89814 IT SKILLS ASSESSMENT IN ARMENIA The Global Information and Communications Technologies (ICT) Unit The World Bank June 2014 Contents Abbreviations ....................................................................................................................................2 Tables ................................................................................................................................................2 Figures...............................................................................................................................................2 Acknowledgement .............................................................................................................................4 Executive Summary............................................................................................................................5 OBJECTIVE OF THE STUDY...................................................................................................................9 SCOPE OF THE STUDY................................................................................................................................ 9 METHODOLOGY ...................................................................................................................................... 10 1. OVERVIEW OF THE IT AND HIGH-TECHNOLOGY SECTOR IN ARMENIA ......................................... 12 1.1. INTERNATIONAL CONTEXT .......................................................................................................... 12 1.2. HISTORICAL DYNAMICS OF THE SECTOR.......................................................................................... 13 1.2. TRENDS AND DEVELOPMENTS ......................................................................................................... 15 1.4. GROWTH POTENTIAL OF THE SECTOR ............................................................................................. 16 2. DEMAND SIDE ANALYSIS OF SKILLS GAP IN ARMENIAN IT AND HIGH TECHNOLOGY INDUSTRY ... 18 2.1. QUANTITATIVE DEMAND ANALYSIS OF SECTOR COMPANIES ......................................................... 18 2.2. QUALITATIVE ANALYSIS OF DEMAND BY SECTOR COMPANIES ....................................................... 22 2.3. RECRUITMENT AND HR PRACTICES IN IT AND HIGH TECHNOLOGY COMPANIES ........................... 28 3. SUPPLY SIDE ANALYSIS OF SKILLS GAP IN IT AND HIGH TECHNOLOGY INDUSTIRES...................... 31 3.1. EDUCATION SYSTEM OVERVIEW IN ARMENIA ................................................................................ 31 3.2. IT AND ENGINEERING EDUCATION SYSTEM IN ARMENIA ............................................................... 33 3.3. CASE OF SUCCESSFUL UNIVERSITY-PRIVATE SECTOR COLLABORATION: ........................................ 42 3.4. VOCATIONAL EDUCATION IN IT AND ENGINEERING SECTORS ........................................................ 44 4. SUMMARY AND HIGH LEVEL RECOMMENDATIONS ....................................................................... 47 4.1. HIGH-LEVEL SHORT-TERM RECOMMENDATIONS AND KEY POINTS FOR POLICYMAKERS .............. 48 4.2. HIGH-LEVEL LONG-TERM RECOMMENDATIONS AND KEY POINTS FOR POLICYMAKERS ................ 50 5. APPENDIX .................................................................................................................................... 53 5.1 COMPANIES SURVEY ......................................................................................................................... 53 5.2. UNIVERSITY SURVEY......................................................................................................................... 59 5.3. TRAINING CENTER SURVEY .............................................................................................................. 64 5.4. LIST OF THE SURVEYED PARTIES ...................................................................................................... 69 1 Abbreviations ANEL: Armenian National Engineering Laboratory AUA: American University of Armenia CAGR: Compound Annual Growth Rate ERA: European Regional Educational Academy FDI: Foreign Direct Investment GDP: Gross Domestic Product IT: Information Technology NSS RA: National Statistical Service of the Republic of Armenia RAU: Russian-Armenian (Slavonic) University SEUA: State Engineering University of Armenia UITE: Union of Information Technology Enterprises WEF: Women’s Economic Forum YSU: Yerevan State University Tables Table 1: Number of IT and Engineering students and graduates in the universities, 2013/2014 Table 2: Student-to-faculty ratio in Armenian universities Table 3: Average age of the university lecturers, 2014 Table 4: Characteristics and indicators training centers in Armenia Table 5: Characteristics and KPIs of educational systems initiated by private companies Figures Figure 1: Number of companies participated in the survey categorized by type and origin Figure 2: Number of surveyed companies categorized by size Figure 3: The number of respondent companies and their total employees categorized by company type Figure 4: Number of survey participants representing IT education sector Figure 5: Percentage of population using Internet, 2011 Figure 6: Computer and information services as % of all commercial services exports, 2012 Figure 7: Armenia computer & information services exports Figure 8: IT industry turnover, labor productivity and number of employees, 2006-2013 Figure 9: the dynamics of the company distribution in IT sector of Armenia Figure 10: The forecasts of employee absorption potential in IT and Engineering sectors 2 Figure 11: Total number of demanded IT specialists in surveyed companies categorized by company size Figure 12: Forecasted % growth of employee number in small, medium and large companies in short- term and long-term Figure 13: Number of demanded IT specialists categorized by IT and High-tech sectors Figure 14: Number of required IT specialists categorized by specialization Figure 15: Breakdown of short-term "Other" category Figure 16: Breakdown of long-term "Other" category Figure 17: Recruitment constraints in IT and Engineering companies Figure 18: Assessment of skills for graduates in IT and Engineering sectors by companies Figure 19: Assessment of soft skill importance of job candidates Figure 20: Share of English-speaking employees in surveyed IT companies Figure 21: Company preference for different candidate skills and knowledge and other characteristics Figure 22: The current structure of labor force in the sector by university degrees (survey results versus Enterprise Incubator Foundation) Figure 23: Companies' preference for the major or discipline of graduates Figure 24: Company preference for recruiting from Armenian universities Figure 25: Recruitment channels in IT and High technology sectors Figure 26: WEF ranking on the Quality of Educational System, 2013-2014, Score, out of 7 Figure 27: WEF ranking on the Quality of Math and Science Education, 2013-2014, Score, out of 7 Figure 28: Number of IT-related students and graduates Figure 29: Estimated number of graduates from IT-related faculties, 2013/14-2015/16 Figure 30: Public expenditure on tertiary education as % of GDP, 2011 Figure 31: Number of teaching staff in universities by IT and Engineering specializations, 2013/2014 Figure 32: Student-to-faculty ratio in local and Western Universities, 2014 Figure 33: Main methods of job search by the students (on the left) and their effectiveness (on the right, measured by receiving a job offer) 3 Acknowledgement This report was prepared by Sandra Sargent (Senior Operations Officer) and Saori Imaizumi (ICT Innovation & Education Consultant) at the Global Information Communication Technologies (ICT) Unit of the World Bank with EV Consulting based in Yerevan, Armenia. The team would like to thank Bagrat Yengibaryan (Director, Enterprise Incubator Foundation) and the peer reviewers, including Ulrich Bartsch (Senior Economist), Feyi Boroffice (Finance and Private Sector Development Specialist), Siddhartha Raja (ICT Policy Specialist), and Vigen Sargsyan (EXT, Yerevan Office) for guidance and support provided in the preparation of this report. 4 Executive Summary The IT and high-technology sector is one of the fastest growing sectors in the Armenian economy. Since 2006, the sector, excluding Internet service providers, has grown with a CAGR of 22% reaching a total output of US$294 million in 2013. The number of companies operating in the sector is ~380, the number of employees ~8,000. About 13% of the companies operate in the high-technology domain, while the rest are IT companies. One of the driving factors of sector growth was its attractiveness for foreign companies to establish branches in Armenia. The prime competitiveness factor was the availability of relatively cheap and competitive human resources in Armenia. Currently, Armenia seems to be on the verge of losing this competitive advantage. Due to the growing number of IT companies in Armenia, demand for IT specialists will continue to increase. According to conservative estimates, if the market and productivity continue to grow with an average rate of 18% and 1% respectively, the absorption potential of additional IT specialists will grow at a rate of 17% annually and reach ~15,000 by 2017. The sector is currently undergoing a major transformation: there is an increasing shift from the outsourcing model to the model of own product development and entrepreneurship in the sector. This model of growth requires a higher level of knowledge, new skills (such as sales and entrepreneurship skills), and entrepreneurial knowledge. The outsourcing model mostly fostered the growth of the sector as well as attracting international companies and FDI. The model is based on outsourcing activities, which can be sustained because of a low-cost and high-quality workforce in the global market, which is beneficial to foreign companies. Thus, the model is built on the basis of cost-competitiveness. Current sector trends are moving toward a higher value-added entrepreneurship model. The presence of international companies, which bring sector-specific culture into the country, and the international startup boom are driving the development of the model among IT and high-tech specialists. These factors are expected to advance the market toward more value-added activities and overall sector growth. Therefore, the education sector also needs to adapt quickly and reflect these challenges in order to sustain IT/high-tech sector competitiveness. In order to sustain this growth from its traditionally high quality labor force, the country currently faces the issue of providing a sufficient supply of IT skills. The increasing demand for IT skills is a global trend, but in Armenia it is more constraining due to the small size of the labor force in the country and an increase in competition between the local industry and multinationals. At the current point of sector development this is a complex issue, as the skills gap increases with the positive dynamics and development of the IT industry. This implies that the skills shortage is increasing in parallel with the sophistication of the industry. IT and high-technology companies view the mismatch between the supply of and the demand for a skilled IT workforce as a key factor that hinders sector growth. 5 Currently, private sector does not place high value on university degree in their recruitment practices, indicating the diminishing role and image of higher education in the sector. This particularly applies to the master’s level degree programs. There can be two plausible explanations why this may be the case: (i) educational institutions are not producing skills required on the market, (ii) limited sophistication of the IT market that does not yet require high-end skills obtained from a master’s degree. Overall, the higher education system in Armenia lacks competitive dynamism and efficiency when it comes to IT skills. The quest to join the European Higher Education Area compels Armenia to reform. Armenia is undertaking reforms through the Bologna process in order to join the European Higher Education Area. Currently, the number of graduates with IT specializations annually closely coincides with the annual demand in the overall market, but only 45% of the graduates consider or qualify to be employed in the sector, thus creating a quantitative workforce imbalance. ~450 graduates ~2,000 new specialists demanded IT and high-technology sector The number of specialists demonstrates the demand only in the IT and high-technology sector and does not include non-IT and non-high technology companies, which are also in need of IT specialists. Thus, the actual demand in the market might be much higher than 2,000 new specialists per year. In addition, due to the positive and rapid industry dynamics, there is also a qualitative skills gap conditioned by the following factors:  Teaching programs are not always meeting private sector needs: the private sector assessment for practical and theoretical knowledge of graduates is below average.  More effective links needed between university and private sector in regard to internships and recruitment procedures.  More professional development opportunities are needed to maintain teaching staff qualifications.  The teaching staff cadre is aging, while the younger generation with hands-on experience has little interest in an academic career.  University programs do not fully emphasize the self-development and self-educational capabilities of graduates, essential for the dynamically developing industry.  There are limited alternatives such as certification programs to formal university degree programs. 