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January 25, 2016

Fighting for Talent: In GE’s wake, biz leaders call for more high-tech recruitment

PHOTO | Pablo Robles Bruce Carlson, who leads the Connecticut Technology Council, wants Connecticut to strengthen its support ecosystem for mid-sized companies.
By Matt Pilon

Like a spurned love interest, General Electric is leaving Connecticut for what it views as a more attractive mate. Now it's time for the state to hit the gym to re-shape its competitive prowess, industry observers say.

“In my mind, let's take the slap to the face, but let's keep moving and say to ourselves 'what do we need to do?' ” said Connecticut Technology Council President and CEO Bruce Carlson, who speaks for approximately 2,000 companies in the software, advanced manufacturing and other industries — the overwhelming majority of which are likely staying in Connecticut despite GE's departure.

Among the recommendations from Carlson and others for the post-breakup recovery period:

  • Strive to make Connecticut an attractive place for high-tech talent;
  • improve infrastructure;
  • strengthen industry-university partnerships; and
  • hone the state's messaging about its economic aspirations.

“Connecticut will not be Boston. We will not have the scale or the critical mass,” Carlson wrote in a message to his membership last week. “But that doesn't mean we can't learn about what is important to companies like GE, and apply those lessons learned to our mid-sized companies.”

Linking undergrads to employers

One way the council is trying to do its part is through a new initiative that aims to link computer programmers enrolled in Connecticut universities with in-state companies in need of talent.

By the end of the month, approximately 200 students from 10 schools will have taken the Connecticut Skills Challenge, which will culminate in a final event and jobs fair in April.

An available workforce is the most important ingredient in keeping high-tech companies happy, Carlson said. He believes taxes are secondary, though unpredictable or retroactive tax hikes hurt the state's competiveness, he said.

While GE was vocally dissatisfied with Connecticut tax hikes in 2011 and 2015, the conglomerate cited other reasons for its decision to move its headquarters to Boston, including Beantown's diverse, technologically fluent workforce.

A city with few equals

Metro Boston has few equals when it comes to a concentration of high-tech workers. It has triple the number of “advanced-industry” employees as the Hartford and Stamford metro areas combined, according to an analysis of 2013 data by the Brookings Institution, and a higher ratio compared to overall employment. The area also has prestigious research universities and hospitals, draws more venture capital investment, features an airport with numerous international flights, and offers slightly more favorable tax rates on corporate and personal income and capital gains.

Boston's offerings also fit into GE's strategy to retool into a high-tech industrial company.

“Boston is just an incredibly powerful magnet,” said Fred Carstensen, a UConn professor and economist.

Big-city attraction

It's not that Connecticut doesn't have an educated workforce. The rate of advanced degrees here is comparable to Boston and among the highest in the country.

But Connecticut companies have a hard time attracting and hanging onto certain types of in-demand employees, including digital engineers and programmers, said Joseph McGee, vice president of policy and programs at the Business Council of Fairfield County.

“Maybe they stay two years and go off to Boston or New York or California because of the pay scale,” McGee said. “We hear that repeatedly.”

Keeping talented workers

One such company is Bridgeport's GoECart, which provides a cloud-based ecommerce platform and related services for online retailers. CEO Manish Chowdhary said his 20-employee firm, which has eight vacant positions, struggles to find software developers and engineers.

Many talented workers including some of his own past employees have flocked to Silicon Valley, Boston and New York City, he said.

“It's a fertilization problem,” Chowdhary said. “We have to go above and beyond to try to hold onto this talent.”

GoECart has a loan from the state Department of Economic and Community Development (DECD), but Chowdhary said government aid will only go so far in building a tech ecosystem that attracts a larger talent pool.

Has he thought about locating elsewhere?

“The thought has crossed my mind several times,” he said. “We stick around hoping things will get better.”

Chowdhary said the state's larger tech companies must step up by seeding or working more with startups, like Google Ventures does in California and elsewhere.

One thought he has: Requiring big companies that receive state loans or grants to use part of the funds to collaborate with smaller Connecticut tech firms.

Income tax credit?

McGee said he would like the state to create a new tax credit awarded to certain high-tech workers who agree to work in Connecticut for a minimum number of years.

Connecticut's top economic official, DECD Commissioner Catherine Smith, said she and her team have been discussing ways to make the state more attractive to tech talent and companies.

The idea of a personal income tax credit for skilled workers is something DECD wants to analyze, she said. But there are also budget realities. As the legislature prepares to convene next month, lawmakers will continue to grapple with a combined projected deficit of $2 billion in the next two fiscal years.

“Income tax in particular kind of keeps this place afloat,” Smith said. “It's something we're a bit constrained about.”

Governor's views

In a statement following the GE decision, Gov. Dannel P. Malloy expressed disappointment and issued a call to stabilize the state's pension debt and create a more predictable budgeting process. He was also quick to point out that his administration since 2011 has used low-interest loans, grants and tax credits to retain or create nearly 95,000 jobs in the state.

