Firms purging staff with obsolete skills

The hungriest information technology labour market in history is a fussy eater. If it wants sushi and all you can offer is quiche, you're out the door quicker than stale bread.

That has been proved by a spate of recent layoffs among IT vendors and service providers, including IBM, Hewlett-Packard, KPMG Consulting and Ernst & Young LLP.

Those layoffs are different from job reductions at companies such as Compaq Computer and Xerox, which recently announced cuts in an attempt to bolster sagging profits. Nor are they like terminations among the dot-coms that have hit the skids. They're not workforce reductions; they're strategic divestitures of people who have unwanted skills. The vendors are dumping staffers with tepid IT skills out the back door while luring hot new talent in the front, analysts said.

These problems will have a direct impact on user companies that continue to get more of their technical specialists from contracting and consultanting firms while reserving staff jobs for business technologists with deep knowledge of their particular industry, said David Foote, a managing partner at human resources consultancy Foote Partners LLC in New Canaan, Connecticut.

"The big problem consultants have is the ability to reskill quickly enough to capture new business," said Tom Rodenhauser, president of in Keene, New Hampshire. Established companies that might be loaded with enterprise resource planning skills have a real problem keeping up with the electronic-business expertise of nimble boutique players, for example.

In these circumstances, retraining isn't always practical. "They've got to turn a lot of grunt soldiers into Army Rangers, and that's difficult," Rodenhauser said. "It creates the strange circumstance of laying off on one hand and desperately looking for skills on the other."

Weighing the Options

For example, last week, IBM Global Services announced that it was terminating the jobs of about 1,000 US specialists in Y2k and other completed projects. Spokesman Scott Brooks said the company's first choice is always to retain and retrain. "But retraining is weighed against other candidates for the jobs who may have skills that are better," he explained.

Similarly, HP recently announced that it would turn over about 5% of its workforce this year, and New York-based Ernst & Young laid off 5% of its consultants in February.

Foote agreed that retraining is easier said than done. "Usually, less than 5% [of workers] can do that," he said. And many have personal agendas about what training they want that may or may not mesh with the needs of their companies.

To realign skill sets for the Internet economy, KPMG Consulting LLC, a division of KPMG LLP in New York, recently laid off 350 consultants, even though it expects to hire 2,000 new ones this year. The company is looking for specific technical expertise, not just general management skills, according to spokeswoman KPMG Elizabeth Brooks. "You can't just do strategy. You have to understand the technology that you're building the strategy around," she said.

Despite the "huge emphasis" the firm puts on training, it isn't enough to get workers up to speed in highly technical areas with which they are unfamiliar. For example, Brooks said, at KPMG, the integration of legacy telecommunications infrastructures with Internet technologies is among the hottest skills. "That's a pretty specific skill set, and you can't just send someone to school for a few months to learn that," she said.

Today, speed is everything, Rodenhauser said. "The suddenness and incredible demand for e-business projects is overwhelming for everybody," he said. "It's a feeding-frenzy mentality: How can we get our share?"

Join the newsletter!


Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

More about CompaqCompaqErnst & YoungErnst & YoungFoote PartnersHewlett-Packard AustraliaIBM AustraliaKPMGXerox

Show Comments