6  There are limited postgraduate requalification training programs for base- and senior-level specialists. To address these sector issues, short- and long-term recommendations are suggested. Short-term recommendations:  A new university curriculum would benefit from the inputs of the private sector to align it with the industry needs. For this purpose, it is recommended that special curriculum development boards be established and board members be elected from industry specialists and executives.  It is recommended that policymakers explore the possibility of increasing the quota of students in IT-related faculties whose tuition is funded by the Government. Provided there is additional budget, a higher free student quota, which is allocated to students based on their entrance exam results, will attract more qualified candidates.  The link between universities and the private sector should be strengthened through reinvigorating the role of mandatory internship/apprenticeship programs. The dialogue between the parties can be strengthened through creation of a new standard of internship programs - apprenticeship, mandatory for students to receive the degree.  More young professionals from sector should be encouraged to teach in universities through a guest lecturer programs.  The urgent need for entry level and senior level specialists can be satisfied via creation of special certification training programs, currently limited in the market.  Cofinancing schemes for workforce development through creation of training centers can help smaller companies to close the skills gap.  Special cofinancing matching schemes can be developed with the support of the Government to promote establishment of special training centers co-shared by the companies.  Widespread and targeted communication campaigns can be organized to highlight the prospects and strong market demand for the engineering profession.  The quantity of applicants in technical faculties can be stimulated by information campaigns on the engineering profession, where the engineering career is presented as being at the core of modern economy. Long-term recommendations:  The university funding would benefit from a considerable increase as well as diversification through research grants and endowment foundations.  The government approach to supporting skills development need to be focused on comprehensive problem solving.  The number of university-based laboratories, which are established with the help of multinationals, should be scaled up. Similar to the establishment of ANEL together with National Instruments, USAID, and Government, more laboratories need to be established on university premises to strengthen the technical environment for students. 7  Creating an alternative program such as certifications and an associate’s degree to prepare software programmers in less than four years will help increase the supply of labor in the medium term.  The universities may consider revitalizing their career centers in order to support their graduates.  If Armenia aspires to transition from an outsourcing and development center destination to an innovation center functioning under an entrepreneurship model, it would need to integrate fundamental research and development practices into its university system. The development of innovation and R&D capabilities is easier to inculcate if students are accustomed to performing fundamental research from early years of their study.  High-tech accelerators can become a valuable resource for entrepreneurs.  As the entrepreneurship model will require more innovative and high-end solutions and product development, it will also eventually require a high-level graduate and postgraduate base and radically new approaches to education and skill development to move up the innovation value chain. 8 OBJECTIVE OF THE STUDY The purpose of the study is to assess the potential gap that exists between the demand and supply of qualified human resources in the IT and high-technology sector in Armenia. Having sufficient qualified specialists with the corresponding skill set would have a major impact on the IT/high-technology sector growth potential in Armenia and can be a core driver of further development. Armenia’s IT/high- technology sector is facing constraints with recruitment of this talent, which could lead to a loss of sector competitiveness. This study collects and analyzes data provided by the private sector on the quality and relevance of the existing labor force and constraints faced by the industry during recruitment. It also reviews the main impediments to closing the existing skills gap in the market. This analysis can help policymakers to:  Examine the impact of the skills gap on the further development of the sector  Assess the performance of IT education and training systems and workplace demand in the context of the IT/high-tech industry  Identify the critical bottlenecks and reduce deficiencies in the overall ecosystem necessary to prepare qualified specialists SCOPE OF THE STUDY The study relied on secondary data, statistical data, and primary data collected through a survey and interviews implemented within the following scope:  Survey of 30 companies operating in the IT and high-technology sector in Armenia  Interview with five major higher educational institutions operating in Armenia  Interview with five main training centers, industry experts, several students, and other stakeholders from the IT community in Armenia. On the demand side, the study is based on the information collected through interviews that assess employers’ satisfaction level of graduates’ theoretical knowledge and practical skills, their soft skills and fluency in English, and additional generic capabilities. Valuable inputs from industry experts including the Union of Information Technology Enterprises (UITE) and Granatus Ventures were also collected and analyzed in the report. On the supply side, the survey focused on the main providers of IT education, their programs and quality of teaching staff, the estimation of the potential quantity of graduates, and the identification of key quality constraints. Secondary data is sourced from the National Statistical Service of the Republic of Armenia (NSS RA) and the Ministry of Education of the Republic of Armenia. The report juxtaposes the demand and supply parameters and analyzes the implications on the sector for the next 3-4 years. Based on the assessment results, high-level recommendations are given to address the system constraints and support the sector’s growth and competitiveness. 9 METHODOLOGY A rapid assessment methodology was applied to collect both quantitative and qualitative data from companies and education institutions. The target sample for the demand side survey was executives and HR managers of the companies. It is noteworthy that the sample size of the survey comprises ~13% of total players in the sector; nevertheless, it reflects the viewpoints of the major players of the field. The selected sample includes major market players and representatives of companies of various sizes, origin, activities, and target markets. Figure 1 shows the composition of international and local companies. The majority of the companies surveyed were local companies. Figure 1: Number of companies participating in the survey categorized by type and origin International 3 4 From the 30 companies one was disqualified. The remaining selection Local 17 5 comprises local companies and branches/subsidiaries of international IT High-tech companies. Source: EV Consulting company survey As indicated in Figure 2, large, medium, and small companies were included in the sample to build an objective evaluation of the market trends and balance the outcome of the responses based on different skills gap issues faced by the different sizes of the companies. While more IT companies were surveyed than high-technology companies, the number of employees in the high-technology companies exceeded those in the IT companies. Figure 2: Number of surveyed companies categorized by size The distribution of companies between large, Large (51+ employees) 7 medium, and small sizes is based on the number of employees and reflects the Medium (11-50 employees) 17 average distribution of the industry. Small (1-10 employees) 5 Source: EV Consulting company survey Figure 3: The number of respondent companies and their total employees categorized by company type High-tech 9 High-tech 1,246 IT 21 IT 589 IT High-tech IT High-tech 10 Supply side data was collected through interviewing the main representatives of educational systems in Armenia, such as all major universities which have a considerable role in IT education, along with training centers and other major parties, including university labs and career centers. Figure 4: Number of survey participants representing IT education sector Universities 5 Training centers 4 Other parties 5 Source: EV Consulting company survey Data collection for the survey took place from 29 March 2014 to 29 April 2014 and included 43 interviews. Depending on the situation of the respondent, the time taken to interview and complete the questionnaire ranged between 30 to 90 minutes. All the interviews were conducted face to face by an interviewer on the company, university or other party premises. The interviewer also administered the corresponding background questionnaires (in Appendix). The forecasts are carried out based on the understanding of the existing plans and upcoming initiatives of major educational establishments providing IT education and companies in the next three years. 11 1. OVERVIEW OF THE IT AND HIGH-TECHNOLOGY SECTOR IN ARMENIA 1.1. INTERNATIONAL CONTEXT Compared internationally and to other neighboring countries, Armenia has a competitive workforce, a relatively favorable trade environment, and increasing computer and information services exports. According to the Global Competitiveness Index, Armenia ranked 79th out of 148 countries in 2013-2014 while the Russian Federation ranked 64th. From the trade perspective, according to OECD’s trade facilitation indicators, Armenia’s trade facilitation performance is better than the averages of Europe (non-OECD) and Central Asia and lower middle income countries in the areas of information availability, automation, and internal border agency co- operation.1 On the other hand, Armenia performs less well on appeal procedures and simplification and harmonization of documents. Yet, the country surpasses the lower middle-income country average in all these five areas. Trade facilitation indicators identify potential areas of improvement to bring more trade impact through improving border procedures, reducing trade costs, boosting trade flows, and getting greater benefits from international trade. In terms of education level, Armenia has a higher share of population with university degrees compared to other countries. The European Training Foundation conducted a comparative study among Georgia, Armenia, and Morocco in 2012. The results show that compared to Morocco, Georgia and Armenia have a higher education level due to the Soviet legacy of being a high-tech hub. On average, one-quarter of the population in Georgia and Armenia has university degrees.2 In the IT industry, Armenia performs better than other neighboring countries in terms of computer and information services exports, while only around half of the population uses the Internet as of 2011.3 Figure 5: Percentage of population using Internet, 2011 Georgia 44 Ukraine 44 Armenia 42 Belarus 40 Moldova 38 Azerbaijan 24 0 10 20 30 40 50 Source: Armenia ICT Trade Report, July 2013, the World Bank 1 http://www.oecd.org/tad/facilitation/Armenia_OECD-Trade-Facilitation-Indicators.pdf 2 http://www.etf.europa.eu/webatt.nsf/0/E811EB8749A0287BC1257C0700318D02/$file/Migration&skills_ Armenia &Georgia&Morocco.pdf 3 Data is based on the World Bank’s Armenia ICT Trade Report, July 2013. 12 Figure 6: Computer and information services as % of all commercial services exports, 2012 Armenia 8.2% Belarus 7.0% Moldova 6.2% Ukraine 5.3% Georgia 0.2% Azerbaijan 0.1% Source: Armenia ICT Trade Report, July 2013, the World Bank Figure 7: Armenia computer & information services exports 8.4% 8.2% 7.7% 7.9% 7.4% 6.9% 7.0% 5.5% 63 65 50 56 44 43 33 22 2005 2006 2007 2008 2009 2010 2011 2012 Computer and information services exports (US$ m) As % of all commercial services Source: Armenia ICT Trade Report, July 2013, the World Bank 1.2. HISTORICAL DYNAMICS OF THE SECTOR The IT and high-technology sector is one of the fastest growing sectors in the Armenian economy. The importance of the sector is growing despite its still small output and workforce size, comprising only 0.6% of the total employed population in Armenia. Although the Government declared the IT sector to be a priority sector for the economy in 2002, its support has accelerated recently through institutions such as the IT Development and Support Council, the Enterprise Incubator Foundation backed by World Bank funding, and others. The average labor productivity of the sector is about 4-5 times higher than the general average of the economy. Productivity is growing as well, almost doubling from the level of 2006 (CAGR (Compound Annual Growth Rate) of 9%). This is a sign of the sector’s maturity. Since 2006, the sector, excluding Internet service providers, has grown with a CAGR of 22% reaching a total output of US$294 million in 2013. The sector output accounts for about 3% of the country’s GDP 13 (Note: the calculation is based on the total output of the sector divided by GDP, due to the absence of a corresponding value-added indicator in the Armenian national statistics database). On the other hand, the labor force share engaged in the sector is only about 0.7% of the country’s total. Figure 8: IT industry turnover, labor productivity, and number of employees, 2006-2013 300 ,000 294,000 ~3% of GDP 250 ,000 200 ,000 ~0.7% of total labor force 150 ,000 7,996 100 ,000 4,021 75,200 36,768 ~4X higher the average level of 50,0 00 18,700 the economy - 2006 2008 2009 2010 2011 2012 2013 Turnover, thsd USD Productivity, USD Number of technical employees Source: EIF, Armenian IT Industry Report, 2006-2013 The number of companies operating in the sector is now about 380 according to EIF estimates. For this study, the sector is analyzed in two subsectors:  IT companies: engaged in software and systems development, web, and mobile programming.  