How do you spell hot in German? One way might be D-E-B-I-S. That's the acronym for Berlin-based Daimler-Benz Inter Services. And these days, the wholly owned subsidiary of the Daimler-Benz Group, is certainly smokin'.

A service company specializing in information technology, telecommunications, media and real estate management, its core IT business grew 30% last year while the division's total revenues jumped 15% to $5.3 billion. DEBIS now employs 10,000 IT specialists in 15 countries after adding 4,500 staff in just three years. But DEBIS boss Klaus Mangold says his firm could be even hotter: "We could take on more projects, if we were able to hire more people."

His complaint is echoed by managers across Europe in the information and communications technology industries in which a yawning "skills gap" has left as many as 200,000 jobs unfilled across the region. In Britain alone, where 500,000 people are employed in IT jobs, another 50,000 positions go begging because of a lack of available people with programming skills. "It is a pan-European problem and a phenomenon our industry has to live with," says Bernhard Rohleder, secretary-general of Eurobit, a Frankfurt-based IT trade group. Eurobit expects the Western European IT market to grow by 9.1% this year to $230 billion, and by another 9.6% in 1999. Rohleder says those growth rates would each be about two percentage points higher if there were enough people to fill available jobs.

The shortage has been exacerbated by a desperate need for programmers to work on two big short-term projects — the so-called millennium bomb and the introduction of the European single currency. But demand for software engineers will continue to outpace supply long after the Year 2000 bomb stops ticking and euros jingle in pockets across the Continent.

Unfortunately, the European IT industry considers its skills gap an embarrassing secret. And a problem that remains partly submerged is a problem harder to solve. "No one wants to talk about a skills shortage; it's a sign of weakness," explains Niall Rae, associate director, NOP Business, a London-based polling firm that recently surveyed British companies about the problem. Adds Brian Arthur of Britain's Federation of the Electronics Industry, "It doesn't want to be seen as an industry that can't attract bright minds, an industry people don't like being in." Some of the reticence might be understandable. In June 1997, Logica, a U.K. software consultancy, talked openly about the trouble of finding qualified people. Shortly thereafter, it lost nearly $3.30 off its share price and took about eight weeks to recover.

The root cause of the problem probably dates to the recession of 1991-93, when computer programmers found that jobs were virtually nonexistent and potential students began going into other fields. "Five years ago, [an IT grad] couldn't find a job," notes Xavier Autexier, of Information Technology Industry Association in France. That resulted in "a missing generation of programmers," adds Gordon Ewan, of Britain's Alliance of Information Systems Skills.

The industry also suffers from a less-than-cool image. Too many students consider computer programmers as buttoned-down nerds. Within European universities, 40% of computer science and electronic engineering places are unfilled, Rohleder says. In Germany alone, there are places for 11,000 software engineering students, but only about 7,000 are filled.

Even money doesn't seem to attract students, and given the imbalance between supply and demand within the sector graduates can demand high salaries. "The industry is so very transient, it's willing to pay, since most big earners will be gone in a year," says Kit Grindley, a computer science expert at the London School of Economics. At Germany's SAP, Europe's biggest software company, starting salaries are between $36,000 and $47,000. That's high compared to other sectors. For example, entry-level bankers in Germany gross around $22,600, while chemical engineers start at just over $24,000. Computing, a British trade weekly, each week publishes dozens of pages of IT help-wanted ads with top-end salaries for programmers around the $98,000 mark. IT jobs within the banking/finance sector often pay much more. Steven Mathieson, who covers the IT job market for Computing, says that U.K. programmers with management skills can earn $246,000 or more a year.

The skills shortage does not pack the same wallop across the board. The finance industry wants only programmers at the peak of their game who tend to jump from one high-paying job to another. That makes it expensive to keep IT staff. "You will always have trouble at the cutting edge because companies are always after the very latest thing. The financial industry wants everything yesterday," explains Rae. That choosiness limits hiring options. His NOP Business poll found that only universities and public-sector offices have more trouble recruiting IT staff — but for altogether different reasons. Schools, hospitals and government agencies don't offer the challenging work and good pay that attract the most talented people. Yet their programming needs are just as pressing.

Top software companies and consultancies, which can offer interesting projects, high pay and — for some staffers — long-term career prospects, are best able to bridge the skills gap. Despite the hit Logica's share price took when it broached the problem, the firm will still discuss the skills shortage issue. Says Jim McKenna, Logica group personnel director: "I don't think we're afraid to talk about it, but we're a successful and growing company." Logica's worldwide hiring goal this year is 6,200 people, and McKenna says it will be met. Nor is SAP hunting for job applicants. "But then, we have a hot name and can easily hit our hiring goals," boasts Harmut Hillebrand, SAP human resources director.

But even successful companies have to look beyond the current job market to ensure a steady supply of talent. Logica, for instance, recently started a program with the University of East London to train mid-career candidates from other professions. So far, about 100 students have passed the four-and-a-half week course, which costs about $1,600 per pupil, and are now Logica employees — including one of the company's former secretaries and a paleontologist who wanted a more future-oriented career.

Logica's approach of "reskilling" older people from other fields will be just one of many possible solutions. But retraining will not do much to ease the high unemployment rates dogging many European countries. Successful applicants must show an aptitude for software engineering and that rules out most of the jobless. And companies willing to train code writers tend to want people who have at least an undergraduate university degree — another criterion that excludes many of the unemployed. And despite the Logica program, the European industry — like its U.S. counterpart — exhibits a strong bias for young programmers. Critics claim this is because young hotshots happily work long hours for relatively less pay. Says Grindley of the LSE: "Ageism is a problem; it helps keep costs down."

Another solution is looking beyond national borders for help. DEBIS has been pushing into Central and Eastern Europe and recently opened subsidiaries in Hungary and Russia. Says Mangold, "The high level of education in mathematics and physics, as well as in engineering, is an important advantage for investment in those countries." While U.S. companies have been scouring Asia for high-tech whizzes, Mangold believes DEBIS has found an even better talent pool in its own backyard.

But most experts say the best long-term solution is getting universities to graduate more computer science majors — and getting younger students interested in the field. According to the NOP poll, 78% of industry respondents believe that full-time education offers the best answer to the skills crunch. That may eventually require European governments to step up educational investment. But for now the industry's stodgy reputation makes getting more students to take existing IT courses difficult enough. Companies like DEBIS, SAP and Logica may be red-hot today.

But if they are to continue to challenge their U.S. competitors, some of the buzz they have generated in the past few years will have to rub off on the rest of their industry. Only then will it attract enough talented, young Europeans to ensure future success.