Hedge Funds Luring Away
Prospective Microsoft Talent”>
Editors Note: This is the second in a series of articles, based on an interview with Microsoft COO Kevin Turner, that examine the focus, strategy, challenges and opportunities for the software company going forward.
The biggest challenge facing Microsoft today is making sure that it has enough qualified, capable, talented people who can continue to scale with the company.
But the Redmond, Wash., software maker is facing competition for those resources from an unexpected source: the hedge fund industry.
“You have about a third of the number of people entering the IT field than you did during the dot-com era,” Microsofts Chief Operating Officer Kevin Turner told eWEEK. “Also, one of the stiffest competitors we face today are the hedge funds, for staff to support all the major systems and analysis and decision support-type activity they do and which is pretty intensive.
“There is excitement and glamour associated with working for a hedge fund, so we are finding that some of the best competition that we get in the marketplace is coming straight from the hedge funds, which, over the past few years, have added a lot more people than Google and Yahoo,” he said.
While Microsoft has always had to compete for skilled workers with other companies in the technology field—something it has learned to manage—the hedge funds are a player that has entered an already pretty full field, Turner said.
“I dont know that we saw the hedge fund opportunity coming. I dont know that we realized until we started going back to campuses how much they were peeling off in that particular space. … We are now coming to grips with the issue of how we make this company aspirational, how we make it a company that people want to work for,” he said.
Microsoft is pulling out all the stops to try to correct the growing shortage of IT graduates and the shrinking number of people entering the technology field by doing things like lobbying in Washington for relief.
“Its unfortunate that we can educate people here, but they then have to go home. Also, [Microsoft Chairman] Bill [Gates], [CEO] Steve [Ballmer], myself and others are all speaking at universities to get students excited about getting into the technology field,” he said.
The shortage of qualified candidates in the IT space is a concern to the entire industry and the one thing that Turner said he thinks about every day, from the time he gets up in the morning until he goes to bed at night.
That concern is shared by Ballmer, who told students in a speech at the Stanford Graduate School of Business in March that while the company had just finished its best recruiting year ever—despite there being more competition—”getting the best people remains a big issue for us.”
“Im always thinking about how we can continue to develop and train our people, how we can improve their capabilities and get more people into the pipeline so they can grow and scale this. You saw the breadth of the [product] portfolio we have across the company, and its an awesome thing, but it is something that takes a lot of people to do,” Turner said.
Numbers Not Looking Good
Jim Foley, a professor in the College of Computing at Georgia Institute of Technology and former chairman of the Computing Research Association, agrees with Turner that the numbers for college students heading into IT are not looking that good.
CRA research found that entering freshmen who indicated they would major in computer science fell by half from the high of 16,000 in 2000, which was just before the dot-com crash, to some 8,000 by fall 2006. “But the good news is that the decline seems to be leveling off; at Georgia Tech we have a slight uptick,” Foley told eWEEK in an interview.
The number of U.S. students graduating with Bachelor of Science degrees peaked at 14,000 in the 2003-2004 academic year, dropping to 10,000 for 2005-2006, he said, noting that interest in computer science and computer engineering as a major has also dropped from about 3.7 percent of entering students in 1999 and 2000 to about 1.1 percent in 2006.
“Again, this does not include all of IT, but in large part these are the students whom Microsoft would like to hire, and there are not enough of them. There will be another lag until entering students realize that computing and IT are good fields with good jobs. Thats what Microsoft and lots of other companies are experiencing right now and are worried about,” said Foley, in Atlanta.
“Competition is fierce, and our students are now getting multiple job offers. Hiring was slower just after the dot-com crash but, you know what? Jobs for the really good students were always there,” Foley said.
However, the CRAs annual 2005-2006 Taulbee Survey of North American University departments that grant Ph.D. degrees in computer science and computer engineering found that the outlook is not all bad.
While the results of that survey, released in May, found that the number of Ph.D. degrees awarded continues to set records, the number of masters and bachelors degrees awarded has dropped significantly. The full survey and analysis can be downloaded here.
Some 235 departments were surveyed and 188 responses were received, giving a response rate of 80 percent, author Stuart Zweben said in the report.
Between July 2005 and June 2006, a record 1,499 Ph.D. degrees were awarded, a 26 percent increase over the same period the previous year. Of those who reported employment, almost half took jobs in the industry, while just one-third took academic employment in North America.
“As was the case during the dot-com boom years, industry is taking a much larger share of new Ph.D.s than is academia. … There was also a large increase in the number of people with Ph.D.s employed in the operating system/networks area, with a decline on the software engineering side,” he said.
The record number of Ph.D.s has not resulted in higher unemployment among new Ph.D.s, the survey found, noting that the reported unemployment of 0.7 percent in 2006 was lower than the 1.5 percent in 2005.
The proportion of women getting Ph.D.s rose to 18.1 percent in 2006 after falling to 14.7 percent in 2005, while the proportion of nonresident alien Ph.D.s rose to 56.8 percent in 2006, from 53.4 percent in 2005, underscoring Turners comments that many of those educated in North America come from elsewhere and often have to return to those countries.
Masters Degrees Down
The number of masters degrees awarded, however, was down 13 percent, to 8,074, in the year ending June 2006. The June 2005 number was 9,286, which was “reasonably consistent with the 17 percent drop in new masters students reported two years ago,” Zweben said.
Enrollment in masters programs by new students was about the same as last year, while total enrollment was down by more than 10 percent—all attributable to declines in computer science masters programs, he said.
More than half of new masters students came from outside North America, rising to 56.7 percent from 46.5 percent last year.
On the bachelors degree front, issuance was down more than 15 percent, following the 13 percent decrease reported last year. “From this years estimates, it would appear that another 16 percent decline is looming. If this holds true, it would represent a drop of more than 40 percent over a three-year period,” Zweben said.
But there is some positive news. “When looking at new bachelors degree students, for the first time in four years the number of new undergraduate majors is slightly higher than the corresponding number last year. This holds true when looking at only the more robust computer science numbers,” he said.
The number of new computer science pre-majors was up nearly 10 percent, a possible sign of renewed interest in the undergraduate computer science major. “One should not jump to conclusions based on one years data, but the cessation of declining numbers of new students is welcomed by our computer science programs,” Zweben said.
Total enrollment in computer science bachelors programs was down 14 percent from last year, echoing the drop reported in last years survey, with enrollment today more than 40 percent lower than it was four years ago, he said.
But the industry is not standing still. Georgia Techs Foley said that the computing community, recognizing that demand for workers will again grow, has started taking proactive steps to project a more positive image of computing as a profession.
This led to the Image of Computing Task Force, of which Foley is co-chair along with Rick Rashid, the head of Microsoft Research. Director Jill Ross is a former executive with Avaya Software. The task force has the support of six professional societies as well as the support of Microsoft, Hewlett-Packard and Intel.
“We will be rolling out some campaigns in the next few months targeting high school students, undecided college students, parents and high school teachers. The goal will be to eradicate the negative myths and stereotypes around computing as a career,” Foley said.