Executive salaries aren’t being hurt by the flood of candidates into the market,
but Karen Heller of WayCoolPeople is seeing other technical salaries return to normal levels.

Companies finding ways to trim costs
5/7/2001
By Pavan Lall

As far as growth is concerned, the tech movement’s crucifixion looks like a process that involves the loss of corporate lives before the market is resurrected again.

For those in the new economy, the trend is to cut back on consultants, reduce billable hours, pump sales and retain revenue-generators.

Possible factors for the embargo on spending are market caution coupled with an aim to suppress steep information-technology salaries.

A natural step in the layoff scene involves companies eliminating contracted consultants.

“That (consulting) is where the billable hours are,” said Orton Varona, Southwest Airlines Co.’s technical recruiting team leader. “Most companies to my knowledge are still hiring technology (personnel). They are just doing away with the superfluous — in short, trimming the fat.”

Southwest Airlines (www.southwest.com) had recently announced plans to hire 150 employees across the board for its technology department.

Departments, however, might not have as much to do with an employee’s future as the ability to make money.

“It’s clearly the people that have nothing to do with revenue generation that have a better chance of getting cut,” said Kevin McConnell, president of Markettrix Inc. (www.
markettrix.com), a Fort Worth company that specializes in search-engine optimization and Internet marketing.

“Some of our partners are cutting project managers and customer-service people.”

Others on the list who don’t generate revenue include public-relations executives, customer liaisons and database researchers, said Markettrix’s co-founder Susan Nix.

The general “softening” in the industry might be greater in departments that have older technology.

“Mainframe groups are floundering and quality and assurance (areas) are not getting enough play,” Varona said, but software development is still big, even though avenues like Java are not as hot as they were.

As brick-and-mortar companies incorporate information technology, more jobs will be available. But gone are the days where tech professionals could call their own salary shots, Varona said. Salaries will be more organized and in accordance with specialization and skill, he said.

Karen Faith Heller, WayCoolPeople Inc.’s chief executive, agreed with Varona. WayCoolPeople is based in Addison and specializes in executive searches and strategic resource planning for the technology sector.

“It is almost like corporations are getting together to force (employee) prices to go down,” she said. “Absolutely, in the technical arena … I see this as part of the game going on. The flood of candidates in the market is requiring salaries to move downward, based on the positions by about 10 percent to 20 percent. However, the executive market has not been negatively affected by salary trending,” Heller said.

Companies that are hiring are primarily doing so for top positions and complex technical positions.

“Right now I’m seeing high-level executive positions such as (chief executive officer) openings, as well as optical and wireless hardware digital designers — infrastructure players,” Heller said. “I am also seeing a focus on national sales — strong sales people with Rolodexes that can develop territories.”

Executive positions might be more convenient to fill, in one regard, because management people do not require as much training as junior employees.

“From my experience, companies have turned off the training dollar taps,” said Ed Fiduccia, vice president of sales and marketing at Richardson-based Software Concepts Inc., which provides tech training courses to corporations. “The bigger ones like Nortel (Networks Inc.) and (Texas Instruments Inc.) have said they like our courses, but that they are not spending (money) ’til the third quarter.”

The market has slowed down in many industries except communications infrastructure — fiber optics and wireless areas, Heller said.

“Companies are operating on a skeletal level,” she said.

Since many companies were making employee cuts in response to tech stock dips, Heller expects that once the market strengthens, the hiring would commence at all job levels.

Overall, companies seem to be downsizing by 20 percent to 30 percent, Heller said. Bobby Chang, Chorum Technologies Inc.’s director of business development, said that figure is accurate.

Chorum (www.chorumtech.com), a Richardson-based fiber-optics component provider, has laid off manufacturers but is hiring sales personnel, Chang said.

The kind of hiring and firing will depend on the industry and whether it is management information systems, telecom or software development, Chang said.

“There is development and hiring going on in the infrastructure arena, and this will have to turn into business applications and sales before too long,” Heller said. “We cannot have technology infrastructure with no business application focus.”