Smith echoed that sentiment: “We've seen so few announcements like GE's, and so many about [companies] expanding here,” she said. “On balance, we've seen more of that kind of positive activity.”

DECD is considering the creation of high-tech workforce programs at both the K-12 and college levels, she said. In recent years, the state has similarly sought to bolster its pipeline of manufacturing talent.

Workforce challenges, successes

Another company searching for programmers is New Oak Financial, which uses data analytics and other technology to advise banks and insurance companies.

The New York company, which also has offices in Atlanta and Dallas, established a Danbury office in 2013 with the help of a $3 million DECD loan.

Managing Director Yuri Yoshizawa said New Oak hasn't been able to find an adequate volume of programming talent in Greater Danbury to meet its growth goals.

So last year the company launched its own internal bootcamp program.

Candidates with an interest in tech — not necessarily computer-science majors — take nine weeks of training, followed by 12 to 15 weeks at a programming school in Manhattan. There's also several months of mentoring at the Danbury office.

A handful of people have completed the program so far, Yoshizawa said.

New Oak also provides mentoring and internships to students participating in the state-backed Early College Opportunity (ECO) program, which seeks to create a stronger pipeline of STEM skills.

So far, several community colleges and companies, including IBM and Electric Boat, are participating.

Yoshizawa thinks ECO is a good program for the state.

“I would like the state to commit to funding it long-term,” she said.

Talent acquisition across CT

How are other high-tech companies in the state faring with talent acquisition?

Drugmaker Alexion, which is in the midst of moving its headquarters from suburban Cheshire to downtown New Haven with the help of as much as $51 million in state assistance, hires from both within and outside of Connecticut.

Asked about the company's commitment to staying and growing in Connecticut, CEO David Hallal said New Haven, home to Yale, offers “a knowledge-based economy, easy access to Amtrak and other mass-transit systems, and a vibrant community for Alexion employees.”

“In addition, creating a new global headquarters in Connecticut has allowed our current employees to remain with the company without having to relocate their families to another state,” he said.

At Branford's Core Informatics, a software maker for scientists and researchers that has grown its staff from 16 to 90 employees in the past two years with the help of $3 million in DECD aid, CEO Josh Geballe said he is happy staying put.

“I think certainly when it comes to bioscience and biotech investing, Boston is the center of the universe right now,” Geballe said. “But we are actually very bullish on Connecticut.”

Geballe gives Connecticut credit overall for being “supportive and aggressive” in attracting tech companies.

He said his team enjoys a lower cost of living and less traffic than many workers in Cambridge, Mass., where Core opened an office several years ago. He has hired employees from Southern Connecticut State University, UConn and the University of Bridgeport, among other area schools.

“Quality of life is important,” he said. “A lot of us at Core value living on the shoreline and being close to New Haven.”

At Norwalk disaster backup and recovery provider Datto, Michael Mueller, senior director of talent acquisition, said some, but not all high-tech workers would prefer to live in a major city like Boston. Datto, which is a sponsor of the tech council's skills challenge, has hired employees who had offers from big-city companies, he said.

“It's always tough finding great talent,” Mueller said.

The company provides competitive pay and benefits, he said, but also seeks to differentiate itself with perks like free-lunch Fridays, office arcade machines and company trips to play paintball. The company recently rented out an entire movie theater for employees to watch the new Star Wars.

While Core Informatics and Datto both say they've been able to find and attract high-tech talent, both have also used highway billboards and other advertising as a part of their recruitment strategies.

Assessing the state’s efforts

UConn's Carstensen said Malloy has been smart to try to build the state's bioscience industry through its deal to bring Jackson Laboratory to Farmington, and to keep Pratt & Whitney's headquarters in the state with the help of a $400 million tax-credit deal in 2014. “We've done some good things, but it has never been integrated into a broad narrative about how we're becoming a cutting-edge economy,” Carstensen said.

He thinks the state should broker UTC-like deals with other companies, allowing firms to cash in unused tax credits for infrastructure and other growth investments that keep businesses tethered to the state. Smith countered that few companies have the amount of unused tax credits that UTC does.

Carstensen said the state should better leverage its multi-million-dollar investment in a high-speed Internet backbone by allowing private companies to tap into it. Such a strategy could be a key piece of a broader narrative about the state's economic aspirations, he said.

And he thinks UConn should follow through on past pledges to boost research and programs at its regional campuses, including Stamford, where GE had an innovation collaboration called edgelab that shut down in 2011.

Stanislav Kurkovsky, chair of Central Connecticut State University's computer science department in New Britain, said he sees no simple solution to competing with major tech hubs. “I don't know if there's a strategy,” he said. “If there is, I don't feel it.”

His own students, some of which took the tech council's skills challenge, have ended up at area insurers and other companies, while others have landed jobs out of state at Twitter, Netflix, Amazon and other big tech firms.

“I'd like to think that as a computer-science program, we're doing everything we can to produce quality graduates,” he said.

It's a message he and his colleagues try to trumpet to industry, but it's not always enough to convince companies to locate or remain here.

“The exit of GE is a good example,” he said.

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