Every engineer on staff adds $1 million in valuation to a company, as the saying goes in the tech community. Graphic designers, another hard-to-find talent, add $2 million each.

(The punchline: For each M.B.A., subtract a million.)

Whether or not the equation works in real life, it's true that with hundreds of companies vying for a limited number of engineers, the ability to attract and hire talent is becoming a critical test.

“You have to add a new level to business viability: engineering viability,” said Seth Besmertnik, CEO and co-founder of Manhattan-based search-engine-optimization company Conductor Inc. “Does this company have a plan to recruit engineering talent?”

To find engineers, tech startups in New York are working both ends of the hiring spectrum, from building their own recruitment teams to outsourcing development overseas. They network constantly, go to meetups, give speeches and even make cold calls to people who turn up on their searches of social media sites. Indeed, Conductor hired four engineers over a five-month period this year—each had multiple job offers—and it needs 10 more.

“As CEO, I'm the first guy [a candidate] talks to and the last [a candidate] talks to,” Mr. Besmertnik said. “Our whole leadership team is very hands-on with recruiting.”

Startups have some advantages, including “portraying themselves as disruptors,” said Mike Fitzgerald, a partner in Winter Wyman's New York technology division.

But for all their hacker mentality and culture, New York City startups continue to lose candidates to bigger names like Google, Facebook, Foursquare and others, including Wall Street firms that have their own enormous demands for programming talent.

Clark Valberg is CEO and co-founder of Invision, which has developed a software prototyping product. His investors urged him to hire locally, and the first developer he interviewed talked a good game about wanting Invision's culture. He ended up taking a job with Amazon. “No way I'm going to be able to compete,” Mr. Valberg said. “Our company has a runway. Their company has an airport.”

Another roadblock: the specialized talent required. “The bar for people to cross over from other industries is much higher,” said Gregg Grossman, head of search firm Vantage Point Associates. “If you're Tumblr and you want someone who understands how to create a consumer website that scales, you want someone with similar experience. You're not going to find that on Wall Street.”

So what can a young company do? Conductor, for one, hosts events at its offices, uses contingency recruiters for some openings and is building a three-person internal recruiting team. Mr. Besmertnik also does his own sourcing, making cold calls to potential engineering hires, including one he found on LinkedIn. His pitch: The software is the product.

The pitch resonated with Chris Osborn, a software and electrical engineer who was entertaining another offer when he decided a few months ago to go with Conductor. “I would much rather be building the product than the tools nobody ever sees,” said Mr. Osborn.

Josh Levine, vice president of engineering for 3D printing company Shapeways, works the networks of his investors, keeps track of which companies have which kinds of engineers—Google, Facebook and Second Market all have Java experts—and combs through job-posting sites, even Craig's List, for senior engineers. When he comes across a top candidate, he knows what he has to do.

“You say you won't ask them to do anything they hate. They'll have awesome equipment, won't be forced to maintain code, will be able to innovate, solve problems, architect software and [do things] that are vital to the mission of the company,” advised Mr. Levine.

Others opt for far-flung expertise. Six months ago, when Mr. Valberg started Manhattan-based Invision with $1.5 million in seed money, he went after seasoned, 30-something engineers with families, offering them generous stock grants, gym memberships and free Macs along with health benefits and the opportunity to work from home. His four engineers work from Rochester, Florida, Kentucky and California.

“The young, hip dude with Warby Parker glasses who comes in on a skateboard, we're not going to get that guy,” said Mr. Valberg. “We wanted somebody whose skin in the game didn't just come from their own desires.”

Similarly, Manhattan-based Enterproid, whose technology creates a secure work environment on a personal mobile phone, has 65 employees, half of them engineers based in Hong Kong. In fact, almost all of its development staff is in Hong Kong, where many mobile manufacturers are located and where Enterproid has been able to attract top university grads. Cost wasn't a factor in the decision to go to Hong Kong, said product marketing manager Michael Kohen, but it has produced efficiencies. “For the same cost, we can have a much larger team.”

Read the full Crains article here