In the IT world today, it is clear the stakes are higher than ever before. The strong will survive and a key strength component for success is education.  There are many certifications, seminars, college degrees, and proprietary qualifications which can be obtained in the IT space.   The technology world continues to become ever larger and more complex.   There are thousands of suppliers of software and hardware.   This equipment needs to be purchased correctly, installed, integrated, operated, and maintained.   A CEO has to be even more selective before those decisions are made.   He has to decide which people to hire to help make these IT decisions.   Simply put, the days of employees learning “on the job” are long gone.   Promising 99% uptime sounds good, but it’s becoming a more difficult goal.

Benefits to the CEO/owner:

With real economics forces finally taking over, employers are able to pick and choose from many good IT resumes.   The quality of an employee base is a key variable to the acquirer of an IT company.   A potential buyer can interview each employee and get a feel for their basic knowledge, but unfortunately their interviewing skills play too significant a role in the process.   Without official educational qualifications, there simply isn’t enough information in an interview to get a feel for the individual’s depth of knowledge.  

Granted employees with these qualifications might be more attractive to headhunters, the benefits far outweigh the flight risk.   The owner of an IT company will no doubt increase the probability of selling his company for the highest price and under the most favorable terms with a more formally educated employee base.   Not only does an educated employee base give the impression of a better run operation, but it also makes the company more attractive because the acquirer can run the new operation with internal employees.   It could be a deal breaker if the CEO is faced with replacing too many employees with external people.    

Real life examples:

In two acquisitions I have been involved with this year, the acquiring company kept several employees following the acquisition.   Interestingly, these employees were located over a thousand miles away from the acquirer’s offices and facilities.   In both cases the reasons were clear.

• The employees were more familiar with the company, its service offerings, and most importantly had developed relationships with the client base.   With post closing client churn being one of the most significant concerns of the acquirer, selective employee retention is a must.
• The employees were located in tier 3-4 markets in the US and thus maybe 1/3 less costly than equivalent tier 1 market IT employees.   The buyers negotiated a salary half way between the estimated tier 1 and tier 3 IT salaries.   This arrangement was a “win-win” for everyone.   The employees hopefully realize they are in a great situation with an above average salaried IT job in a tier 3-4 market.   This also put more pressure on them to perform.  

Due to the incredible technology boom in the 1990’s, there were short term unrealistic economic forces at work in the IT labor space.   Official educational qualifications were not as important, they couldn’t be.   Thousands of CEO’s in and outside the IT space just had to fill seats, and a lot of them.   Technology today involves more complex systems which will require ever more qualified IT employees.