenaghan said organizations that spend at least 7 percent of their IT budget on training are more likely to retain employees than are those that spend 3 percent or less of their IT budget on training.

The State Department is spending less than 7 percent of its IT budget on training according to McClenaghan. She added that the CIO Council's committee on education and training is now studying possible benchmarking for IT training spending.

For some CIOs however a shorter-term solution sometimes works better. Education Department CIO Gloria Parker said that for highly technical positions she prefers to hire contractors who can come in with the necessary skills do the job and then be gone. The strategy may be initially more expensive she said but it provides savings down the road because the department is not hiring long-term employees whose skills may diminish without constant training and whose morale may diminish without continued motivation. The practice gives the agency just what it needs she said. Needs are what more and more CIOs will be focusing on as the IT worker crunch becomes more apparent.

Rep. Thomas Davis (R-Va.) whose district includes Northern Virginia - home to most IT companies that do business with the government - and who sits on the Technology Subcommittee of the House Committee on Science said that in the requests for proposals for technology projects the government can save money by focusing not so much on what academic degrees contract workers should have but on the skills they should have. Otherwise agencies might be asking and paying for more than they need.

"We need to focus...our RFPs not on educational requirements but on training " Davis said. "I think given this labor shortage we need to focus on not overpaying for talent."

Mike Daniels vice chairman of the Northern Virginia Technology Council and a senior vice president at Science Applications International Corp. said agencies also may find themselves exploring new ways of using technology as they battle worker shortages. "There is certainly the specter of all of us not being able to fulfill the growing IT requirements.... I think that the Internet and the related intranet technologies are going to play a programmatic role in fulfilling these requirements in light of these shortages " Daniels said.

The Internet he said could allow technology to perform information collection and dissemination tasks currently done by people.

Likewise developments in data mining technology - tools that allow quick extraction of information from huge databases - could free up human work hours and help ease the IT worker crunch.

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