it skills assessment in armenia
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IT SKILLS ASSESSMENT IN ARMENIA. Prepared by EV Consulting. June , 201 4 Yerevan. Overview of the sector. Demand side analysis of skills gap. Supply side analysis of skills gap. Recommendations. Overview of IT and High technology sectors in Armenia. - PowerPoint PPT PresentationTRANSCRIPT
IT SKILLS ASSESSMENT IN ARMENIA
Prepared by EV Consulting
June, 2014
Yerevan
2
Contents
Overview of the sector
Demand side analysis of skills gap
Supply side analysis of skills gap
Recommendations
3
Overview of IT and High technology sectors in Armenia
4
2006 2008 2009 2010 2011 2012 2013 -
50,000
100,000
150,000
200,000
250,000
300,000
350,000
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
75,200
294,000
18,700
36,768
4,021
7,996
Turnover in thsd USD ProductivityNumber of technical employees
Industry turnover, labor productivity and number of employees, 2006-2013
~3% of GDPCAGR: 22%
~0.7% of total labor forceCAGR: 10%
~4x higher the average level of economy
CAGR: 9%
IT and High technology sectors are one of the fastest growing sectors in the economy of Armenia.
5
The number of companies operating in the sector has reached to about 380 in 2013 from 175 in 2008.
IT companies(87% of total number)
High-tech companies (13% of total number)
2008 2009 2010 2011 2012 2013
119 112 125174
209 22556 74 72
107
151155
175 186 197
281
360380
Local International
CAGR: 20%
CAGR: 13%
CAGR: 22%
6
The dynamic growth of the sector is marked with a number of significant developments
Trainings centers Labs and technoparks Multinationals Entrepreneurial ecosystem
• Microsoft innovation center
• Armenian-Indian ICT Excellence Center
• mLAB ECA
• Instigate Training center, etc.
• Armenian National Engineering Laboratory (ANEL)
• Gyumri Information Technology Center
• Oracle
• IBM
• Granatus Venture Fund I
7
The industry has two directions of sustaining its growth: maintaining the outsourcing capabilities and higher value added entrepreneurial model of growth.
Outsourcing capabilities Entrepreneurial/higher value added growth
Sector development
• Multinationals’ entrance
• FDI
• Venture capital
• Scale-up to international markets
Low-cost high-quality workforce Innovation management, business acumen
8
Due to growing number of IT companies in Armenia, demand in IT specialists will continue to increase.
The forecast of employee absorption potential in IT and High-tech sectors
Assumptions
• Market growth rate – 18%
• Productivity growth rate – 1%
• IT specialists absorption potential – 17%
Optimistic scenario
Pessimistic scenario
Base scenario
9
Educational sector needs to quickly adapt and reflect these challenges in order to sustain the sector
competitiveness.
10
Demand side analysis of skills gap in Armenian IT and High Technology sector
11
IT and High-technology companies view the mismatch between the supply and the demand of the skilled IT labor as a key factor that hinders the growth of the sector.
Qualitative skills gap
Quantitative skills gap
150 employees short-term (3 months)
600 employees long-term (3 years)
EMPLOYEE DEMAND
Small companies
Medium companies
Large companies
30
45
72
30
198
353
Long-term employee demand Short-term employee demand
12
The demand for new talent in surveyed High technology companies is higher compared to IT companies.
Number of demanded IT specialists categorized by IT and High-tech sectors
High-tech
IT
86
61
293
288
Short-term demand Long-term demand
IT
High-tech
Short-term demand Long-term demand
13
Other
QA engineers
Mobile developers
Web developers
Hardware and automation engineers
Software engineers
34
8
7
17
27
54
39
38
78
70
92
264
Long-term demand Short-term demand
Software development will remain the most widespread and demanded specialization in the upcoming 3 years.
Number of required IT specialists categorized by specialization Breakdown of short-term "Other" category
Breakdown of long-term "Other" category
IT security specialists
Virtualization specialists
Database developers
UI/UX designers
Control automation specialists
Technician-installers
Technical sales specialists
1
1
1
4
6
10
11
Technical writersProject managers
Technical HR managersImage processing specialists
IT security specialistsVirtualization specialists
Game developersDatabase developers
Client support specialistsHardware technicians
UI/UX designers3D modellers
1111
22
33
44
710
14
The main constraint of recruitment for companies is the lack of qualified candidates in the market.
