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Jobs Lagging
A bi-weekly column with timely, relevant and possibly irreverent insight into the BC technology industry.

Something Ventured:
September 5, 2003


By Brent Holliday
Greenstone Venture Partners

“Carry me back , Carry me back,
Carry me back baby,
Where I come from.
It's been a long time,
Been a long time,
Been a long lonely lonely lonely lonely lonely time.” – Led Zeppelin, Rock and Roll

If the economy seems to be turning around after a brutal spring, if Intel and other tech giants see a very good third quarter (and are smiling and winking when asked about the fourth), if venture capital investment in start-ups flattened out and started to increase again and if you lack firefighting skills in BC, where the heck are the jobs?  If things are getting better, why is there no evidence of it in the job market?  Why is every second e-mail to me asking where the good tech jobs are in BC?

A survey of local technology job boards, done rather un-scientifically by me clicking through the listings, shows very few tantalizing full-time positions.  If there are interesting looking jobs, they seem to be replacement positions because there appear to be few and rather spread apart in time.  In other words, no hiring binges.  Further anecdotal evidence of tepid job availability is the familiar “brain drain” whine starting up again.  It is usually recent grads who can’t find a job waiting for them after their first or second degree espousing the “grass-is-greener” theory about the US.  

It ain’t any better in Seattle or the Silicon Valley.  Another sure sign that the job market is tough is when the chicken littles start carping about the loss of key jobs to off-shore markets like India. As in any downturn, the culprit is not us, it’s them.  It’s those darned cheap and efficient Indians and Vietnamese that are taking our jobs.  This type of hand-wringing is typical of tough times.  It was the Japanese last time we had a recession.  Look where they are now. 

Trying to decipher technology market data from Stats Canada, where “manufacturing” is one of the more specific terms, is just folly.  But the larger trends are probably not far off the technology market.  BC actually created 11,000 more jobs in July over June and was up 1.4% over last year (seasonally adjusted, of course).  But the overall unemployment rate is 8.4% here and 7.8% nationally (6.6% in 2000 just as the tech carnage was starting).  

The help-wanted index, which sounds like it means someone actually counts classified and web job listings, was down 16.6% in BC over this time last year.  So, more jobs were created, but fewer companies were listing new jobs… huh?  It probably means that the new jobs are contract or part time.  But the fewer listings are consistent with what I found in the tech specific boards.

So, what’s happening?  I talked here a month ago about productivity gains and what it meant for the IT industry.  The lack of jobs for keen technology workers is a result of those gains in productivity within the tech industry itself.  Companies are getting more with less right now because they cut like hell when the wheels fell off of the technology train. 

The last two years have been brutal as most companies have been busy killing projects and streamlining operations.  Now the sun is coming up and the profits are rolling in (or soon will). The profitable companies have been sacrificing R&D and internal processes (like IT jobs) for straight service and sales, keeping expenses ultra low.  So long as the top line (revenue and unit sales) remain tepid, there is no need to hire anyone. But, even as revenue starts to improve in the short term and profits look really good, the hiring still will not begin.  Sorry, but it will be a while longer.

The managers of IT companies have been rewarded for frugal, bare bones existence over the past dozen quarters.  These are the recovery folks.  They hacked jobs and cut waste.  They will be slow to ramp up for growth.  The R&D expenditures will only slowly creep back up.  

In start-ups, the barely cash-flow positive companies, who smiled when they didn’t need to go back to investors for money, will take their time in assessing the market before daring to go cash flow negative again to stimulate faster growth.  Caution is still the word of the day in projecting forward.  Not very conducive to more jobs.

It will take at least two, maybe three quarters of proof that IT spending has begun again and the economy is chugging forward before the shackles will come off the HR departments in the technology industry and hiring will begin in earnest.  

Like a rubber band snapping under the strain, the jobs will catch up and fill the void left as economy demands more inventory and more innovation.  A year from now, if the economy shows the consistent strength, the job boards will be full again.  And for the chicken littles, sending work off-shore to India and other lower paying countries will not go away through this job growth next year.  In fact it will flourish… but not at the expense of good jobs here.

While you are waiting for this elastic snap back to more jobs, hone your skills and find work with the outsourcers who are doing a booming business.  IBM has reported huge gains in its Global Services division as more and more companies have run lean and jettisoned inside IT help.  Look for short term consulting gigs to keep your skills fresh.  The longer term jobs are coming. They just lag the initial phase of growth.  They always have in every cycle before.

What Do You Think? Talk Back To Brent Holliday

 



Something Ventured
is a bi-weekly column designed to supplement the T-Net British Columbia web site with some timely, relevant and possibly irreverent insight into the industry. I hope to share some of the perspective and trends that I see in my role as a VC. The column is always followed by feedback (if its positive or constructive. I'll keep the flames to myself, thanks).

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