The IT skills gap: are companies missing the boat?

Are we taking the necessary steps to balance the supply and demand of tech workers? The answer to outsourcing could be starting with our students.

Businesses have a big problem, and it’s not a new one: to stay competitive, every business is expected to digitally interact with customers elegantly, swiftly, and uniquely. Technology drives the world, and businesses know it.  They’re building and deploying software faster than ever before. Amazon handles a new software deployment every second! U.S. companies are innovating, accelerating, and delivering.  And they’re planning to hire a lot more technology workers to continue delivering software that their customers love, and software that keeps their businesses running.  According to www.code.org, there are 500,000 current openings for computing jobs – the #1 source of new wages in the United States. 

Sounds like things in tech job land are humming along, right? Well, not exactly. In fact, there’s more than a slight problem. In 2016 only about 65,000 students graduated from U.S. institutions with bachelor’s degrees in computer and information services, to help fill the more than 500,000 openings. This imbalance between supply and demand is borne out in hiring. A recent CIO.com article, "Class of 2017 may be in for a rude awakening," warned 2017 graduates that 61 percent of recruiters seek candidates with STEM degrees. However, according to the research, only 23 percent of college seniors will graduate with such a degree. So the supply is not nearly enough to meet demand, even if we could fill every job opening with a STEM graduate.

Unfortunately, the problem is even worse than these statistics would lead you to believe. Many of these 65,000 computer science graduates aren’t getting hired right away, at least not in tech jobs. How is this possible? Because the majority of the half-million computing jobs require work experience. That’s right: the few college graduates who do have necessary computer skills don’t possess the one thing they’re trying to obtain! Additionally, 76 percent of recruiters for IT jobs say past work or internship experience is the most important factor for entry-level candidates, according to a study from ICIMS. This explains why USA Today reports the rate of employment of computer science graduates places 11th out of 16 college majors, below education, history, and philosophy. To build the software the world needs, employers are demanding experienced hires, not entry-level graduates with no experience.  

In fact, this demand for experienced software developers is so great that it explains why businesses desperately grasp for an easy fix, which most often results in outsourcing. Offshore resources offer the promise of cost-effective, proficient tech talent. Take IBM for example, once known as the paragon of American technology. Where is the highest concentration of IBM jobs? According to The New York Times it’s India, where 130,000 IBM employees (about 1/3 of its total worldwide workforce) is located.

The massive demand for new lines of code and the alluring promise of overseas efficiency has driven businesses to find ways to overcome significant obstacles, such as time zone issues, language barriers, and international trade laws, to name a few. There are even different flavors of outsourcing now, as employers set up “nearshoring” operations—or outsourcing functions to a nearby or bordering country—based on the more well-known offshoring model. Whether you call it outsourcing, offshoring, or nearshoring, technology jobs are being outsourced at the highest rate in a decade. And application development (building software itself) is the most frequently outsourced function within the larger technology sector, according to the Data Center Journal’s report on IT Outsourcing Statistics 2017/2018.

But in their haste to link up with cheap, proficient technology overseas talent, did these leading technology employers miss something that was right under their noses? College students are eager to gain real work experience, and are willing to work for pennies on the dollar. Beyond that, this investment has some real perks like a local time zone, no customs barriers, easy transition to the domestic workforce upon graduation, and a company culture they have already participated and been immersed in.

Paid technology internships offer a much more compelling value proposition than offshoring. Moreover, universities love it, since experiential learning is the best way to bridge the skills gap and make their graduates more marketable to hiring talent. Corporate research centers on or near college campuses are ready-made invitations to businesses to set up shop so they can supplement top-notch classroom learning with real-world skills acquisition. To solve for this, my company created an Extension Center at Virginia Tech’s Corporate Research Center in Blacksburg, Virginia. There, STEM students incubate budding tech careers under the mentorship of full-time team leaders building production-bound software for Excella’s clients. 

Setting up a world-class internship environment that breeds a long-term tech workforce isn’t easy. It takes a staff that understands how to balance the need to deliver with the imperative to educate. It also takes a corporate culture that values and embraces learning, and a partnership with a university that sees business as a partner, not an adversary or just a logo. Here’s a challenge: if American businesses can overcome the immense obstacles in making offshoring operations work, shouldn’t they give internships the old ‘college’ try?

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