Recruitment constraints in IT and Engineering companies
Number of respondents: 29
Lack of future business opportunities
Lack of recruitment staff
Budget limitations
High salary expectations
Lack of qualified candidates
1
2
9
12
25
15
The migration trend severely impacts the pool of available IT specialists in Armenia.
Impactful, creative and global career seekers
Higher compensation seeker with strong personal ties with
the country
IT specialists in Armenia
Leave the country
16
The local small companies with revenue limitations face intensifying competition in hiring local talent,
due to high remuneration levels.
17
The quality gap of the skills in IT and High tech is due to low quality of graduates according to the sector companies.
Soft skills
English
Theoretical knowledge
Practical knowledge
10%
3%
3%
45%
17%
17%
31%
28%
45%
41%
45%
17%
14%
28%
17%
7%
14%
10%
3%
3%
Poor Fair AverageGood Excellent Difficult to answer
Assessment of skills for graduates in IT and Engineering sectors by companies
Number of respondents: 29
• Practical capabilities are below expectation - ~73% respondents
• Theoretical knowledge level is average or below – ~80% respondents
18
Soft skills and English knowledge of the graduates are on a more acceptable level compared with theoretical and practical knowledge.
Soft skills
English
Theoretical knowledge
Practical knowledge
10%
3%
3%
45%
17%
17%
31%
28%
45%
41%
45%
17%
14%
28%
17%
7%
14%
10%
3%
3%
Poor Fair AverageGood Excellent Difficult to answer
Number of respondents: 29
Assessment of skills for graduates in IT and Engineering sectors by companies
• Soft skills are average or above - ~70% respondents
• English language skills are average or above – ~80% respondents
Practical knowledge
19
Importance of soft skills and fluency in language are crucial for the employers.
Share of English-speaking employees in surveyed IT companies
Assessment of soft skill importance of job candidates
Number of respondents: 28Number of respondents: 29
Not important
Relatively important
Very important
10%
29%
61%
Employees with knowledge of Eng-
lish; 88%
Employees without knowledge of Eng-
lish; 12%
20
Companies adjust their recruiting requirements and lower standards due to the lack of qualified candidates.
Motivation
Soft skills
Cultural fit
Technical knowledge and skills
University degree
4%
11%
4%
46%
11%
29%
21%
46%
46%
86%
61%
79%
50%
7%
Not important Relatively important Very important
Current company preference for different candidate skills and knowledge and other characteristics
Number of respondents: 28
21
The university degree is not a crucial decision factor in recruitment by companies, indicating the diminishing role and image of higher education in the sector due
to the insufficient quality of graduates.
22
Only 8% of surveyed companies considered the university degree to be of high-level importance for
the recruitment process.
23
Currently, companies consider the Master’s degrees to have a limited benefit on top of knowledge gained through undergraduate studies.
The current structure of labor force in the sector by university degrees
62%
36%
2%
Master's degree and above Bachelor's degreeTechnical (non-higher)
24
Ability to independently find relevant information, utilize it is a critical requirement and self-educate is
currently missing in the majority of graduates.
25
The companies do not differentiate among the faculties and major specializations of the higher education institutions.
Companies' preference for the major or discipline of graduates
Number of respondents: 29
Electronic engineering
Radiophysics and radiotechnology
Computer systems and informatics
Applied mathematics and informatics
No preference
2%
7%
10%
12%
69%
26
About 34% of the respondent companies expressed no preference in hiring graduates from particular university.
Training centers
AUA
RAU
YSU
SEUA
No preference
9%
5%
11%
21%
21%
34%
Company preference for recruiting from Armenian universities
Number of respondents: 28
27
Supply side analysis of skills gap in Armenian IT and High Technology sector
28
The higher education system in Armenia lacks the competitive dynamism and efficiency.
Despite the existence of 63 public and private players, the sector lacks an efficient competitive environment:
• State universities are privileged - providing substantial tuition subsidies and exemptions from army service for students.
• Armenia is not big enough to afford several universities competing in each discipline so a few have become monopoly providers of education in certain disciplines.
