Most Tech CEOs Looking to Hire in '06

Apr 19, 2006

Allen Bernard

Virtually all fast-growth technology CEOs, those in charge of companies from life-sciences through more traditional technology firms like software and hardware vendors, are planning to increase headcount within the next 12 months, but they say that finding and hiring the right people is getting tougher.

This is according to Deloitte’s 2006 CEO first-quarter survey, released today, of the fastest growing technology companies in North America as ranked on Deloitte’s Technology Fast 500.

"The biggest concern they've got this year is attracting and retaining people and that went way up this year from where it was last year," said Tony Kern, deputy national managing principal of Deloitte’s U.S. TMT industry practice. "Basically, it's because there's just more competition from a global workforce (China, India, etc.) perspective to be able to attract and retain people. It's just getting more and more difficult all the time."

Employees Increasingly Valued

High-quality employees are the greatest contributors to success, according to 66% of respondents, up from 25% last year and 19% the year before.

Similar to last year, virtually all of the CEOs (97%) have plans to grow their workforce within 12 months. Almost half (47%, compared to 42% last year) said growth will exceed 25%, while 17% (compared to 19% last year) expect growth to exceed 50%.

Finding, hiring and retaining qualified employees is still the biggest operational challenge, according to 41% of CEOs, an increase from 27% for the past two years.

This is because overseas companies are offering employees very nice incentives—from cars to accelerated career tracks—to leave America and work elsewhere, said Kern.

"The number of people flowing into India who are able to live well in India is significant now," he said. "It's Americans now that are flowing overseas."

Because of this, 71% of CEOs are offering stock options or some form of ownership interest. Others are offering lifestyle benefits: 49% offer flexible work hours and 23% offer additional vacation days. Career track benefits are also important—35% offer training and development programs, and 28% provide a career growth plan.

"What it should say to CIOs …," continued Kern, "is holding onto people and attracting and retaining people is becoming more difficult and I think they need to be more creative in how they do that. There's some traditional ways to do that … things that affect (employees) personally like child care and sabbatical programs and advanced educational programs; so, if you want to attract and retain the absolute best people, you have to go the extra mile now."

Future Growth

Seventy-nine percent of CEOs are extremely confident (43%, up from 36% last year) or very confident (36%, compared with 38% last year) that their companies will sustain high levels of growth.

"Last year they said it was Internet protocol this year their saying it's wireless technology where they are seeing the growth so they're developing applications and hardware for wireless more so this year than say IP," said Kern.

CEOs report that Internet and IP technologies are increasingly critical to their operations—both internally and externally. Sixty-two percent use IP to connect geographically dispersed employees; other internal uses include research collaboration, voice communications, and reporting and regulatory compliance.

Externally, 65% use IP as a data communication channel with clients; 56% use IP to deliver customer support and maximize CRM; and 50% use it as a sales and distribution channel.

Interestingly, however, CEOs no longer see Internet/IP as the technology segment offering the greatest potential for growth over the next 12 months.

The wireless communications services segment, which was cited last year by only 11% of CEOs, leaped to 21%, while Internet/IP dropped from 30% to 19%.

Regulation Top of Mind

Twenty-eight percent of CEOs say excessive government regulation is the biggest threat to growth in the tech sector over the next 12 months, even though only 4% report that dealing with regulatory issues is their biggest operational challenge.

This year, far fewer CEOs are concerned about limited access to capital (13%, down from 21% last year) or terrorism (9%, down from 15% last year).


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