Investment banks are the largest employers of information technology professionals in the city. The turmoil, culminating this week with the demise of Lehman Brothers Holdings Inc. and the forced sale of Merrill Lynch & Co., has left thousands of them out of work.
Local tech firms that have struggled these past few years to fill openings said Wall Street’s pain is their gain.
“It is a lot easier to hire people in the city,” said Gerald Cohen, chief executive of Information Builders, Manhattan’s largest privately held software company. “There are fewer open positions, and we’re getting better people.”
During the first half of this year, Wall Street laid off 22,000 workers, and there are thousands of layoffs still to come. In the past seven months, the city has added 1,100 tech jobs for a total of about 42,700, according to an analysis of state Department of Labor figures by Eastern Consolidated, a real estate investment firm. Strength in tech hiring outside the finance sector has kept employment up, experts say.
Despite an overall economic slump, the local tech industry has remained relatively healthy—revenues are steadily growing and venture capital funding is still strong. Today, most of the city’s tech companies have diversified their client base and are not heavily reliant on the financial services industry, so they are continuing to ramp up staff and expand.
Traditionally, Wall Street has been the tech industry’s stiffest competition on the hiring front. Banks typically beat out tech firms because they offer bigger paychecks and better benefits.
Cohen recalled several instances where he lost good staffers to an investment bank.
Banks have been willing to pay $250,000 base salaries plus a bonus for top talent, said Michael Flannery, managing director of Redwood Partners, an executive search firm.
“That made these people untouchable,” he added.
But the changing landscape on Wall Street will help level the playing field.
TheLadders.com, a site for $100,000-plus salary jobs, expects to add about 50 employees to reach 300 in Manhattan by the end of the year. Marc Cenedella, who founded the company in 2003, has already hired several tech professionals from big banks.
“I think we will see more and more people send in résumés,” he said.
However, not every tech firm is ready to pounce on the fresh talent. Those catering to the financial services firms could face their own tough times. Base One International Corp., a Web database application provider, has put its hiring plans on hold this year.
And some industry observers note that the available talent may not immediately solve their hiring problems. There are tremendous cultural differences between entrepreneurial shops and corporate America, and the available talent may not be the right fit for them.
“When you think about it, 10,000 professionals dumped on the street may not do anything for me,” says Flannery, who helps several startups in New York fill senior-level posts. “I’m looking for high-energy, brilliant programmers who want to build technology.”
Workforce Management's online news feed is now available via Twitter