Project Management Institute

Sun sets on Silicon Valley?

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IT’S HOME to some of the biggest names in IT—Apple, Facebook, HP, Google—that have launched some of the most bleeding-edge projects and offered some of the most highly coveted jobs.

But Silicon Valley seems to be experiencing technical difficulties, leaving many people wondering how—and if—it will rebound.

Faced with fierce competition from a new generation of upstarts around the world, the IT heavyweight in Northern California, USA is contending with heavy job losses and a drop in venture funding. Even the area’s legendary radical innovation is sputtering—threatening a region thought to be the center of global technology and immune to the U.S. recession.

90,000
The number of jobs Silicon Valley lost between the second quarter of 2008 and 2009

“The economic woes of the last two years have shown very clearly that the Silicon Valley economy is very much exposed to the larger forces at work in the global economy,” says Aftab Jamil, audit partner, technology practice, BDO Seidman, a consulting company in San Jose, California. “There are a number of new factors and external forces that have exposed certain vulnerabilities impacting the long-term economic prosperity and technological supremacy of Silicon Valley.”

Simply put, Silicon Valley is no longer the be-all, end-all center of IT. It currently boasts 1.3 million jobs and an average annual salary of $75,390. But it lost about 90,000 jobs between the second quarter of 2008 and 2009, dropping total employment to 2005 levels, according to the 2010 Silicon Valley Index, an annual report by two local not-for-profits, the Silicon Valley Community Foundation and Joint Venture: Silicon Valley Network.

Innovation—the ability to continually generate cutting-edge ideas, projects and products—has long been the driving force behind Silicon Valley’s stellar performance and employment opportunities. Yet the new report reveals a chink in the armor: The number of patents registered in the region fell in 2008. The ever-so-slight dip of less than 1 percent is hardly a death knell, however.

“Yes, there is increasing global competition, but that does not mean that the game is over for Silicon Valley,” Mr. Jamil says. Emerging countries including China and South Korea have posted increases in patent applications, but Silicon Valley continues to be the most significant player in the innovation economy.

The bigger threat appears to be the dearth of money needed to back all those brilliant projects. Venture capital financing in Silicon Valley plummeted from $8.1 billion in 2008 to $5.3 billion in 2009, according to the index.

“The business community is getting a little worried about trying new things in a time period when things are really tight,” says Fariborz Ghadar, PhD, founding director at the Center for Global Business Studies, Smeal College of Business, The Pennsylvania State University, University Park, Pennsylvania, USA. “To the extent that financing is not there, innovation becomes a little strained.”

imgYes, there is increasing global competition, but that does not mean that the game is over for Silicon Valley.

—Aftab Jamil, BDO Seidman, San Jose, California, USA

That leaves many Silicon Valley project managers stuck on the same old projects done the same old way.

“Lack of innovation or a slower pace of innovation means that there is also a lack of opportunities for hands-on experience for project managers to refine their skills and keep pace with cutting-edge practices that might be taking place in other parts of the global economy,” Mr. Jamil says.

Yet even as some players retreat to the safe and secure, others continue to push boundaries.

“Normally, really innovative companies are the ones that grow in times of hardship,” Dr. Ghadar says. “When things are too soft and ‘loosey-goosey’ and everyone can get money, people get lazy. But in times when things are really tight, it’s actually then that brilliant innovations show up.”

SHIFTING GROUND

Silicon Valley seems well-aware that it cannot simply rely on its glorious past. It may have gotten its name from all the chip innovators and manufacturers headquartered there, but the region is moving from software and semiconductors to newer fields like clean tech, biotech and social media.

No matter where they work, project managers will be expected to demonstrate an ability to deal with slashed funding and high expectations.

“Project managers are faced with tighter budgets, more stringent deadlines and productivity targets,” Mr. Jamil says. “There is no margin for errors and therefore not much possibility to compromise on quality. All this is to be done without the availability of adequate resources.”

At the same time, project managers are seeing more opportunities shipped overseas, where wages are lower and projects can be implemented faster.

“The timing becomes critical on projects. You can’t tell the guy in Cupertino, California that he has to work 24 hours a day—he can’t and he doesn’t want to. What you do is outsource it and [work] around the clock,” Dr. Ghadar says.

“When the United States is awake, the United States works. When India is awake, India works. When Singapore is awake, Singapore works. You go around the circle. It’s not just a cost element. It’s also a time element and a capability element. You can get some very good experts from around the world.”

imgHOMEWARD BOUND

IT job opportunities aren’t the only things being shipped out of Silicon Valley—people are going with them. Many foreign-born IT experts are returning to native soil. And fewer non-U.S. students are coming to the tech-heavy Northern California region to earn engineering and science degrees, according to the 2010 Silicon Valley Index. Students from abroad earned 16.6 percent of the total degrees awarded in science and engineering programs from local colleges and universities in 2007, compared with 18.4 percent in 2003, the study says.

“We’re in the midst of a massive brain drain,” Vivek Wadhwa, a Harvard Law School senior research associate who studied the topic extensively, told USA Today. “For the first time, immigrants have better opportunities outside the United States.”

With fewer jobs available, specialization has become the wave of the future.

“The days of a ‘generic’ project manager are numbered. Firms are looking for specific experience that a project manager needs to bring to the table—for example, a project manager for business applications, business intelligence or for electronic medical records,” says Abhijeet Khadilkar, co-founder of San Jose-based CareerTiger, a career coaching and management consulting firm. “For some specific IT projects, the requirement is to have a technical project manager who can understand the underlying nuts and bolts of the technology being implemented.”

To score that dream job, project managers must know exactly what employers want, says Megan Pittsley, director of career services at TechSkills, San Jose.

“Competition is fierce, and project managers are being forced to fit into perfect little boxes of what employers are requesting. It’s important that IT project managers not only rely on developing their project management skills or gaining their Project Management Professional (PMP)® certifications but keep themselves trained on the latest technologies,” she says. “It’s a war out there for sure, and only the strongest and most proactive will thrive.” —Rachel Zupek

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI.

PM NETWORK MAY 2010 WWW.PMI.ORG
MAY 2010 PM NETWORK

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