Inability to find adequate and appropriate IT talent in their own country is causing many North American CEOs to turn their gaze to distant shores, according to a recent survey.
Nearly two-thirds (64 per cent) of top-tier executives polled by consulting firm Deloitte and Touche LLP “felt it was important to look overseas” for high-calibre technology professionals.
This, it appears, is not because they are unhappy with the quality of tech educational programs here.
In fact, 67 per cent of the CEOs polled believe the North American education system is “successful in producing qualified talent.”
The survey indicates that it’s a “skills shortage” – or at least a perception of one – that’s leading companies to scout for overseas talent.
“The quality of training and professionalism of Canadian and American graduates are appreciated by companies, but the schools are not producing enough [graduates] to meet the demand,” said John Ruffolo, national leader, technology, media, and telecommunications group, Deloitte Canada.
Deloitte surveyed a group of 125 CEOs from U.S. and Canadian technology firms in March this year. A majority of the executives said they were encountering hardships in locating ideal IT professionals, said Ruffolo.
Almost half (48 per cent) the executives polled say attracting and retaining qualified employees are their biggest operational challenges.
To fill vacancies, Ruffolo said, companies have resorted to courting foreigners enrolled in engineering and IT courses in the U.S. and Canada.
Deloitte, for instance, has approached foreign students at Stanford University and offered them positions in the company, said Ruffolo. “We have no choice but to do this if we want to maintain growth.”
Government restrictions on foreign workers are also compounding the problem produced by a tight labour maket, said Ruffolo. He said most CEOs polled “are concerned that government restrictions on employment visas will prevent them from obtaining the overseas talent they need.”
For instance, he said, despite an IT labour shortage in Canada, the immigration department continues to make it difficult for foreign trained professionals work obtain working or immigration visas.
Since immigration rules make it hard to actively recruit foreign-trained professionals from overseas, companies resort to establishing offshore branch offices or “centres of excellence” in foreign lands, Ruffolo said.
While, currently, less than half of the companies offshore some operations, 55 per cent of the CEOs plan to offshore in the next five years to achieve growth.
Cheaper labour and material cost in countries such as India make it easier to build remote offices there. The offshore locations are staffed by local IT professionals who are paid at a lower rate than their North American counterparts.
Another trend recently catching on is the use of foreign contract workers, said Ruffolo. “This has been building up in the U.S. for the past five years and has caught on in Canada about 12 months ago.”
Using this method, corporations hire an overseas staffing firm, such as Tata Consultancy Services of Mumbai, India, to provide them with foreign IT personnel. The workers are given a foreign contract worker visa and are allowed to stay in North America for the duration of their contract.
“The worker gets paid higher that he or she would back home, the staffing firm gets a cut, the company pays wages lower that it would for local talent and does not need to bother about immigration hassles. Everyone is happy,” said Ruffolo.
North American schools are failing to churn out the required number of IT graduates to meet the ever increasing demand, according to Adam Cole, national director for the Canadian Information Processing Society (CIPS).
“According to one study, U.S. schools produce 30,000 engineers a year, while China turns out 700,000 engineers yearly. How can we keep our edge with such an enormous disparity?” Cole asks.
He said students have shied away from IT-related courses because of the dot-com bust in the 1990s but it is now time to re-grow the local talent pool.
The Canadian IT industry as a whole needs an image makeover to encourage more students to go into computer science courses, according to Cole.
Cole fears if the shoring trend continues, the local economy will suffer. “If corporations keep on establishing the centres of excellence somewhere else, it will eventually hurt our economy.”
Another Canadian analyst agrees that enrolment in computer courses are down, but pointed out that any shortage is limited to specific regions or skills set.
“Some studies suggest that Canadian enrolment in IT subjects will go down by as much as 20 per cent between 2002 and 2007. However, this does not mean that we will have a widespread general IT skills shortage,” said Andy Woyzbun, lead analyst, Info-Tech Research Group Inc.
While some organizations do resort to off shoring, Woyzbun said, there is little evidence that the practice is negatively affecting the local workforce. “Various studies indicate that companies continue to off shore. However, the local hiring rates remain stable.”