High technology companies: engaged in the development of software and hardware to design, build, and utilize engines, machines, and automation structures. The rough division of the number of companies in each sector shows that the major portion of companies is mainly IT oriented: IT companies High tech companies ~87% of the total number of ~13% of the total number of companies companies Source: NSS, Armenia One of the driving factors of sector growth is its attractiveness for foreign companies to establish branches in Armenia. The prime competitiveness factor is the availability of relatively cheap and competitive human resources in Armenia. Armenia seems on the verge of losing this competitive advantage. 14 The breakdown of the companies by local and international shows the growing share of international branches: Figure 9: The dynamics of company distribution in the IT sector of Armenia Since 2008, the number of IT companies doubled with overall CAGR of 20%. The growth rate of the number of international companies outpaced that of the local companies by 9 percentage points (14% compared to 23% of international companies). Source: EIF, Armenian IT Industry Report, 2006-2013 The growth in the number of local IT companies is supported by the thriving entrepreneurial spirit in the sector. According to industry expert analysis, around 20 IT startups were founded each year in the country since year 2000. M&A activities intensified in the industry driven by foreign companies, such as Synopsys (with the acquisition of LEDA Systems, Virage Logic, and Monterey Arset), VMWare (with the acquisition of Integrien Corporation) etc., seeking talent and a qualified pool of software and hardware engineers. 1.2. TRENDS AND DEVELOPMENTS The dynamic growth of the sector is marked by a number of significant developments. Due to the high demand for IT workers, several training centers and laboratories were established at universities with the collaborative effort of state, non-profit, private and government sectors. Among the established training centers are the Microsoft Innovation Center, mLab ECA, and the Armenian- Indian ICT Excellence Center. The creation of the Armenian National Engineering Laboratory at the State Engineering University, a program worth US$6.2 million, is remarkable in its attempt to provide modern engineering tools and equipment and invigorate the strong engineering potential of Armenia. The Gyumri Information Technology Center was launched with the objective of housing state-of-art laboratories, educational centers, and business incubators. Two other techno-parks are planned to be established. Multinationals such as IBM and Oracle have preliminary agreements with the Government to establish centers of excellence in Armenia. The establishment of the first venture capital fund, Granatus Venture Fund I, with the support of the World Bank and the Government marks a crucial milestone in the formation of a startup ecosystem. 15 1.4. GROWTH POTENTIAL OF THE SECTOR The industry has two sources for sustainable strong growth: - Continued interest from international companies and a flow of FDI to the sector. This will require the industry to sustain its current competitive advantage of a low-cost and quality workforce relative to advanced markets. The current trend is going in the opposite direction, due to an increasingly scarce skilled workforce in the sector and rising remuneration levels. - Rising entrepreneurial spirit in the sector and a growing number of startups founded locally. This will also mean that the quality of human resources in the sector is key, along with opportunities to link to international markets, venture funding, and creating an innovation ecosystem. IT sector output is generally forecast based on the IT workforce size as the main constraint. Nevertheless, in order to assess the sector’s human resource absorption potential, the potential growth of the sector is forecasted (base scenario) based on the sector’s historical performance. The base growth scenario assumes that continuation of the conservative average output growth trend is about 22% and average productivity rate is 4%. Pessimistic and optimistic scenarios are projected to include market volatility. Figure 10: The forecasts of employee absorption potential in the IT and engineering sector Source: EV analysis Due to the growing number of IT companies in Armenia, demand for IT specialists will continue to increase. 16 The growth tendencies of local and international companies in the market mean that there will be an increasing demand for IT specialists in Armenia. According to the base scenario, if the market and productivity continue to grow with an average rate of 18% and 1% respectively, the absorption potential for additional IT specialists will grow at a rate of 17% annually and reach ~15,000 by 2017 (see Figure 10). This implies that the annual number of new specialists required in the next 3 years will be ~1,000- 2,000. The quality of specialists and the level of skills will be of utmost importance. The increasing pressures on productivity also dictate the need to shift to higher value-added niches for the sector. This requires new skill sets for the total sector. The sector is undergoing a major transformation right now: there is an increasing shift from the outsourcing model to the model of own product development and entrepreneurship in the sector. This model of growth requires a higher level of knowledge, new skills (such as sales skills), and entrepreneurial knowledge and behavior. The outsourcing model fostered the growth of the sector for the most part as well as attracting international companies and FDI. The model is based on outsourcing activities, which can be sustained because of a low-cost and high-quality workforce, beneficial to foreign companies. Thus, the model is built on the basis of cost-competitiveness. Current sector trends are moving toward a higher value-added entrepreneurship model. The presence of international companies, which bring sector-specific culture into the country, and the international startup boom are driving the development of the model among IT and high-tech specialists. These factors are expected to advance the market toward more value-added activities and overall sector growth. The education sector needs to adapt quickly and reflect these challenges in order to sustain sector competitiveness. In order to sustain the growth based on the traditionally high quality labor force, the country currently faces the issue of providing sufficient supply of IT skills. The increasing demand for IT skills is a global trend, but in Armenia it is more constraining due to the small size of the industry in the country and an increase in competition between the local industry and multinationals. At the current point of sector development, this is a complex issue, as the skills gap increases with the positive dynamics and development of the IT industry. This implies that the skills shortage is increasing in parallel with the sophistication of the industry. 17 2. DEMAND SIDE ANALYSIS OF SKILLS GAP IN ARMENIAN IT AND HIGH TECHNOLOGY INDUSTRY 2.1. QUANTITATIVE DEMAND ANALYSIS OF SECTOR COMPANIES IT and high-technology companies view the mismatch between the supply of and the demand for skilled IT labor as a key factor that hinders the growth of the sector. There is a qualitative gap between skills needed in IT and high-technology sector companies and those supplied by the higher education system of the country. This translates into a constant quantitative need for new employees in the sector. The survey of the IT and high-technology companies showed the almost permanent need of the companies for new talent with particular technical knowledge and skill sets. The survey assessed the short-term (next 3-4 months) and long-term (up to 3 years) needs of the companies. At the time of the interviews, about 70% of companies had one or more vacant positions and/or were planning to have one during the next 3-4 months. Only 10% of the companies were not in search for new talent. Long-term forecasting of growth trends cannot be accurate due to the volatility of the sector, as well as the project-based nature of most companies; however, the companies’ rough estimate of future talent is about 10% growth in employees annually. Figure 11: Total number of IT specialists wanted in surveyed companies categorized by company size 353 Large companies The average quantitative need for talent 72 expressed by the IT and engineering 198 companies showed an aggregate of about Medium companies 45 150 employees in the short term and 30 about 600 employees in the longer term. Small companies 30 Long-term employee demand Short-term employees wanted Source: EV Consulting company survey Number of respondents: 27 According to EIF estimates, the IT and high-technology industry absorption potential is about 2,000 employees annually of which about 300 are not being filled and remain as a gap. This is roughly in accordance with the survey findings of about 150 current unfilled positions declared by about 10% of sector companies. The survey results show that the smaller companies aspire to grow at higher paces, which due to their low starting base means a smaller number of employees in absolute terms. 18 Figure 12: Forecast % growth of employee number in small, medium and large companies in short term and long term Large companies 26% The short-term growth refers to the 5% upcoming period of about 3 months. The 47% longer term growth is for 1-3 year period Medium companies 11% time horizon. Small companies 81% 81% Average % growth of employee number in long-term Average % growth of employee number in short-term Source: EV Consulting company survey Number of respondents: 27 The smaller companies have high growth expectations for both the short-term and the long-term perspectives. Meanwhile, the medium and large companies stick to the strategy of relatively conservative growth in the short term and more aggressive recruitment in the long term. The demand for new talent in the high-technology companies surveyed is higher compared to the IT companies. Figure 13: Number of IT specialists in demand categorized by IT and high-tech subsectors IT 61 288 High-tech 86 293 Short-term demand Long-term demand Source: EV Consulting company survey Number of respondents: 27 Software development will remain the most widespread and in-demand specialization in the next three years Both in the short- and long-term perspective, software development in C++ and C# remains the highest in-demand specialization in the IT sector followed by engineers. The demand for software engineers is also estimated to increase within the next three years at a much higher rate compared with other specializations. 19 Figure 14: Number of required IT specialists categorized by specialization Software engineers 264 54 Hardware and automation engineers 92 27 Web developers 70 17 Mobile developers 78 7 QA engineers 38 8 Other 39 34 Long-term demand Short-term demand Figure 15: Breakdown of short-term "Other" category Figure 16: Breakdown of long-term "Other" category Technical sales specialists 3D modellers 10 11 UI/UX designers 7 Technician-installers 10 Hardware technicians 4 Client support specialists 4 Control automation… 6 Database developers 3 UI/UX designers Game developers 3 4 Virtualization specialists 2 Database developers 1 IT security specialists 2 Image processing specialists 1 Virtualization specialists 1 Technical HR managers 1 IT security specialists 1 Project managers 1 Technical writers 1 Source: EV Consulting company survey Number of respondents: 27 Methodological Note As no formal breakdown of specializations exists in the sector, the following main groups of IT and engineering specializations were constructed based on industry knowledge and company interviews: - Software development specialists: includes .NET developers, particularly specialized in C++ and C# programming language family with minor exceptions. - Engineers: the category has the highest variety of narrow specializations due to the specifics of the sector. The category includes hardware, electronics and CAD engineers, PCB designers, etc. - Web developer specialists: the category consists of mainly Java developers with knowledge of web-programming basics such as HTML, PHP, etc. - Mobile developer specialists: the category includes professionals with the knowledge of relevant programming languages, such as Java, and the mobile platforms such as iOS, Android. 