A blight looms on the horizon.  An engineering talent blight to be exact.  The bumper crop of consumer internet seeds and start-ups cropping up around the country (with concentrations in SF/SV and NYC) and binge hiring of engineering talent by companies such as Google and Facebook are creating a shortage of talent.   A blight ensues when there are hundreds of companies looking for the same people.  I would guess that there are at least twice as many engineering jobs in start-ups as there are people to fill them.  Just look at the job boards and hiring pages on the company’s web sites. 

The availability of seed and Angel money, the preponderance of infrastructure as a service and open source code, and the capital efficiency of consumer internet businesses are combining to create a shortage of talent to perform critical functions.  Add to this the “suck up all the good engineering talent” approaches of some powerful web companies and you have a shortage of people in key areas such as User Interface, Engineering Management, System Architecture, System Administration and good old fashioned coding. 

For some requirements, outsourcing is fine.  There are shops that excel at contract coding and consulting.  India Inc. is ready and waiting to develop your code.  Running your system on Amazon servers, hosting at RackSpace, using Akamai for content delivery and farming out discrete code development can be effective ways to reduce internal manpower and capital requirements.  However, some functions are risky to farm out.  I’ve seen companies burned outsourcing UI, system engineering, and even iPhone app development. 

For a consumer internet company, the UI is a critical element of the business.  The UI requires specialized skills combining technical and artistic talent.  Since the web is a living thing and consumers are fickle, the UI often requires constant care and feeding.  This is a role that is hazardous to farm out for many companies.  The same is true for Engineering Management and Senior System Architecture roles.  Unless the technology is trivial or the scale of the system isn’t significant, these roles can make or break the company.  Scaling issues, security vulnerability, and other technical issues can have a devastating impact on a young company.  Even a Sys Admin role can be critical to a company that operates a meaningful code base. 

If you are a consumer web company or an enterprise web company and you don’t think you’re competing with technology, don’t worry, you’re already dead. 

So, if you are a talented UI, Engineering Director, System Architect or Sys Admin congratulations, you are the belles of the ball.  The scores of little start-ups being seeded need you.  The big, “Monopoly-money” web companies want you.  The key for you is to pick the right ones.  It’s an opportunity cost issue.  One byproduct of the engineering talent shortage is the problem of a revolving door where people jump from one company to the other building a portfolio of vested stock.  This happened in spades back in the Internet Bubble era.  This is not necessarily a bad thing if people go to the companies that deserve them.  Luckily, all companies in the Spark Portfolio deserve the best people ;).  Feel free to check out the jobs boards on their web sites. 

So what is a company to do?  Make sure you’re surrounded by people that are first rate at recruiting talent.  There is always talent but remember that A’s attract A’s and B’s attract C’s.  Look off the beaten trail for people that don’t want to live in the Valley or the City (or Taxachusetts for that matter).  There are talent centers in the Beltway, Research Triangle, Austin and Great North West.  There are also pools of talent north of the border in Ottowa, Montreal and Vancouver. 

Having development centers in Tel Aviv, Shanghi and Oxford, England can work if you have the right people managing the projects (Spark companies have centers in these cities.)  The H1B Work Visa effort is also an important source of technical talent.  The flow has diminished as xenophobia went on the rise.  Alas, the US is falling behind in producing the quality and quantity of engineering talent required to keep the armies web companies humming.  The Government should do no harm.  If they want to do good then they should create incentives for kids to undertake and excel in technical educations and careers. 

Establishing a relationship with an outsourcer that goes beyond just work for hire can work i.e. performance-based compensation and a participation in the success of the project.  In some cases it makes sense to acquire your third party developer.  Groupon just did this with their CA-based iPhone developer.  This is happening a lot lately. 

Finding good talent will be a key differentiator for start-ups.  Of course not all these companies will survive.  Perhaps the growing shortage of talent is a good thing: a form of Darwinism to trim the herd when money is loose and barriers to entry are low.  If so, the rich will get richer, so to speak.  A lack of people to go around will drive up prices (salaries that is) and drive down the hiring barriers (companies will settle for what they can get).  To boot, outsourcers and contractors will see a boon in their businesses as companies try to rent vs. buy talent. 

If there were a stock market for engineering talent I’d be buying.  I might also be buying futures on UI developers and derivatives on System Architects and Sys Admins.  I wonder if Goldman is already doing it.  They seem to know how to make money during a blight. Maybe I’ll start a stock exchange for technical talent and call it the C++SE or the NERDAQ.