• Five universities dominate the sector by virtue of their scale of enrollment.
• Armenian higher educational institutions do not track their performances by international rankings, the statistics on the career development of the graduates, etc.
• The minimal connection with the global education market means the local market is a captive one.
29
The quest to join European Higher Education Area pressures Armenia to reform, but the pace is still unsatisfactory
Netherlands
Lithuania
Slove
nia
Estonia
Croatia
Ukraine
Iran
Albania
Hungary
MontenegroLa
tvia
Romania
Macedonia
MoldovaSe
rbia
Armenia
Bulgaria
Czech Republic
Kazakhsta
n
Slova
k Republic
Israel
Tajiksta
nTurke
y
Azerbaijan
GeorgiaRussi
a
Kyrgyzs
tanEgyp
t1
2
3
4
5
6
7
Netherlands
Montenegro
Estonia
Albania
Lithuania
Israel
Slove
nia
Czech Republic
Latvi
a
Armenia
Macedonia
Ukraine
RussiaTurke
y
Hungary
Bulgaria
Croatia
Kazakhsta
n
Romania Iran
GeorgiaSe
rbia
Azerbaijan
Moldova
Kyrgyzs
tan
Slova
k Republic
Egypt
1
2
3
4
5
6
7WEF ranking on the Quality of Educational System, 2013-2014, Score, out of 7
WEF ranking on the Quality of Math and Science Education, 2013-2014, Score, out of 7
30
The list of most significant higher education institutions that provide IT and Engineering specializations comprise 5 universities.
STATE ENGINEERING UNIVERSITY OF ARMENIA (SEUA)
YEREVAN STATE UNIVERSITY (YSU)
RUSSIAN-ARMENIAN (SLAVONIC) UNIVERSITY (RAU)
AMERICAN UNIVERSITY OF ARMENIA (AUA)
EUROPEAN REGIONAL ACADEMY (ERA)
31
For the last 4 years there was no shortage in number of graduates enrolled in IT-related faculties.
2009/10 2010/11 2011/12 2012/13
7,009
8,820
7,075 6,576
1,657 1,950 1,842 1,959
Students Graduates
Number of IT-related students and graduates
32
Provided the same tendency of faculty choice, the number of IT graduates will decrease starting from 2014/15 until 2022, with a slight recovery in 2016-2017.
Estimated number of graduates from IT-related faculties, 2013/14-2015/16
Assumption
95% of currently enrolled students will graduate.
2013/14 2014/15 2015/16
3,290
190 1,270
1,340 1,720
2,020 Graduates in ICT-related special-isations Number of ICT specialists required (base scenario)
Graduates in IT-related specializations
Number of IT specialists required (base scenario)
In 2018/19 and 2019/20 the number of the graduates is again expected to diminish due to the recent military reform
owing to which males are bound to have a 2-year military service deferring their higher education.
34
Currently, there is a shortage of graduates in quantitative terms “produced” by the local higher education system, particularly, for the sector of IT and Engineering.
YSU SEUA AUA RAU ERA
IT STUDENTS 670 1,650 100 200 90
ENGINEERING STUDENTS 1,390 1,730 50 100 40
TOTAL STUDENTS 2,060 3,380 150 300 130
IT GRADUATES 190 460 25 40 30
ENGINEERING GRADUATES 480 640 25 20 10
TOTAL GRADUATES 670 1,100 50 60 40
Number of IT and Engineering students and graduates in the universities, 2013/2014
35
There is no quantity shortage of teaching staff in IT-related faculties in Armenian universities.
ERA
AUA
RAU
YSU
SEUA
18
20
46
120
177
12
15
43
96
211
30
35
89
216388
IT High-tech
Number of teaching staff in universities by IT and Engineering specializations, 2013/2014
36
The average student-teacher ratios in Armenian universities are quite low compared to international standards, but teaching stuff is gradually aging.
Student-to-faculty ratio in local and Western Universities, 2014
YSU SEUA AUA RAU ERAAVERAGE
AGE 50 56 45 ~45 ~40
Average age of the university lecturers, 2014
There is no set process between universities and companies in terms of organizing internship
projects for students, yet there are discussions to make the internships of students an efficient link
between the platforms.