20 The main constraint of recruitment for companies is the lack of qualified candidates in the market. There is generally a large number of applicants for each job vacancy announced. However, the skill levels of most candidates are not adequate and do not meet company requirements. According to the sector companies, a lack of qualified candidates and talent is the main constraint of recruitment. There is a mismatch in the available supply of candidates and the necessary skills demanded by the companies. The skill mismatch is mostly qualitative, as the companies mentioned that any job announcement results in numerous job applicants for the job. The number of job applicants is especially higher for junior positions. Based on observations from the interviews, one of the first steps to increase the supply of qualified labor would be increasing the quality of the existing labor pool. According to several companies, the ratio of job applicants per position and the number of hired applicants is constantly worsening, due to the increasing demand towards higher skills, in parallel with the industry dynamics. For the junior positions, this ratio can be as low as 1 hire out of 80-85. Figure 17: Recruitment constraints in IT and Engineering companies Lack of qualified candidates 25 High salary expectations 12 Budget limitations 9 Lack of recruitment staff 2 Lack of future business opportunity 1 Source: EV Consulting company survey Number of respondents: 29 The limited supply of qualified labor is inflating salary expectations. The current salaries still remain competitive for the multinationals. However, given that Armenia is pursuing a product-based rather than an outsourcing-based model for its development, this poses a constraint to local industry development and growth of Armenian IT products. As a consequence of the IT skills gap in the industry, qualified candidates become more in demand, which results in their salary expectations exceeding their knowledge and skills. In 2012-2013, the monthly net salary of IT employees varied in the range of US$300-US$3,500. The official level of the average monthly net remuneration in Armenia for 2013 was about US$290, which is about equal to the lower level of the average IT sector salary. This indicates that IT/high-tech is a very high value-added sector, and increasing jobs in the sector will have a positive effect for the economy as a whole. The company interviews revealed that the upper limit is constantly increasing and in some cases reaches up to US$4,000-US$4,500, which also exceeds candidates’ knowledge or qualifications and is a result of the scarcity of qualified specialists. 21 The migration trend severely impacts the pool of available IT specialists in Armenia. Currently there is a significant migration outflow from Armenia caused by economic conditions, which in particular causes a brain drain in the IT and high-technology industry. The majority of the companies interviewed confirm that retention has recently been dropping due to the high number of emigrating employees. Nevertheless, there is a “conditional division� of developers and engineers based on their emigration patterns: Impactful, creative, and global career seekers. The careerists represent the category of people who have the ambition of professional growth as a priority and who do not see enough opportunities in Armenia with respect to career: the interviewees mentioned that the professional ambition of the specialists goes beyond salary level. It strives towards higher positions and impact in the global markets, which in their opinion is not likely to happen in Armenia-based companies. The majority of those departing are senior and mid-level specialists. Some of the specialists leave their Armenian companies and start a career by joining local startup companies, but the majority of them find employment outside the country. There are no precise statistics on the number of migrating IT specialists, but all of the respondents unanimously perceive that greater percentage graduates is choosing foreign employment that local. The locally-established relatively small companies face intensifying competitions in hiring local talent. Startups and smaller companies face market and revenue growth limitations. These companies require further startup funding to facilitate their growth and need for new hires, in order to expand in the market and be able to work on new product development. Armenia has a very small IT labor force due to the overall small population size; therefore, “poaching� of skilled labor represents a particular problem. The increasing remuneration levels of the labor market poses real risks for such startups and small companies, as their abilities to get new quality hires by providing competitive salary levels is weak. Small companies also face the issue of lack of designated HR recruitment function in their companies. Several companies mentioned the issue of lacking specialized recruitment personnel, which hinders their ability to source necessary talent. The medium to large size companies generally create HR functions, with the main focus on recruitment and trainings. Some other issues relating to HR functions of the companies are discussed later in the report. 2.2. QUALITATIVE ANALYSIS OF DEMAND BY SECTOR COMPANIES According to the information obtain from the private sector the quality gap of the skills and availability of IT and high-technology labor can be improved by increasing quality of graduates from local higher education institutions according to sector companies. 22 Higher education plays a key role in developing basic skills of graduates. These skills form the basis of their theoretical and practical knowledge levels. However, local companies regard these skills as mostly below the expected average and outdated. This relates to both the fundamental technical knowledge and the more generic soft skills of the graduates. The interviews were conducted with the respondent companies to rate the skill level of graduates according to the following four knowledge/skill types:  Practical knowledge – the level of student’s familiarity with up-to-date technical tools (engineering equipment, programming languages, platforms, etc.) to apply acquired theoretical knowledge in specific projects  Theoretical knowledge – technical fundamentals required to shape the algorithmic thinking and mathematical mindset of IT professionals, learned through lectures and available literature.  Soft skills – level of communication and self-expression, as well as the ability to work in a team  Knowledge of English – the importance of this is underlined by the fact that IT/high-technology is a mostly internationalized sector with a high level of interaction with the outside world. Figure 18: Assessment of skills for graduates in IT and Engineering sectors by companies Practical knowledge 45% 28% 17% 7% 3% Theoretical knowledge 3% 31% 45% 17% 3% English 3% 17% 41% 28% 10% Soft skills 10% 17% 45% 14% 14% Poor Fair Average Good Excellent Difficult to answer Source: EV Consulting company survey Number of respondents: 29 ~73% of the respondents think that the practical capabilities of the graduates are far below the expected level and not satisfactory for employment. Unanimously, all the respondents mentioned that the majority of graduates lack practical capabilities even given their relatively high level of theoretical knowledge, due to the absence of practical activities in the universities. During the survey, it was revealed that only a small portion of graduates (~10%) with a higher sense of responsibility tend to find internship projects or visit available labs at their own initiative during their studies, while the rest totally depend on the directions given by the university. The latter, according to the private sector, has to put more effort in providing practical skills via mandatory internship programs and lab work. Underdeveloped practical knowledge and skills mean higher learning and development costs for employers, further placing downward pressure down on sector competitiveness in the global landscape. 23 ~80% of the respondents consider the level of graduates’ theoretical knowledge to be average or below expectations, but on a higher level compared with the practical capabilities. It is notable that some executives with longer managerial experience have slightly different opinions on the priority and importance of theoretical knowledge. According to some of them, theory matters more than practice, as practice can be taught during on-the-job training, while the theory, if not taught to the students in their early university years, will hinder the professional development during the rest of their career. Besides the evaluation of theoretical knowledge, some of the respondents state that the ability to self- educate and grasp new concepts rapidly is of higher importance. This is conditioned by rapid industry dynamics, which suggests that any theoretical knowledge will be outdated over time, while the ability to self-educate and grasp new concepts quickly is a prerequisite for the modern IT specialist. Company executives believe that the skills and know-how to educate oneself should be taught in the university. From the employer’s point of view, the soft skills and English knowledge of the graduates are on a more acceptable level compared with their theoretical and practical knowledge. More generic skills, such as work ethic, teamwork, etc., are a part of larger set of soft skills. The local higher education system generally does not emphasize the development of such skills in students. The graduates lack such skills as self-presentation, written or oral communication skills, interview skills, etc. However, the level of these skills among the graduates is assessed mostly as average and above (by ~70% of respondents). Figure 19: Assessment of soft skill importance of job candidates Very important 61% About 61% of the respondents highlighted the ultimate importance of the soft skills of Relatively important 29% interviewed candidates when making a recruitment decision, while 29% stated that they Not important 10% can be developed on the job. Source: EV Consulting company survey Number of respondents: 28 Due to the availability of up-to-date technical literature mostly online and in English, graduates who want to grow professionally have to learn the basics of the language. About 80% of the respondents regard the graduates’ knowledge of the English language as average or good and note that it tends to improve with professional development. Figure 20: Share of English-speaking employees in surveyed IT companies Considering that the share of employees with knowledge of English in companies is almost 90%, this skill is vitally important. 24 Several companies mentioned the worsening quality of Russian language knowledge among graduates. The growing importance of the Russian market in Armenia might increase demand for this language also, whereas most companies note that the level of English knowledge is far better compared to Russian. Companies adjust their recruiting requirements and lower standards due to the lack of qualified candidates. Source: EV Consulting company survey Number of respondents: 29 Due to the qualification constraints, the companies tend to recruit junior-level graduates who have elementary basic knowledge and whose motivation and personality fit with the company culture and train them to a certain level by means of on-the-job training. The relatively low responses about the importance of technical skills are conditioned by this practice. The situation is worse with senior developers, due to the lack of high-level qualification training programs, whereas the on-the-job requalification opportunity cost is much higher. The base-level developers are more flexible, due to the combination of their work experience, which ensures a particular knowledge level, and their non-advanced specialization level, which is easier to transform into the narrow specialization required by each company specifics. The requirements and evaluation of the above-mentioned criteria (see Figure 21), particularly regarding the technical knowledge and soft skills, have been adjusted due to the deficit of the qualified specialists. In opposition to the current educational system, some companies think that preparing their future employees in their own training programs is more beneficial: several respondents mentioned a preference to recruit and train young people right from school, without the intermediate interference of the university. As observed from interviews, currently the university degree is not one of the most crucial decision factors in recruitment by companies. This is a concern that urges both private sector and educational institutions to work together to close existing gaps in quality of graduated. Only 8% of surveyed companies considered the university degree to be of high-level importance for the recruitment process. Figure 21: Company preference for different candidate skills and knowledge and other characteristics University degree 46% 46% 7% Technical knowledge and skills 4% 46% 50% Cultural fit 21% 79% Soft skills 11% 29% 61% Motivation 4% 11% 86% Not important Relatively important Very important Source: EV Consulting company survey 25 Number of respondents: 28 Due to the gaps between the university program and industry, job applicants tend to learn upgraded technical knowledge and skills mostly during the probation period in the company. Thus, the hiring executives value the cultural fit of the applicant in the company more, as by default, the technical skills are planned to be transferred to the employee on the company premises. However, for a long-term sustainable and high-end development of the IT industry, a strong university base will retain its critical importance. While company base training can provide basic IT skills, the ever- increasing sophistication of IT products will require a strong multidisciplinary educational background that can be provided only on the basis of university education at the graduate and postgraduate levels. Based on the responses from the companies interviewed, the most desirable solution is modernizing the current educational process. Currently, companies do not fully appreciate the benefit of master’s degree. This observation demonstrates that or the level of training for master’s degree programs is inadequate or possibly there is a limited sophistication of the IT industry that does not require yet the skills obtained from the master’s degree. Generally, the companies do not perceive a considerable quality increment between the bachelor’s and master’s degrees. In addition, some university representatives agree with the fact that there are curricular limitations in master’s degree programs, requiring upgrading of curricula to make it valuable to the private sector Only a small portion of graduates continue their studies to PhD degrees. It has been observed that currently in Armenia there is a limited market for PhD graduates. The overview of the current workforce structure shows that the major portion of the employees have some level of university degree. The workforce distribution by bachelor’s degree and master’s degree is about equal. In the graphs below, there is a comparison of the survey results and EIF study, which is based on a larger data sample and might provide more precise information. Figure 22: The current structure of the labor force in the sector by university degrees (survey results versus Enterprise Incubator Foundation) Survey results EIF study 1% 2% 45% 36% 54% 62% Master's degree and above Bachelor's degree Master's degree and above Bachelor's degree Technical (non-higher) Technical (non-higher) Source: EV Consulting company survey, EIF “Armenian ICT Sector: State of Industry Report�, 2012 Number of survey respondents: 29 26 Cultural fit in the company and the motivation of the graduates are the most important factors for recruitment decision-making, followed by soft skills and technical knowledge. Due to an informal working environment, mostly teamwork on projects in sector companies, cultural fit, and motivation are particularly important factors for the selection process. With the declining qualification level, the sector tends to recruit fresh graduates and spend a considerable time on training them to a relevant level. Considering the opportunity cost of the time, the importance of the cultural fit and motivation is critical, according to ~95% of the respondents. Ability to independently find relevant information and utilize it is a critical requirement that is currently missing in the majority of graduates. 