Skills shortage challenge: More than pay bumps needed to address tech talent gaps, say experts

Industry getting creative with office locations, wants government to revamp education

BC Tech Association CEO Jill Tipping says rapid pay hikes for the tech industry in an effort to recruit more workers would likely be met by rising housing costs for the region | Submitted

“Our talent competes with the best,” reads a bid document produced by the Vancouver Economic Commission in 2017, “yet we have the lowest wages of all North American tech hubs.”

The statement was meant to be an enticement for Inc. (Nasdaq:AMZN) to build its second headquarters just a few hours north of its home base in Seattle.

But the bid document, which also acknowledged the city’s high cost of living, exposed the reality of attracting much-needed tech talent to Vancouver: the pay is relatively low and it’s expensive to live here.

“It’s an issue for every company in the tech sector whether they’re a startup or a scale-up or a large company,” said Jill Tipping, CEO of the BC Tech Association.

She said recruitment challenges still remain as one of two major factors limiting growth in the province’s technology ecosystem (the other factor being a business environment that doesn’t always lend itself to growing startups into large firms).

The average annual wage for a technology worker in Vancouver in 2016 was $79,607, according to commercial real estate services firm CBRE Group Inc.’s Scoring Tech Talent in North America 2017 report.

In Seattle, which is also home to industry giants like Boeing Co. (NYSE:BA) and Microsoft Corp. (Nasdaq:MSFT), the average annual wage for tech workers in 2016 was, at $150,843, nearly double Vancouver’s.

So if Vancouver companies were to boost wages, would that solve at least one part of the recruitment puzzle?

“The people who seem to do the very best at extracting value out of this economy are the people who are selling houses and renting houses. So what I would worry is that if we paid people more, then rents would just go up even more,” said Tipping.

The CBRE report appears to give grounds for that worry.

Vancouver’s annualized apartment rental costs were $15,796 in 2017 compared with $26,916 for the higher-paying Seattle.

But the B.C. tech sector is making progress in terms of wage growth.

The BC Tech Association’s 2018 BC Technology Report Card concluded that average weekly earnings for tech workers in the province have climbed at a 10-year compound annual growth rate of 3.8% to land at $1,690.

Over the course of 52 weeks, that would add up to an average annual wage of $87,880 – notably different from CBRE’s 2016 numbers for Vancouver, but still far below Seattle’s.

Meanwhile, the report estimated wages in the province’s tech sector have grown at more than twice the pace of the Canadian average over the past three years.

And while Tipping said it would be naive to think that the cost of living doesn’t have an effect on recruitment, it’s an issue that can sometimes be overblown.

“Every major thriving tech city in the world has a high cost of living,” she said. “If we’re going to have that problem, we can’t have other problems as well.”

Tipping said she’d like the provincial government to go beyond its January 2018 pledge to create 2,900 tech-related spaces at post-secondary institutions – a measure expected to translate into 1,000 additional grads by 2023.

She’s also pushing for a campaign or mechanism to entice Canadian expatriates to return to B.C.

Meanwhile, tech companies are trying different approaches to fill in some of the talent gaps.

Traction on Demand has about 250 workers in Metro Vancouver, where the software firm helps companies implement marketing strategies using the Inc. customer relationship management service.

It’s opening a satellite office this spring in Nelson, B.C., in a bid to retain workers looking for a change of scenery.

Half the workers in the initial 10-person office, which CEO Greg Malpass said could expand to 25 employees, are expected to be hired locally.

Meanwhile, mobile gaming studio Kabam Inc. is doubling down on the city and leasing seven storeys at the under--construction Vancouver Centre 2 tower on Seymour Street.

Kabam CEO Tim Fields told Business in Vancouver last month he hopes to double its 200-person workforce in the city in the coming years.

“I spend a lot of time thinking about this one,” he said about efforts to recruit within Vancouver.

Part of the reason for the new premises is to amalgamate Kabam’s smaller offices and ensure close access to rapid transit, as many workers have moved farther from the city’s core to find cheaper housing.

“There are places busy attempting to make it more attractive to staff up in significant ways,” Fields said. “Sometimes it’s a little bit harder to convince [workers] that they want to come here. That forces me to pay higher wages. Higher wages suggest that there are things the provincial government can do with regards to tax incentives to make that more palatable.”

Jeremy Shaki, CEO of the Vancouver-based coding boot camp Lighthouse Labs, said the province must also revamp the K-12 curriculum.

“It’s not even about teaching them technology,” Shaki said. “It’s really about giving them a sense about how to adapt to change and evolve with change.”

Shaki said the coding boot camp’s “sweet spot” is clients who are 25 to 32 years old – those with a few years of job experience who are willing to take a risk by changing careers.

Lighthouse Labs released a report in December 2018 outlining career trajectories of clients since the organization’s founding five years ago.

The report found demand for talent high enough that 93% of job-seeking grads secured jobs within 120 days of completing the boot camp.

Five years after clients graduated, average salaries grew to $114,000 a year.

“With the amount of tech talent that’s needed, what you do see in a report like this is that once people have [workers] they’re happy with, they don’t want to let them go,” Shaki said. “And if they are willing to let them go, those people will find jobs relatively quickly.”