When a company promises to ship an engineer's wine cellar across the country just to recruit him you know there's a skills' shortage.

This is indeed what happened to an engineer at a major semiconductor company here when he was needed at the company's Albuquerque, New Mexico plant. It's an extreme example of the lengths companies go to in an extremely tight labour market in Silicon Valley. Microsoft, with its headquarters in Washington State, has had considerable difficulty enticing people from the balmy Bay Area to rainy Seattle, and it has had to set up a Bay Area office which has quietly recruited 800 engineers who want to work for the company but not badly enough to leave this area.

Microsoft probably got tired of offering extravagant inducements to get engineers to Seattle, such as the very expensive house it bought for one engineer, promising to forgive the loan if the engineer remained at the company for five years.

Companies at all levels here complain about the effort they need to recruit. The consulting company IDC, in its 1997 report on worldwide training trends, noted that "never before has it been so apparent that there is a lack of skilled staff to design, develop, install, manage or use hardware, software, systems or networks".

The numbers are staggering. According to the Information Technology Association, 190,000 tech jobs stand open in the US alone. The demand grows exponentially, while supply is growing slowly.

This forces companies to adopt all sorts of strategies for filling their engineering ranks. Common actions include buying companies purely for their engineering talent (Microsoft bought around 20 companies in 1996 alone). They scour trade exhibitions for restless talent and give bonuses of up to $5,000 (£3,290) to employees when they snag a new colleague.

Mr Mark Hornung, managing director of JWT Specialised Communications in San Francisco, which handles recruiting for companies such as Cisco and Microsoft, says employee referrals are ideal for several reasons.

"Candidates are more likely to accept an offer," he notes, "they tend to stay longer because they have an instant network to fall back on, and they are generally of a higher quality because employees want to show they have a good grasp of what the company is looking for. The downside is a lack of diversity - people tend to refer people like themselves. So I always recommend a diversity program alongside a referral programme."

Cash, surprisingly, is not a major factor in recruiting engineers. Stock options, of course, are central to most packages, and many companies have profit-sharing plans. Human resource staffs have to be much more creative than that to get the best talent. Orem, Utah-based PowerQuest, which is doubling the size of its development staff in the next six months, promises to take the whole company to Hawaii if targets are met.

Mentor Graphics in San Jose announced just this week that it is forming a partnership with a local school district to subsidise a year-round "early learning centre" for babies aged six weeks old up to preschool-age children.

Most corporations now spend considerable sums on training and continuing education for employees themselves, to keep them up to date in technology skills.

The Web has become the ultimate recruitment tool. Companies of all sizes treat it as the point of entry for investors, customers, vendors and future employees. Irish company Euristix, which has openings for 30 engineers in its San Jose facility, tracks potential candidates' interest closely on its Web site and spends considerable time ensuring that its careers section is up to date and properly presented.

Ms Irene McGoey, international marketing manager with Euristix, says that while word-of-mouth and employee referrals are key recruiting tools, the Web allows the company to prequalify and screen candidates that they would not come across any other way.

At the other end of the scale is Cisco Systems, which has to hire 4,000 people this year. Their Profiler Web site draws 500,000 job searches monthly. Applicants can translate an initial questionnaire into Russian, Cantonese or Mandarin with the push of a button.

Employees are encouraged to call the candidates and invite them to visit Cisco informally to get the sense of the environment and meet their potential peers.

The intense competition for talent has forced companies outside their Silicon Valley base just to get the right skill set.

Seagate, for example, expects to hire more than 1,200 new skilled workers in the next 12 months for its two factories in Northern Ireland. While the lure of highly-educated, skilled labour and tempting tax incentives attracts Seagate to Ireland, others are looking further afield to India, where local hero, Oracle Corporation, has developed most of the software for its Network Computer effort.

How will this shortage be alleviated? The short answer is - when companies stop growing. Until that happens, Silicon Valley companies will continue to use ever more creative ways to snag employees in the Bay Area and around the globe.