17% of the respondents are critical about the candidate’s ability to use available literature and other sources for the quick self-education. Due to the rapid industry dynamics, quick adaptation skills are a prerequisite for preserving competitiveness and are highly appreciated. Currently, the development of those skills has an individual nature and mostly correlates with the level of candidate’s initiative, but the real sector representatives state that the ability to self-educate should be provided and developed by universities. The companies do not differentiate among the faculties and major specializations of the higher education institutions, which show that all of them meet minimal standards required by companies. Figure 23: Companies' preference for the major or discipline of graduates The majority of the respondents No preference 69% stated that taking into consideration Applied mathematics and informatics 12% the overall low quality of the Computer systems and informatics 10% graduates and their level of practical Radiophysics and radiotechnology 7% knowledge relative to actual Electronic engineering 2% employee activities, there is no significant difference between the Source: EV Consulting company survey qualifications received in different Number of respondents: 29 faculties. Consequently, given the presence of other required selection criteria within the job candidate, the discipline studied plays a negligible role. Nonetheless, given the specifics of some high tech companies, the importance and irreplaceability of precise majors, e.g. electronic engineering, is undeniable. About 34% of the respondent companies expressed no preference in hiring graduates from a particular university. 27 Figure 24: Company preference for recruiting from Armenian universities No preference 34% SEUA and YSU remain the most preferred SEUA 21% universities in the IT sector with 21% of YSU 21% preference each, which is partially conditioned RAU 11% by the large number of graduates in engineering AUA 5% specializations absent in other universities and Training centers 9% training centers as well as the active presence of Synopsys Armenia Educational Department Source: EV Consulting company survey Number of respondents: 28 within the universities. RAU and AUA follow with 11% and 5% respectively. Currently the training centers are mostly mentioned as sources for preparing beginners and are not considered an alternative to universities by the companies. Given similar conditions and choices, high-technology companies tend to look for more candidates from SEUA, while IT candidates mostly prefer YSU or Slavonic University. 2.3. RECRUITMENT AND HR PRACTICES IN IT AND HIGH TECHNOLOGY COMPANIES The management sophistication of local IT and high-technology companies is generally correlated with their size and origin. The management system of local IT companies is largely in line with the general level of other Armenian companies, i.e., professional management is scarce and professional tools are of low usage. The exceptions are branches of international companies, who inherit the management systems from their headquarters. Also, the size of the companies dictates the need for better management systems. People management in the companies is generally the function of the key executives. In bigger companies, human resource management is more structured and the function is centered in a special department. The small and medium size companies do not have HR departments, as they do not see an urgent need for it. The distribution of its functions is spread among employees in the company. Recruitment is considered a technical procedure with a personality fit check component at the end. Generally, the responsibility of initial filtering lies with project leads, while the final approval of the candidate is carried out by executives. Thus, there is an opinion that the non-technical HR function is not relevant unless the company grows beyond 50-60 employees, when the proper management of human resources is hardly any longer possible through project leads and executives. The motivation, professional development of employees, and other functions of the HR department are rarely officially tracked in medium-sized companies with no HR department. In the case of high HR capabilities of the CEO, a strong company culture, and employee alignment with the company’s development strategy, the retention rates are high. The performance evaluation and compensation systems are formally structured only in the bigger size companies. The small and medium companies have processes of a more ad hoc nature. 28 Companies prefer to transfer the technical knowledge via on-the-job trainings, while the supporting skill development is delegated to training centers or guest lecturers. According to the respondents, the level of graduates is low and requires additional training to reach minimum company requirements. On-the-job training provides the graduate with the necessary technical knowledge as well as the specifics of the company without spending double the amount of time. Based on this notion, most of the companies prefer to train their junior employees on the job. Out of 29 surveyed companies, three have their own training centers or educational programs to prepare employees and an additional three tend to finance or cofinance technical off-job trainings for their junior employees. The latter were able to provide average training budgets per employee, which range from $80 to $2,500 depending on the subject and duration of the training program. On average, up to six months is required for a newly hired employee in an IT company to complete the on-the-job training phase and become a qualified professional. In case of high-technology companies, the average on-the-job training period lasts from six to twelve months. In complex cases, the preparation of a qualified specialist can last up to 3-5 years. In the majority of cases, off-the-job trainings are carried out on non-technical subjects such as project management, marketing, soft skills, etc. Due to the limited market size with a high concentration in Yerevan, references are the most popular option in recruitment process. Out of 5 recruitment channels mentioned only 3 are utilized by the respondent companies. Figure 25: Recruitment channels in the IT and high-technology sector References 76% 14% 10% Online announcement channels 69% 14% 7% 10% Universities 3% 10% 28% 14% 45% Recuitment agencies 100% Newspapers 100% Every time Often Sometimes Rarely Never Source: EV Consulting company survey Number of respondents: 29  Due to the small market mainly located in Yerevan, the most popular method of hiring managers at all levels is the reference model through the network.  Online portals such as www.careercenter.am and social media are also popular. Lately, specialized IT recruitment online resources such as www.itjobs.am have appeared on the market. 29  Recruitment agencies and newspapers are considered irrelevant for the industry. In the case of the first, the recruiter should have some technical understanding, which is generally not the case for the Armenian recruitment agencies. Regarding newspapers, potential employees do not look for job announcements in offline media, thus, the newspaper channel does not satisfy the targeting criteria.  University recruiting has two main options: o Recruitment via official relationship with the university. Among the 29 companies interviewed ~20% has or had an official relationship with the universities for the recruitment process. Nevertheless, the majority of them find the experience not satisfactory and unpleasant. The feedback includes dissatisfaction with the administration procedures of joint project organization and implementation, reporting problems, and the low number of career center activities. o Recruitment through the acting company employees, lecturing in the university. Out of 29 respondents an additional 15% mentioned a recruitment practice through their employees, also employed in various universities as lecturers. The method is considered effective as prior to the recruitment the lecturer has a possibility to discover both professional and personal capabilities of the student.  Headhunting was also mentioned as an ineffective method for recruitment in Armenia, due to the small market and relationships among the players. 30 3. SUPPLY SIDE ANALYSIS OF SKILLS GAP IN IT AND HIGH TECHNOLOGY INDUSTIRES 3.1. EDUCATION SYSTEM OVERVIEW IN ARMENIA The higher education system in Armenia lacks competitive dynamism and efficiency. Armenia’s higher education system consists of 63 public and private institutions. First established in 1991, private universities expanded the sector, populating it with many fledgling institutions. Demand for private education was driven by a mass of students ready to pay for accessible and undemanding study. Over the past few years, demand has diminished and there are 20 percent fewer schools now than in 2003. Despite a large number of players, the sector lacks an efficient competitive environment: First, compared to the private universities, the state universities are privileged - providing substantial tuition subsidies and exemptions from army service for students. Second, 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. Third, five universities dominate the sector by virtue of their scale of enrollment. The smaller schools have correspondingly limited capacities and infrastructure development opportunities. As a result, many universities (mostly private) have become “retail outlets� for diplomas and forego competing based on quality. Fourth, Armenian higher educational institutions do not track their performances by international rankings, citation indices, statistics on the career development of graduates, and other comparative indicators, which usually drive competition among universities. Finally, minimal connection with the global education market means that the local market is a captive one. The vast majority of high school graduates cannot afford to study abroad so local universities are complacent. The quest to join the European Higher Education Area puts pressure on Armenia to reform, but the pace is still unsatisfactory. Armenia is undertaking reforms through the Bologna process in order to join the European Higher Education Area. Enforcement of reforms, however, is questionable. Often the universities are unable to keep pace with reforms, and changes are mere formalities with little impact on content. In addition, there is little awareness of the content of ongoing reforms. Consequently, the quality of the education has room to improve, which is also demonstrated in the World Economic Forum’s (WEF) ranking on the Quality of Educational System. 31 Figure 26: WEF ranking on the Quality of Educational System, 2013-2014, Score, out of 7 7 6 5 4 3 2 1 Source: World Economic Forum, Global Competitiveness Report, 2013-2014 Interestingly, according to the World Economic Forum ranking that is based entirely on the perception of business executives, the Armenian educational system lags behind more countries in the quality of math and science education compared with the overall educational system quality. In juxtaposition with the ambition to become a significant industry player on the international level, the ranking below suggests plenty of room for education quality improvement. Figure 27: WEF ranking on the Quality of Math and Science Education, 2013-2014, Score, out of 7 7 6 5 4 3 2 1 Source: World Economic Forum, Global Competitiveness Report, 2013-2014 32 3.2. IT AND ENGINEERING EDUCATION SYSTEM IN ARMENIA For the last four years there has been no shortage in the number of graduates enrolled in IT-related faculties. IT-related faculties are considered technical faculties in the university providing students with knowledge fundamentals and an algorithmic mindset to enable his/her further technical specialization during employment. The relevant majors/disciplines are:  Mathematics and physics  Informatics and computing systems  Radiophysics and radiotechnology  Automation systems  IT and cybersecurity The list of the most significant higher education institutions that provide IT and Engineering specializations is as follows: UNIVERSITY FACULTY STATE ENGINEERING  Computing systems and informatics UNIVERSITY OF ARMENIA  Applied mathematics and physics (SEUA)  Machinery engineering  Mechanics and machinery  Cybernetics  Radiotechnics and communication systems YEREVAN STATE UNIVERSITY  Informatics and applied mathematics (YSU)  Mathematics and mechanics  Radiophysics  Physics RUSSIAN-ARMENIAN  Applied mathematics and informatics (SLAVONIC) UNIVERSITY  Electronics and nanoelectronics (RAU)  Infocommunication technologies and communication systems  Construction and technology of electronic systems AMERICAN UNIVERSITY OF  Industrial Engineering and Systems Management ARMENIA (AUA)  Computer and information science  Computational Sciences EUROPEAN REGIONAL  Applied information technology ACADEMY (ERA)  Communications equipment and microelectronic circuits and systems  Informatics and applied mathematics 33 The actual number of the graduates in IT-related faculties has been stable since 2010; nevertheless, the overall number of students is declining due to deteriorating demographics including low birth rate and emigration. Figure 28: Number of IT-related students and graduates 8,820 7,009 7,075 6,576 From 2010 to 2013 the number of students enrolled in IT-related faculties has decreased, while the number of 1,657 1,950 1,842 1,959 graduates remains about the same. This points toward an expected decline in the number of graduates in the next several years. 