The first salvo in what can only lead to a talent war - The Seamless Workforce

November
10
2010

The first salvo in what can only lead to a talent war

Posted by: Joel Capperella

This week has been an interesting one for Google. On Monday, the turf war with Facebook over contact information significantly heated up. On Tuesday, a new competitor in the browser market, RockMelt, made a big splash with their social Web focus. And this morning, we arise to the report that Google has given its entire staff a 10 percent raise AND a $1,000 end-of-year bonus in time for the holidays.

The last story alone is significant, but in light of the first two, it becomes much more telling of what can only be a looming trend — the war for tech talent is about to heat up. To provide some context, it is important to take a closer look at what is going on in the area of digital media consumption.

Google, which brought in more than $23 billion in revenue in 2009, is likely to end up at least $4 billion over that number for 2010. Meanwhile, their most aggressive competitor in terms of owning the Web experience, Facebook, is likely to double their 2009 revenue and end up in the neighborhood of $1.28 billion.

What is most important to note here is that nearly all of these billions of dollars in revenue are generated from advertising. So make no mistake about it. Facebook and Google are in head-to-head competition. This workforce move by Google most certainly has an impact on their competitor, who is a mere three-and-a-half miles away.

The implications, however, are most likely to be far more widespread than a fight for talent between these two behemoths. If you pay attention to the tech space at all, you are well aware of what could potentially become another tech boom that will result in escalated salaries for those who have the skills necessary for delivering products.

Good news for the overall economy in the long-run, but in the here and now, with this talent investment, Google has inflated wages overnight. There will almost certainly be ripple effects down through the entire technology ecosystem.

The war for talent is coming. There is most likely no escaping it. Now is the time to dust off battle plans and put together a strategy that will fit with the economic realities of your business and help drive the talent supply of those workers you’ll need to achieve the most important objectives.

 
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  • M. Edward (Ed) Borasky

    There is *no* "Silicon Valley Talent Shortage" and no "talent war." Anybody who thinks there is doesn't understand engineering economics. What there's a shortage of at Google is strategic management common sense. If anything, they need to kill dozens of projects with little or no prospects of ever reaching marketplace dominance and have a huge layoff.

  • Joel Capperella

    Thank you for the perspective, Ed. I don't think I meant to suggest that there is a talent war in the here and now, but moves like this from Google certainly plant the seeds for a potential battle.

    I can tell you that firms placing talent across the tech ecosystem are certainly bracing themselves for a potential shortage if the cash Google, Microsoft and others are sitting on ever begins to flow. (More on that here: http://blog.yoh.com/2010/09/therapy-for-cash-hoarders-overcoming.html)

    I've managed product lines in the enterprise software market for a good part of my career, and the conditions we are seeing right now are very similar to the mid-90s leading to the Internet rush. You might not respect Google's development strategy, but because it is their strategy to continuously develop and innovate, they'll need engineers to do the work.

    I'm hopeful that the wages don't get ridiculously inflated, and the talent war never materializes, but hope isn't a strategy. Therefore, for better or worse, tech firms should prepare.

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