photo © 2009 Colin | more info(via: Wylio)According to reports, Google is offering its employees a 10% pay increase for 2011 and $1000 holiday bonuses company wide. Digg layoff refugees are met with open arms by enthusiastic HR vultures. Companies in existence for two months are getting acquired for their teams. Ask.com engineers are getting job offers on Twitter the second news that they are on the market breaks.

Wait a minute, since when are Ask.com engineers such a hot piece of property?

Well, since the Silicon Valley engineering drought of 2010. GigaOm’s Om Malik brings up the shocking statistic that job postings in the IT industry have increased 69% since October of 2009. Plentiful availability of seed funding has made it easier to start a company and engendered a culture where doing your own thing is the only badass move. Read: “If I’m going to work for someone else, it better be a pretty damn good offer.”

Among the companies that are expected to hire more in 2010 are Facebook, Google, Zynga and Twitter. And the latter three plan on expanding their offices to accomodate their rapidly expanding staff.  From one Google employee on their rumored New York digs, “Filling the entire block is still a lot ofheadcounts.”But a multitude of smaller startups like Square and Dropbox are also throwing their hats into the hiring ring.

The gap between supply and demand is fueled primarily by a Google and Facebook bidding war (around 12% of Facebookers used to work at Google). Says investor Shervin Pishevar, “There’s been an arms race for talent. Certain companies have been stockpiling talent with great benefits. Most of that talent has had golden handcuffs.”

As Google has money to burn and Facebook has lucrative stock options, the fierce competition amongst the dominant players is most evidenced by their recent spate of “acqui-hires,” Drop.io and Hot Potato for Facebook and Plannr and AdMob for Google.

Mark Zuckerberg even has put the acqui-hire equivalent of a want ad on Quora, asking for cool suggestions for companies to acquire. Word around the startup world is that“Why not pay $1 million to hire a few good engineers?”isn’t an irrational question. Zuckerberg himself has said, “Facebook has not once bought a company for the company itself. We buy companies to get excellent people.”

Twitter investor Chris Sacca digs deeper into the problem, “There is no shortage of talent available for the very best companies that are reaching escape velocity. It seems harder for smaller companies who are looking to add employee 6 or 7 to find recruits beyond their network of friends.”It’s the relative ease in hiring for companies like Twitter that makes it so much harder for most startups.

With smaller startups competing with the giants and the giants competing amongst themselves, the job market has become cutthroat. More startups + fewer talent resources = salaries will continue go up. Google’s raise offer earlier today is just the beginning.

Now might be a good time to take some Computer Science courses.

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Authors: Alexia Tsotsis

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