2009/10 2010/11 2011/12 2012/13 Students Graduates Source: NSS Armenia Based on statistical data, since 2010 there have been ~2,000 new graduates from IT-related faculties annually; nevertheless, market demand has not been met. Among the factors causing the mismatch in the market are the massive migration, demotivation of the graduates, etc., but according to the companies, which base their opinion on the tests conducted and interviews with the job applicants, currently the most prominent factor is the low quality of the specialists who have graduated. In addition to the qualitative gap, provided faculty choice remains the same, the number of IT graduates will decrease starting from 2014/15 until 2022, with a slight recovery in 2016-2017. The decrease in the number of graduates is conditioned by several factors. One of the major reasons is the significant decline in birth rates in the 1990s with the lowest level registered in 2002. Due to educational reform, which changed the mandatory number of study years in primary and secondary schools from 10 to 12, the 2011-2012 academic year was marked by a very low number of students admitted to the universities. Figure 29: Estimated number of graduates from IT-related faculties, 2013/14-2015/16 3,290 2,020 Graduates in ICT-related 1,720 specialisations 1,340 Number of ICT specialists required (base scenario) 190 1,270 2013/14 2014/15 2015/16 Source: EV Consulting analysis, NSS Armenia, University reports 34 Methodological Note The expected numbers of graduates are estimated based on the total number of students enrolled in IT faculties less the total number of students admitted four years prior to the estimation year. The calculation is done under the assumption of 5% historical dropout rate. The numbers of required specialists per year are estimated based on the base scenario of The employee absorption potential of the IT and high-technology sector (Figure 10). Assuming that the number of admitted students in faculties will remain constant and 95% of the students will graduate, it is estimated that the number of IT-related BSc graduates will plummet to the level of ~200 in Armenia in 2015, with a following partial recovery – ~1,350 graduates – in 2016 and later. At the same time, the growth in demand of additional qualified IT specialists of different levels is estimated to be ~1,500-1,800 per year for the next three years. The unusually high graduate number in 2013-2014 will compensate for the shortage of graduates in 2014-2015, but starting from 2015-2016 the quantitative gap will become noticeable. In 2018-2019 and 2019-2020 the number of graduates is again expected to slightly diminish due to the recent military reform owing to which males are required to have a two-year military service and defer their higher education. As the majority of the students in IT-related faculties are male, the two-year gap will be noticeable starting from the 2018-2019 academic year. Currently, there is also a shortage of graduates in quantitative terms “produced� by the local higher education system, particularly for the IT/high-tech sector. Out of five main universities offering IT education, the largest institutions are Yerevan State University (YSU) and the State Engineering University of Armenia (SEUA). Other universities include the Russian- Armenian (Slavonic) University (RAU), the American University of Armenia (AUA), and the European Regional Educational Academy (ERA). YSU and SEUA provide the vast majority of the graduates and have the largest quantity of students enrolled in IT-related faculties. Table 1: Number of IT and Engineering students and graduates in the universities, 2013/2014 YSU SEUA AUA RAU ERA IT STUDENTS 670 1,650 100 200 90 ENGINEERING 1,390 1,730 50 100 40 STUDENTS TOTAL STUDENTS 2,060 3,380 150 300 130 IT GRADUATES 190 460 25 40 30 ENGINEERING 480 640 25 20 10 GRADUATES TOTAL GRADUATES 670 1,100 50 60 40 Source: EV Consulting university survey, University reports 35 During the 2012-2013 academic year, there were 6,576 students in total enrolled in IT-related faculties in Armenia. In the same year 1,959 students with IT specializations graduated from the universities, which comprises ~ 8% of the total number of graduates. The graduates from humanities, economics, and management as well as educational and pedagogical faculties comprised 34%, 17%, and 9% respectively. It is estimated that only ~45% of the total graduates from IT-related faculties work in the IT and engineering sectors in Armenia (source: �Market study on HE graduate labor demand and employment in Armenia�, EV Consulting, 2011). So only ~ 450 graduates considered employment in the sector, which is a lower number compared with the demand. All three stakeholders of the system, universities, students, and the real sector, are dissatisfied with each other and expect negative developments in the future. Most of the universities consider their curricula, teaching staff, and methods to be up-to-date and aligned with industry requirements, while the respondent companies have the opposite opinion. According to the sector interviewees, the educational system is so stagnant that few of them see reform possibilities. Universities in turn find companies reluctant and uninterested in joint activities to educate future specialists. Educational system factor analysis reveals that funding for universities in Armenia is one of the lowest in the region. This may be contributing towards education quality. Specifically IT education requires higher investments into technical laboratories and latest technologies. Figure 30: Public expenditure on tertiary education as % of GDP, 2011 2.1% 1.7% 1.5% 1.5% Currently, public expenditure 1.4% 1.4% 1.3% on tertiary education in the 1.2% 1.1% 1.1% 1.0% country comprises about 0.4% 0.9% 0.8% of GDP and is low compared with peer countries. 0.4% 0.4% 0.3% Source: UNESCO statistical database Moreover, the lack of university funding and the imbalance between the salary ranges of academic professionals and some employed students/real sector professionals results in the dearth of professional dialogue and compromise. Currently, the average gross salary of a full-time lecturer in large universities ranges between ~US$300-US$500, in line with the official average salaries in Armenia, whereas the average IT sector salaries that students can potentially attain are much higher. 36 The university view on cooperation with the private sector has its own specifics: especially at the lower management level the large universities see the cooperation as mutually beneficial given external investments for the establishment of company laboratories and R&D project execution in the university. The downside of the approach is the risk of becoming a training center for a particular company, which universities plan to mitigate by having part of the curriculum stable and the other subjects open to change based on company feedback. The ineffective dialogue between academia and the private sector together with the unfavorable economic conditions and mass migration impact the attitude of many students. The pessimistic view of future uncertainty in the job market is highlighted among the students starting from their second year of study. There is no quantity shortage of teaching staff in IT-related faculties in Armenian universities. There are ~760 lecturers in five universities, 80% of whom are concentrated in YSU and SEUA. Figure 31: Number of teaching staff in universities by IT and Engineering specializations, 2013/2014 SEUA 177 211 388 YSU 120 96 216 RAU 46 43 89 AUA 20 15 35 ERA 18 12 30 IT High-tech Source: EV Consulting university survey, University reports The average student-teacher ratios (Table 2) in Armenian universities are quite low compared to the international standards, where 12:1 is considered a healthy ratio (in the UK the lowest ratio is 10:1). Table 2: Student-to-faculty ratio in Armenian universities YSU SEUA AUA RAU ERA IT 6:1 9:1 3:1 4:1 5:1 ENGINEERING 14:1 8:1 7:1 2:1 3:1 AVERAGE 10:1 9:1 5:1 3:1 4:1 Source: EV Consulting analysis, University reports 37 Figure 32: Student-to-faculty ratio in local and Western Universities, 2014 Source: Official websites of universities Nevertheless, in the Armenian reality, the low student-staff ratio is not a result of overstaffing, but a consequence of underutilization. A number of lecturers, including the younger generation, work part- time, as they combine internship with their academic career. This is especially the case with the Russian- Armenian Slavonic University, the engineering student-staff ratio of which is extremely low. This proves that in spite of the high number of lecturers, the underutilization of the latter negatively impacts teaching. Thus, there is room for optimization in terms of decreasing the number of the teaching staff and increasing the quality of lecturing and corresponding salaries. This does not refer to sector professionals who should be more than encouraged to lecture part time. The teaching staff is gradually aging, which, combined with a weak link with the private sector, makes the teaching profession appear to be less worthwhile and lucrative than others. The average age of the lecturers is above 40 in smaller universities, and in the largest universities –50 and above. Table 3: Average age of the university lecturers, 2014 YSU SEUA AUA RAU ERA 4 AVERAGE AGE 50 56 45 ~45 ~40 Source: University reports, EV university survey The necessity of the existing lecturers to go through requalification programs and to adapt international teaching methodologies is undeniable, as the existing curriculum and methodological practices are already out of date. Simultaneously, due to the low remuneration and the diminishing prestige of an academic career, there is an acute deficit of younger specialists with hands on practice in the sector who are teaching. 4 The range of lecturer’s age was very broad as there is a group of main lecturers with an average age of 60, and a group of part-time young lecturers with hands-on experience in the private sector with an average age of 30. 38 As another precondition, the lecturers are required to possess a higher scientific degree for teaching the lower degree course programs, e.g., lecturer with a master’s degree has the right to teach a bachelor’s course. This diminishes the potential pool of the candidates further. The university survey reveals that on average, less than 1/3 of university lecturers work or have ever worked in the sector and have hands-on experience in the industry. This, in combination with the high average age, implies that the teaching methodology is rather theoretical and does not give practical experience. Due to the teaching culture inherited from the Soviet Union, many classes are not interactive and do not engage students. Already hired younger generation specialists tend to work part-time in the university in combination with employment in the sector. This fact has both advantages and disadvantages: the upside is the fresh intake of innovation and alignment with real sector dynamics, while the downside is the low concentration and lack of the academic career priority, which in some cases impacts the teaching quality. According to the survey the lecturer salaries are especially low in large universities, such as SEUA and YSU, due to larger overhead costs and laboratory expenses. This impacts the motivation of the aging teaching staff and, subsequently, the quality of the education. Declining quality together with low remuneration negatively influence the prestige of pursuing an academic career. A closer collaboration between universities and private sector is needed to develop practical capabilities necessary for students to enter the job market. All the companies unanimously mentioned that graduates on average need 3-6 months in the case of IT and 6-12 months in the case of engineering to learn the job specifics and become competent employees with corresponding salaries. Universities do not teach programming languages as separate subjects, but as support tools to develop algorithmic thinking and understand technology. For example, in one of the largest faculties C++ and C#, object-oriented programming languages mostly in-demand in the Armenian market at the moment and in the next three years, are included in the curriculum for four semesters, but there is no practical application of it in terms of working on real projects while studying. The duration of internship programs is too short to develop hands-on skills and a practical mindset with the student. The popularity of laboratories and training centers on the university premises is just starting to increase, but the majority of current teaching staff is not accustomed to practical classes. In this respect, graduates need more experience within a company environment to gain knowledge. Currently, the trend of establishing technology laboratories in Armenian universities is poised to facilitate the transfer of practical knowledge to students. There are two main models: General educational labs: General educational labs are established on the premises of a university and aim to join the theoretical knowledge received in the university with practical activities and to develop 39 the student’s practical engineering capabilities. ANEL (Armenian National Engineering Laboratory) is an example of a general lab that opened in September 2013, the demand for which is gradually increasing. Utilization of general laboratories up to the present has had more of a demonstrative nature, where the students had a passive role of spectators while the instructor was experimenting with the tools. The current downside of general labs is their slow adaptation rate. Specialized company labs. Company labs are established on the premises of the university (or company) at the expense of the company as supporting tools for trainings/education. The labs are mainly aimed at preparing specialists for the investing company. Due to the more certain future employment possibilities under this model, company labs are in high demand among the students. The Synopsys Armenia Educational Department established an educational department within the SEUA faculty on the premises of the company with a special lab. Smaller labs are established in YSU, RAU, and ERA. The downside of such laboratories is the narrow specialization of the trainees, who according to some potential employers encounter difficulties when switching jobs. 