Should companies in the innovation economy do more in terms of training?

It seems to be the same everywhere. Hiring tech talent is far from easy, according to a study released last week by software development company STX Next. Based on responses from 500 CTOs around the world, the report found that 41% struggled to hire the right people.

It’s a snapshot of the overall picture. Here in the UK – where I am based – there are particular issues. In the economy as a whole, there are more than a million vacancies. In one respect, it is a sign of dynamism. Likewise, however, with very low unemployment, it is an indicator that there are not enough people with the right skills to fill the jobs.

And the UK innovation economy faces particular challenges. According to Tech Nation’s latest jobs and skills report, demand for tech talent grew 42% in 2021 compared to 2019. Again, this is a sign of strength and the report rightly cites the sector as a major contributor to job creation.

But that’s only a strength if you can find the people. Last year, recruiter Harvey Nash found that 43% of UK businesses struggled to hire tech talent. Companies large and small are recruiting from a limited pool of domestic workers and it is no longer easy or direct to attract people from the European Union. Brexit has ended freedom of movement in Britain and qualified people wishing to come here have to go through the fees and bureaucracy of applying for visas. Why do that when you can go to Paris, Berlin or Barcelona instead?

Small companies in fields such as data science, AI and blockchain are likely well positioned to attract graduates keen to make their mark working on cutting-edge projects, but at the same time they are in competition with much larger companies with the resources to offer generous salaries and benefit packages.

There is an economic cost to all of this. According to a report by lobby group TechUK, the UK economy could be $6 billion lower in GDP terms due to skills shortages faced by SMEs.

So what can tech and fast-growing companies do to address skills shortages? Well, maybe one way forward is to do something that UK businesses have seemed increasingly reluctant to do in recent years – namely to train staff rather than just compete for the best IT graduates or coders with previous experience.

That’s the approach taken by Sidetrade, a company that offers an AI-powered cloud solution to help corporate clients manage their customers’ payments. Simply put, the software predicts when customers will pay for goods or services, allowing businesses to optimize their invoice tracking. Predictive analytics is key and finding the right talent is key.

“The first pillar of our strategy is innovation and to achieve this, hiring the best people available is key,” says CTO Mark Sheldon.

An open program

Sheldon joined Sidetrade when it acquired the company he founded, BrightTarget. As he explains, in addition to recruiting in the usual way, Sidetrade’s operation in Birmingham, England, runs a Coding Academy, which welcomes students from a variety of backgrounds and educational backgrounds. “The program is open to everyone,” says Sheldon. “It is not necessary to have experience or a particular type of education.

There is – inevitably – an assessment process designed to judge suitability and willingness to learn new skills, but Sheldon says the academy has attracted students ranging from school leavers to PhDs.

A real contribution

But is it just a good deed in a mean world, or is it a real contribution to Sidetrade’s demands? Or, to put it another way, is it helping to address skills shortages?

Sheldon says the classes are structured around each participant completing a project, an approach that helps foster real-world skills. “So far, 52 people have gone through the program,” he says. “We offered 12 jobs and 80% are still with us today.”

At first glance, this may not seem like a high percentage, but those who are offered work are considered capable of joining existing development teams and making a real contribution from the start.

A larger swimming pool

At a time of skills shortages, Sheldon says many companies are missing out. “They rely on graduates or people with previous experience, but there’s a broader talent pool out there,” he says. Also, bringing in people from diverse backgrounds is a benefit in itself. “Everything we do around innovation is supported by diverse backgrounds.”

But here’s the thing. Sidetrade sits at the very top of the companies I cover in this column. Although an integral part of the fintech/innovation economy, the company has been growing steadily for two decades and in recent years has acquired startups such as Amalto and BrightTarget to bolster its technology and teams.

So is this a path that companies early in the growth curve can emulate? Sheldon thinks any company can train. That said, the structure of the training may be different. For SMEs, the key could be partnerships with colleges, universities and bootcamps. It’s something that was highlighted by Tech Nation – the agency responsible for helping UK tech companies grow – in a recent report.

The general principle here is that poaching workers from other companies is ultimately counterproductive in that it leads to an upward spiral in wages and benefits. Better, perhaps to fill at least part of the skills gap by finding ways to train the local talent pool.

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