IT Contracting: Putting paid to the UK brain drain
Tuesday 05 May 1998
Lynne Curry reports
The United States, birthplace of the free market, entrepreneurial spirit, Silicon Valley and the information revolution, is showing signs of falling behind its hype. American companies that have been crossing the Atlantic to lure over IT people from the UK are giving up the chase - unable to match salaries in the UK.
In an era of severe skills shortages, the effects of rampant competition have been slow to show in the country which pioneered the go-getting philosophy. While IT professionals in this country have seen their salaries rise far above the rate of inflation, the Americans are much more faithful to rigid and traditional salary scales based on time served and level of ability.
Analysts and programmers in the UK are now commanding between pounds 300 and pounds 500 a day - salaries roughly equivalent to between pounds 70,000 and 115,000 - but their American peers are earning only between $40,000 and $60,000 a year (at today's rates, between pounds 25,000 and pounds 37,000).
Compuware, one of the 10 biggest software houses in America, with a pounds 2bn turnover, has been coming to British recruiting events since 1994, but dropped out this year, concluding that the pounds 10,000 cost of the stand and accompanying literature was not worth the handful of people they might recruit.
The company's Woking based British associate, RDL, was to recruit specifically on Compuware's behalf at an exhibition at London's Olympia last month but pulled out. RDL claims to be Britain's foremost Oracle agency and Compuware's intention, according to Susi Strange, RDL sales director, was to "reverse the brain drain" from the US. But Andy Richards, RDL's founder, says the enthusiasm of British contractors for the charms of the palm beaches of California has been waning since British rates began to race ahead.
"Compuware has come over here about six times since 1994," Strange said. "The first time, we had a week of interviews - about 77 people - and offered more than 50 jobs.
"It worked very well because the people they were looking for were not that employable in Britain at the time - there was a strong demand from the US for the old mainframe skills. Now these people are more popular here and, although they're still in demand, the Americans don't pay anything like the rates."
There are more indications that the Brits are turning the tables in the IT field. London-based Glotel, the company behind Comms People, has sent 10 "pioneering'' members of staff over to the States to establish offices in Boston, Dallas, Denver, Los Angeles, San Francisco, Santa Clara, and Washington DC, contributing almost half of current turnover. The mechanics of the process are simple and much more American than European: an ambitious staff member is sent out (economy class) to start from nothing in a strange city. He or she hires a serviced office, acquires a copy of the local newspaper and begins to make telephone calls.
Computec International Resources has an office in Los Angeles; Computer People has 12 US offices; and Elan has an office near Silicon Valley. Parity, owners of CSS Trident, has said its aim in 1998 is to concentrate on international expansion, having bought two US services companies last year. It intends to replicate the growth of its UK business in the US - in five years, its turnover has gone from pounds 20m to pounds 202m.
Andy Richards says US employment practices can seem quaint to British operators. "If you're an entrepreneur, on your own, it's a free market and a very buoyant place,'' he said. "But on a career path, it's time and ability dependent; far more conservative than you'd imagine.
"The vast majority, especially in the Midwest, behave very conservatively," Richards explained. "One of the original reasons recruiters first came over here was because they could only get staff from their local areas and they felt they couldn't do that because they were so moral about taking their customers' employees, even through a third party.''
Clarke Peters, international recruitment consultant for Brighton-based Eurolink, said that although rates are below those in the UK, the cost of living in the US is cheaper.
"People don't go over there for the dollars they earn; it's never their primary motivation to maximise their income and send back money," he said. "It's a lifestyle thing. There's a wealth of opportunity in California area, which is a very nice place to live.''
IT people are in demand whatever their skills, Peters explained, and the British are valued because they are thought to have had a good education and work hard. Americans retain a fondness for the British.
With a growing presence in the US, the "brain drain'' may well be reversed, with British companies "exporting'' American IT staff from over there to over here. Quite how Bracknell will be presented as a gloriously attractive town in which to live remains to be seen.
And why are 'southern' ways of speaking spreading north?
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