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 two domains. Currently, almost all higher education institutions include mandatory internships in their curriculum. However, in some cases, these programs have a formal nature and lack efficiency, e.g., the students do not attend the companies and pass the exams, or are entitled to pass the internship program within the department of the university. Moreover, there are deeper issues on the faculty management level, some representatives of which see the connection with the real sector only via company investments in the university for establishing R&D or training labs with the further recruitment purpose. The survey revealed that most of the internships are not coordinated between universities and the real sector. While the companies generally need interns and seek them using different channels, the graduates and, in some cases, universities do not have set relationships with the companies to organize this flow and generally rely on personal connections to find a relevant company. Only a small number of companies carry out joint programs with the universities in the form of R&D projects or contests. 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. While all the respondent universities have or used to have dedicated career centers, the actual activities of job placement are of an informative nature and have little impact on the employment level of graduates. In addition, career centers are understaffed and underpaid. One of the universities reported a temporary shutdown of the career center, due to lack of funding and staff. University career centers carry out informative functions similar to PR departments, i.e., the main functions of the career centers include attracting companies for campus presentations, networking events, and organizing student trips to company premises, as well as disseminating vacancy announcements for students and faculty via email. Few career centers organize trainings of resume 40 writing or interviewing skills for the upcoming graduates. However, the attendance rate of such events is rather low, - ~33%, indicating the low level of efficiency. Career centers of well-known western universities have larger roles and serve as an efficient channel and component of recruitment for companies from one side and a communication channel for students to the private sector on the other, by constantly keeping in touch with the company HR departments. The function of the career center includes providing HR executives with CVs of relevant graduates for particular vacancies and active engagement in the recruitment process stages, in addition to informational and training activities. Such centers also keep track of the employment statistics of the graduates, as the employment rate is the main KPI of their activities. The local career centers generally do not trace the employment statistics of the graduates due to the lack of communication tools and resources, as well as the low collaboration level of graduates. In fact, career centers are understaffed, with a graduating student/staff ratio of more than 500:1, and are not equipped to contact each graduate and alumnus separately as well as to maintain a contact database. The graduating student/staff ratio of career centers in more developed higher education systems is higher – from 20:1 to 200:1. Thus, being understaffed is another factor affecting the performance and development of career centers and their activities. Currently, there is no significant gap between the job search and job announcement channels in the Armenian IT and high-tech market. Figure 33: Main methods of job search by students (on the left) and their effectiveness (on the right, measured by receiving a job offer) Self-initiated applications to companies 46% 33% References 40% 29% Online announcement channels 24% 10% Recruitment agencies 14% 3% Application to internship company 10% 7% Newspapers 0% 0% Source: EV Consulting, “Market study on HE graduate labor demand and employment in Armenia�, 2011 In search of employment, graduates undertake various measures. Currently, the most popular job search method is self-initiated proactive applications to companies regardless of available vacant positions. With this approach, students tend to contact the target companies to present themselves and try to create a position. The next most popular job search methods are references and online announcement channels, which coincide with the main chosen channels of candidate search by companies. Interestingly, online announcement channels proved to be not very effective in finding employment from the graduates’ perspective, because there are a high number of applications for a single job position. The effectiveness of the channels is measured by success in receiving a job offer. 41 3.3. CASE OF SUCCESSFUL UNIVERSITY-PRIVATE SECTOR COLLABORATION: Synopsys Educational Department The international semiconductor producer Synopsys aggressively entered the Armenian market in 2004, after partnering with local firms for many years. It acquired three chip design automation companies (LEDA Systems, Monterey Arset, Virage Logic) and now is the largest software company in Armenia (600 employees) and the largest Synopsys office outside the US. The Synopsys Armenia Educational Department was established before company acquisitions by Synopsys. The purpose of the project was to prepare microelectronics specialists for LEDA Systems, as experience revealed that already in the 1990s engineering graduates were not qualified for employment. An initial agreement was reached with SEUA to open a special learning department as part of the faculty, where a group of students starting from the third year will be selected based on their excellence indicators and taught by a special curriculum aligned with the business. The physical premises were established near the company, with the objective to immerse the students into ongoing projects (“University goes to the industry premises�). The project was successfully set forth and acquired together with LEDA Systems by Synopsys, which is also providing all financing. Later, the Synopsys Armenia Educational Department began a collaboration with YSU, RAU, and ERA but utilized a different method, where “the industry goes to the university premises�. In spite of best practices in the western culture, where the companies gather on university premises, the methodology did not prove to be as effective as the one with SEUA. Currently, the Synopsys Armenia Educational Department continues preparing engineers for the industry. Although its education is considered too narrowly specialized or practical by some industry experts, 100% of the graduates constantly obtain employment before graduation.  To date, 646 engineers have graduated from the Synopsys Armenia Educational Department, all of who are extremely in demand on the market.  77% are employed by Synopsys Armenia, while 23% are employed in local and international companies such as Microsoft, IBM, etc.  43% of the technical workforce in Synopsys Armenia is supplied by the Synopsys Armenia Educational Department. The department strives for success utilizing several principles:  The number of the students in every intake is kept low. A relatively small number of students in the classroom allows for more individual attention from the instructors as well as more project load per student.  There are a limited number of places and only the best students are selected. The single examination is conducted via the “conveyer� method, where each candidate entering the room is questioned by a number of different instructors in different disciplines. Each discipline is represented by two instructors, who ask different questions to mitigate the subjectivity of the grading. By the end of the examination, the overall grades of the candidates in each discipline are averaged and the top students are selected. 42  The curriculum is intertwined with practical activities. The acquired knowledge is utilized instantly by implementing it in real company projects. Thus, later transferring into an actual job position in the company does not require additional effort for the graduate to adjust.  Relevant hardware and software for the practical activities are provided. The department is well-equipped with technology (about 70 sets of Synopsys Electronic Design Automation tools), the total license cost for which is in the hundreds of millions. The provision of high quality practical knowledge implies high investments, which the universities are not currently able to make.  The lecturers are selected based on superlative characteristics and receive higher salaries compared with university lecturers. The main two principles of instructor selection are the highest available qualification of the specialist in the discipline to be taught and personality traits. According to the head of the Synopsys Armenia Educational Department, any personality traits that are less than superior directly influence the quality of teaching and the outcome irrespective of the qualification of the instructor. Recently, the Synopsys Armenia Educational Department started providing preparatory courses of programming, English, and other technical subjects aimed at preparing second-year students for their full program. Synopsys EE attempted to bring first-year students into the program, but the quality of the students did not prove to be sufficient, and thus the initiative was stopped. 43 3.4. VOCATIONAL EDUCATION IN IT AND ENGINEERING SECTORS The gaps in higher educational systems are being partially filled by the increasing role of vocational training providers. There are two types of training centers currently functioning in the country. The first type is the one supported by government/donor or international corporations, such as the Microsoft Innovation Center, the Armenian-Indian IT Center of Excellence, and mLab ECA. The second type of vocational education is provided by private company initiatives, which in some cases are not training centers as such, but educational alternatives to universities. Examples of such initiatives are the Instigate Training Center and the Synopsys Educational Department. The objective of the first is to prepare junior specialists for Armenian IT companies, while the second aims to meet its own demand for engineering specialists. After graduation from the company training center, the best graduates generally receive job offers. The rest have no legal obligations to the training company and are free to find employment in other IT companies. IT training center services have significant demand from both the students and junior level working professionals. Their estimation of the demand in the next three years is firmly positive. In spite of providing paid trainings, the training centers see a constant increase in demand for their services. Students attend practical trainings to acquire basic knowledge of programming languages as well as to develop their soft skills. There are both short-term trainings with a minimum of six hours activity and long-term trainings with several levels that last up to 6-7 months in total (~180 hours). The courses consist of theoretical knowledge with practical application in a project that the trainees are generally assigned as homework. Table 4: Characteristics and indicators training centers in Armenia MICROSOFT ARMENIAN-INDIAN IT MLAB ECA INNOVATION EXCELLENCE CENTER CENTER TECHNICAL COURSES Available Available Available NON-TECHNICAL DEVELOPMENT Available Available Available COURSES PREREQUISITES Basic knowledge and No requirements for Basic programming algorithmic thinking5 beginners, minimum knowledge required for test score/knowledge transferring to mobile for advanced stages programming platforms ANNUAL NUMBER OF ~1,000 ~500 ~300 GRADUATES 5 The prerequisite is for the beginner level. In order to pass to the next level, the trainee needs to complete the previous training level or have the corresponding knowledge. 