Moreover, foreign companies have to compete with globalizing Chinese companies for seasoned managers, and that demand will continue to outstrip supply by a ratio of 15-to-1 over the next 10 to 15 years, the report says.
Most in demand are Chinese IT managers with experience working overseas.
"Everybody shoots for the returnees," says Tsiknas, noting that they have the best English skills, solid work habits and multicultural savvy. "They bridge the divide between local and Western cultures and have experience that is not easily gained here in China," he says.
The shortage of midlevel IT managers has driven salaries in Beijing, Shanghai, Guangzhou and Shenzhen -- China's leading coastal business centers -- up 8 percent to 10 percent per year, Wang says. Salaries in second-tier cities are generally 20 percent lower but are increasing at a higher rate, he adds.
Stopgap measures for handling the IT talent shortage can make things worse. Poaching from competitors, for example, is a much decried though common practice. "There is a tendency in China for employees to jump for relatively small salary improvements," says Linda Sprague, a professor of manufacturing and operations management at China Europe International Business School in Shanghai.
This is a three-part problem, she explains: The company loses an employee it has been developing, the IT person who jumps may never stay in one place long enough to become really experienced and productive, and salaries rise even faster.
Another strategy is to tap overseas communities of Chinese speakers in Singapore, Taiwan and Hong Kong, who usually have excellent English skills and are used to working to Western standards in multicultural environments. Because they are in demand, IT managers from Singapore and Taiwan -- and especially Hong Kong -- command the biggest salary packages, according to a 2005 compensation and benefits survey conducted by Watson Wyatt Worldwide, a global human resources consulting firm based in Arlington, Va.
But additional costs, such as housing expatriate workers and flying them home to see friends and family, doubles what a company would spend on a Chinese employee. "Everyone is trying to scale back on these because they are expensive," says Wang.
Multinational corporations have one distinct advantage over domestic Chinese companies when it comes to attracting the best and the brightest: The sky's the limit as far as opportunities for advancement are concerned. Well-known companies such as General Electric Co., Siemens, Motorola and The Dow Chemical Co. can attract good people if they have a reputation for nurturing employee success, Wang says. That's because, at least in one respect, Chinese IT workers are like their counterparts everywhere. "Pay is usually not the key driver for attracting top employees," Wang says. "Many people are driven by factors such as career opportunities, training and education."
Employers that provide those extras build reputations that help attract the best talent while drastically reducing the cost of recruiting. "In a profession such as IT, where turnover is 25 percent or more, this cost can be significant," Wang says.
Apparently, the approach is working for global soft-drink giant Coca-Cola Co. "We have no problems in attracting and recruiting skilled IT managers," says Coca-Cola Asia spokesman Kenth Kaerhoeg. "Fortunately, the talent pool in China is increasing rapidly. In addition, we provide intensive training to all new recruits."
In terms of career opportunities, one of the most powerful lures is the promise of an international career development path. "It's a fallacy to think you can retain people purely on cash compensation," says John Ruthven, general manager of Asia-Pacific operations at Islandia, N.Y.-based CA.
The software vendor is putting together plans for one- and two-year rotations through its Hong Kong office or other international locations for its Chinese employees. "Overseas postings make them extraordinarily marketable and extraordinarily valuable to a multinational business operating in China," says Ruthven.
And what about companies that can't afford to pay top rates or rotate people through glamorous international locations? They may have to set their sights lower, says Samuel Ritter, a senior consultant at SSBG, an IT services provider based in Shanghai.
"A lot of companies are forced to make changes in their requirements," Ritter says. "Where they were looking for 15 years' experience, they're lucky if they get five to eight. Where they want fluency in Chinese and English, they're lucky if they get just professional Chinese communication skills. Where they want a good personality and a team player, they may have to settle for someone with people issues."
Trombly and Marcus are freelance business and technology writers based in Shanghai.