When the city of El Paso's legacy financial system needed to be replaced, officials had a choice: Go through the traditional implementation process and purchase a system El Paso IT workers would operate and maintain, or try something completely different and outsource the entire operation to an application service provider.

According to William Chapman, the city's chief financial officer, the decision was a no-brainer. Unable to attract and retain information technology workers capable of running the newest generation of financial and human resource software, the city turned the project over to PeopleSoft, which provides all the operational support -- and infrastructure -- necessary for the Web-based application.

Not long ago, such a move would have been virtually unheard of in government. But with more and more states and localities unable to recruit and retain workers for the high-tech fields of Enterprise Resource Planning (ERP), data modeling, project management, e-government and other specialized fields, outsourcing has become an increasingly attractive option. But with few governments willing to expand outsourcing beyond certain types of technical applications, the chase for skilled IT workers goes on.

The Struggle

Most state and local governments continue to struggle with a shortage of qualified IT workers, according to Gartner Inc. In a study conducted last summer, the research firm said 87 percent of state governments and 80 percent of local governments don't have the IT personnel they require.

Part of the problem is the gap in compensation between the public and private sector for IT managers and staff. For example, the median salary for IT managers in government is $70,000 -- well below the median of $82,000 for managers in the private sector.

The problem is expected to worsen as huge numbers of baby boomers reach retirement age in the next few years. The federal government, which currently has 1.8 million workers, will have half that number -- 900,000 --eligible for retirement within five years, according to USA Today. In Contra Costa County, Calif., more than 53 percent of the county's IT workers are eligible for retirement, according to government officials.

But not all is so bleak. The softening economy has led many IT workers to take a second look at a career in the public sector. "The market has improved, though it depends on which part of the country you are talking about," said Jim Fox, chairman of Fox, Lawson & Associates, a compensation consulting firm that specializes in the government sector. "The [recruitment] situation is certainly better now than it was a year-and-a-half ago."

Dianah Neff, chief information officer for Philadelphia, confirmed the upswing. "We have seen more applications coming in for open positions. As a result, we are seeing candidates without using placement companies," she said. "But we're still having problems finding qualified workers for certain technical fields, such as database administration, architecture and modeling. These premium positions are harder to fill."

Some CIOs wonder just how long new applicants will stick around once the economy gets back on its feet and the private sector starts recruiting again in larger numbers. To prepare for that eventuality and to strengthen the overall IT recruitment process, some state and local governments are trying to get hide-bound civil service departments to break with the past and start building some flexibility into hiring practices, pay schedules and job descriptions.

Other governments, especially at the local level, are building relationships with local colleges, hoping to tap into a new generation of skilled graduates. Philadelphia-area universities now teach electronic commerce skills to students, a knowledge area increasing in demand in the public sector. Other jurisdictions have turned to community colleges to fill less specialized positions. Some have tapped the welfare-to-work market as a recruitment resource.

According to Fox, the most innovative governments have learned how to become flexible when it comes to pay,

Tod Newcombe  |  Features Editor