The Talent Crunch Will Define the Tech Industry in 2012

The unemployment rate in the U.S. is 8.6%, but you wouldn’t know that by looking at the tech industry.

There is an all-out war for engineering and design talent here in Silicon Valley, and the battle is driving up salaries and making a lot of us wonder: where are all the engineers?

The Wall Street Journal is just the latest to write about this phenomenon. It had an article last week about the battle for engineering interns, and this week it has a piece on how startups are finding it difficult to raise funding without having a full team of engineers ready to go.

There are simply not enough qualified programmers to fill the rosters of tech’s biggest and smallest companies. Google and Facebook are rapidly expanding, while more and more engineers are deciding to strike it on their own and start their own company rather than work for one. This phenomenon has only grown with the falling costs of starting a company and films like The Social Network, which I believe have sparked a renewed interest in entrepreneurship.

The talent crunch has been a problem in tech for years, but I believe 2012 is going to be the year that it hits the breaking point and the general public starts paying attention to the engineering talent wars.

A couple of factors are going to make the race for talent even tougher:

  • Facebook’s Impending IPO: What do you do if you’re the Internet’s hottest company and you suddenly are given $10 billion? Simple: you hire a shitload of engineers. Facebook is well known for keeping its headcount relatively low, but it will always content for the top-tier talent.
  • Google Doubles Down: Did you know that 2011 was Google’s biggest hiring year ever?. Don’t expect that rate to slow down in 2012. The company is erecting new buildings to accommodate the new talent.
  • Starting Your Own Company Has Never Been Cheaper: Five years ago, you would have had to buy a bunch of servers and a whole team to manage them. Now we have Amazon EC2 and Rackspace to deal with that problem. All you really need is enough money for personal expenses and decent hacking skills, and you can launch something.
  • No Startup Visa: The U.S. is not doing enough to bring foreign technical talent into the country. The Startup Visa, introduced by Senators John Kerry (D-MA), Richard Lugar (R-IN) and Mark Udall (D-CO), has gone nowhere. It’s a rich pipeline of talent we are ignoring for some reason.
  • There are just not enough students becoming engineers in the U.S.

There will be a lot more stories about the lack of engineering talent in the U.S. in mainstream publications like The Wall Street Journal in 2012, and it will result in a lot more attention on the issue, especially as more people realize that their old jobs are never coming back. A laid-off manufacturer would be smart to retrain and rebrand himself as an IT guy.

There will also be a greater focus on getting U.S. students trained in programming and engineering, especially as China and India continue to swell with bright engineering talent. It will take some time, but I hope and believe that U.S. schools will eventually make programming a required course in high school and/or college. Hopefully it’ll happen sooner rather than later.

The result of this attention will eventually be more foreign engineers (can we please pass the Startup Visa Act already?) and more students who become engineers. But it will be years until these talent flows enter the pipeline.

So for now, there’s going to be a talent crunch. The most innovative companies and savvy entrepreneurs will end up being the winners, while lots of startup ideas will begin to wither and die because they couldn’t recruit the talent needed to support them.

Begun, the Talent War has.