Career centers can also serve as a link between universities and the private sector. However,
these currently do not operate efficiently and are in their infancy stage.
39
IT training center services have significant demand from both the students and junior level working professionals.
MICROSOFT INNOVATION CENTER
ARMENIAN-INDIAN IT EXCELLENCE CENTER MLAB ECA
TECHNICAL COURSES Available Available Available
NON-TECHNICAL DEVELOPMENT COURSES Available Available Available
PREREQUISITES Basic knowledge and algorithmic thinking
No requirements for beginners, minimum test
score/ knowledge for advanced stages
Basic programming knowledge required for transferring to
mobile programming platforms
ANNUAL NUMBER OF GRADUATES ~1,000 ~500 ~300
NUMBER OF INSTRUCTORS 9 10 ~50
AVERAGE AGE OF INSTRUCTORS ~27 ~40 ~33-35
INTERNSHIP Available Not available Not available
EMPLOYABILITY RATE 80%-90% N/A 90%
Characteristics and indicators training centers in Armenia
40
Engineering educational centers prepare specialists that meet international quality standards and are almost 100% employed.
INSTIGATE TRAINING CENTER SYNOPSYS ARMENIA EDUCATIONAL DEPARTMENT
TECHNICAL COURSES Available Available
NON-TECHNICAL DEVELOPMENT COURSES Not available Available
PREREQUISITES Capacity to solve technical problems, basic mathematical knowledge
Strong technical knowledge and algorithmic thinking. Strong knowledge of
all technical fundamentals
ANNUAL NUMBER OF GRADUATES ~50 ~80
NUMBER OF INSTRUCTORS ~30 67
AVERAGE AGE OF INSTRUCTORS ~30 ~30-35
INTERNSHIP Involvement in company projects Involvement in company projects
EMPLOYABILITY RATE 100% 100%
There is total absence of professional off-job training program for senior developers on the market, so the
companies have no alternative but to provide on-the-job training.
42
SUMMARY AND HIGH LEVEL RECOMMENDATIONS
43
Only 45% of the graduates consider employment in the sector, thus, creating a quantitative imbalance of workforce.
~450 graduates ~2,000 new specialists demanded
IT and High technology sector
Whereas, the number of graduates with IT specializations annually about coincides with the annual new demand in the overall market
44
Due to the fast growing industry dynamics there is also a qualitative skills gap
Teaching programs are not fit for the private sector standards
No effective links between university and private sector
Professional standards in teaching staff is low and there is no motivation to requalify
Teaching staff is aging
The university programs do not accentuate self-development
The university degree program is too long in comparison with the industry dynamics
Not sufficient number of high-level training programs for base and senior level specialists to requalify
45
High-level SHORT-TERM recommendations and key points for policy makers
1. A new university curriculum should be developed together with the private sector
2. The quota of government funded students should be increased for IT
specializations
3. The link between the universities and private sector should be strengthened
through transforming the role of mandatory internship/apprenticeship programs.
4. More young professionals should be encouraged to teach to inject the practical
skills.
46
High-level SHORT-TERM recommendations and key points for policy makers
5. The need in base and senior level specialists can be satisfied via creation of
special training programs.
6. Co-financing schemes for workforce development by means of training centers
creation can help smaller companies to close the skill gap.
7. Widespread and targeted communication campaigns shall be organized to
highlight the prospects and strong market demand for the engineering profession.
47
High-level LONG-TERM recommendations and key points for policy makers
1. The fundamental reshape of the IT education is recommended to start with the
intervention at schools.
2. Simultaneously, the university funding needs considerable increase as well as
diversification through research grants and endowment foundations.
3. The number of university-based laboratories, which are established with the
help of multinationals, should be scaled up.
4. Creating an alternative program to prepare software programmers in less than 4
years will help increase the supply of labor in the medium term.
48
High-level LONG-TERM recommendations and key points for policy makers
5. The universities should transform their career centers into modern support
mechanism for their graduates.
6. If Armenia aspires to transition from outsourcing, development center
destination to one of innovation centers functioning under entrepreneurship
model, it has to integrate fundamental, hard-core research into its university
system.
7. High tech accelerators can become the new type of schools for entrepreneurs.