44 NUMBER OF 96 10 ~50 INSTRUCTORS AVERAGE AGE OF ~27 ~40 ~33-35 INSTRUCTORS INTERNSHIP Available Not available Not available EMPLOYABILITY RATE 80%-90% N/A 90% Source: EV Consulting university survey The anticipation of the student growth is based on the fact of flexible and practical curriculum the centers provide depending on the market need. Although each of the centers is concentrated on a particular direction (e.g., Microsoft platform, mobile programming, etc.), they have no difficulties in shifting to respond to market changes. The current market information is available through centers’ connections with companies and the instructors, ~80% of which work in a real sector and are familiar with ongoing trends. This guarantees an entry-level employment for students, thus, fostering demand for the training centers. The prerequisites for the trainings vary from center to center and from discipline to discipline. There is no competitive selection among the students, but basic knowledge of fundamentals might be required depending on the level of the chosen training. For example, mLab ECA provides mobile programming trainings; thus, knowledge of the corresponding programming language is a precondition for working on Android, iOS, or other mobile platforms. The availability of internship programs in training centers is underway. The Microsoft Innovation Center collaborates with a number of IT companies to provide a 4-5 month internship programs, during which the students undertake a real project and report to the company. Upon the successful completion of the project, the companies hire the intern on a permanent basis. Currently, training centers do not maintain official statistics on the employment of their graduates; nevertheless, due to the ongoing relationship between the companies and graduates, the information is informally accessible. The Microsoft Innovation Center also provides professional certification programs available from Microsoft Corporation. Engineering educational establishments initiated by the companies prepare specialists that meet international quality standards and are almost 100% employed. These types of educational establishments do not charge fees, but have limited places and select only the best candidates based on their technical knowledge and mathematical/algorithmic aptitude. Classes are intentionally small, as the management believes that a high number of students in the classroom compromises the quality of the graduates. The trainings last longer and replace a significant portion of university education. 6 The number is volatile and depends on the number of courses running at the moment. 45 Table 5: Characteristics and KPIs of educational systems initiated by private companies INSTIGATE TRAINING CENTER SYNOPSYS ARMENIA EDUCATIONAL DEPARTMENT TECHNICAL COURSES Available Available NON-TECHNICAL Not available Available DEVELOPMENT COURSES PREREQUISITES Strong technical knowledge and Capacity to solve technical algorithmic thinking. Strong problems, basic mathematical knowledge of all technical knowledge fundamentals ANNUAL NUMBER OF ~50 ~80 GRADUATES NUMBER OF ~30 67 INSTRUCTORS AVERAGE AGE OF ~30 ~30-35 INSTRUCTORS INTERNSHIP Involvement in company projects Involvement in company projects EMPLOYABILITY RATE 100% 100% Source: EV Consulting university survey, University reports The employment rate is 100% out of which 70% and 77% of the graduates are employed in Instigate and Synopsys respectively. There is a lack of professional on-the-job training programs for senior developers on the market; companies are closing this gap through in-house provision of on-the-job training. Currently, there is a huge demand in professional training programs for senior-level specialists in both the IT and high-technology subsectors. The general trend with the senior developers reveals a narrow specialization tendency, which is relevant in the employer company. Owing to the absence of such trainings, the cost of recruiting senior specialists and requalifying them is very high for companies. Base- level specialists tend to be raised from junior specialists within the company environment; nevertheless, the respondents confirmed that in case of training availability, the demand for senior developers would be considerable. Large international companies have opportunities and can afford to requalify senior level specialists abroad, particularly in their headquarters. Nevertheless, despite their financial capabilities, management still considers the opportunity too costly and would prefer to train the staff locally. The international trainings are more preferable after the employee has already spent some time inside the company. 46 4. SUMMARY AND HIGH LEVEL RECOMMENDATIONS Currently, the number of graduates with IT specializations annually closely coincides with the annual new demand in the overall market, but only 45% of the graduates consider employment in the sector, thus, creating a quantitative workforce imbalance. ~450 graduates ~2,000 new specialists demanded IT and high-technology sector The estimated number of needed specialists derived from the demand only in the IT and high- technology sector and does not include non-IT and non-high technology companies, which are also in need of IT specialists. Thus, the actual demand in the market might be much higher than 2,000 new specialists per year. In addition, due to the positive and rapid industry dynamics, there is also a qualitative skills gap conditioned by the following factors:  Teaching programs are not fully meeting private sector requirements: the private sector assessment for practical and theoretical knowledge of graduates is below average.  More effective links are needed between universities and private sector companies in respect to internships and recruitment procedures.  There is a need to have professional development opportunities for the teaching staff  Teaching staff is aging, while the younger generation with hands-on experience has little interest in an academic career.  University programs do not emphasize to the fuller extend the self-development and self- educational capabilities of graduates, essential for the dynamically developing industry.  The university degree program is too long in comparison with industry dynamics and stifles the development of students until they reach the workforce market.  There are no high-level training programs for base and senior level specialists to requalify. The shortage of expertise results in a dysfunctional labor market, where remuneration by foreign owned and locally owned companies has disproportionate differences. Also, the quantitative balance in place at present will be negatively affected in the next several years, due to several factors, such as:  military service will result in a decreased applicant number for 1-2 years with a corresponding lower number of graduates in 4-5 years.  low student enrollment during 2018-2019 because of low birth rates in 2001 and 2002. 47 Sector competitiveness is on the verge of diminishing, unless policymakers take practical steps to balance the situation. 4.1. HIGH-LEVEL SHORT-TERM RECOMMENDATIONS AND KEY POINTS FOR POLICYMAKERS A new university curriculum should be developed together with the private sector The overall curriculum needs a revision and amendments to be better aligned with industry needs. For this purpose, it is recommended that special curriculum development boards be established and board members be elected from industry specialists and executives. The contribution of industry specialists to curriculum development is essential to make it more relevant and attuned to industry needs. The quota of government-funded students for IT specializations at universities should be increased. It is recommended that policymakers explore the possibility of increasing the quota of students in IT- related faculties whose tuition is funded by the Government. Provided there is additional budget, a higher free student quota, which is allocated to students based on their entrance exam results, will attract more qualified candidates. The link between universities and the private sector should be strengthened through transforming the role of mandatory internship/apprenticeship programs. The changes in the university-private sector relationship currently underway globally are possible to implement in the short term in Armenia only through the intervention of policymakers. Dialogue between the parties can be compelled through the creation of a new standard of internship programs — apprenticeship, mandatory for students to receive the degree. To address the gap of practical knowledge/experience, the Union of Information Technology Enterprises (UITE) developed and suggested a concept of mandatory internship-apprenticeship programs for students in all Armenian universities. The concept proposes mandatory part-time employment with a gradually increasing number of working hours for all students starting from their first year. This would ensure that by the time of official graduation, the specialists will already have work experience to develop their specialist qualification and actual portfolio projects to demonstrate their on-the-job capabilities. This initiative will enable a quick transfer of professional knowledge to students from companies and knowledge sharing among the students themselves, which will naturally raise the expectation levels from the educational establishment and gradually change the teaching program. Besides recruitment opportunities, the companies should be incentivized by additional benefits such as publicity, free or low-cost workforce, etc., and should monitor the progress of the student. More young professionals from the real sector should be encouraged to teach in universities to bring practical skills into the classroom. The lack of relevant remuneration and prestige in an academic career should be addressed by encouraging younger professionals to become involved in the university teaching experience. Their 48 interest can be raised by initiating relevant R&D projects, professional trainings, guest-lecturing practices, additional bonus programs for young faculty, etc. The presence of younger generation instructors is the main precondition for the implementation of international and up-to-date teaching standards in the universities. Moreover, academia needs to prepare qualified replacements for the aging generation of lecturers. The urgent need for base- and senior-level specialists can be satisfied by the creation of special training programs, currently absent in the market. Currently, there are no high-level qualification training programs for middle and senior developers available in the market. Due to the narrow specialization of senior staff, the retraining of high-level specialists on the job requires considerable time and resources and represents a high cost for companies. Correspondingly, the demand for high-level qualification trainings increases, creating a niche segment for training centers. The lack of senior staff can be addressed by providing a set of requalification trainings to base- and senior-level specialists, in order to make career transitions more affordable for companies and flexible for developers. This can be implemented through a dedicated support mechanism (technical assistance to identify the relevant niches and develop content, cofinance the infrastructure) to private training providers or by setting up publicly-funded training programs. Utilizing and creating online training courses as a blended learning format can also supplement these training programs in a cost-effective way. Cofinancing schemes for workforce development through the creation of training centers can help smaller companies to close the skill gap. The skill mismatch can be addressed through enhancing the resources that smaller companies can spend on training and development. Special co-financing schemes (with matching requirements) can be developed supported by the government or international donor programs to establish special training centers within the companies. Specifically, companies meeting predefined requirements (size, local ownership, etc.) may be eligible for cofinancing of short- to medium-term training courses for their employees locally and abroad. This approach may be especially useful for training senior developers, who currently have no requalification trainings available for them on the market. In special cases, cofinancing may be granted also to establish corporate training centers. Widespread and targeted communication campaigns should be organized to highlight the prospects and strong market demand for the engineering profession. Due to the significance of the IT industry within the local economy, these problems need to be addressed urgently and intensively. An effective approach suggests increasing both the quantity and the quality of graduates to ensure an increase in the number of qualified specialists. The quantity of applicants in technical faculties can be stimulated by information campaigns on the engineering profession, in which the engineer is presented as a person solving real-life problems rather than an office clerk doing “dull coding work�. 49 4.2. HIGH-LEVEL LONG-TERM RECOMMENDATIONS AND KEY POINTS FOR POLICYMAKERS University funding would need to be increased as well as diversified through research grants and endowment foundations. Currently, the Armenian IT industry is at the inflection point from where it can accelerate into rapid high value growth. Achieving the next level of value addition will require a significant increase in the number and the quality of the labor force. Only comprehensive, focused and collaborative engagement of the government and private sector can have a sizeable impact. Intervention into the educational system faces possible strategic choices:  A focused approach that is based on the principle that with limited resources it is vital to target the “critical pressure points� by focused interventions and mainstreaming the results throughout the entire system. The approach puts the emphasis on the creation of a small number of centers of excellence to become the agents of change for the system.  A horizontal approach suggests a more balanced advancement in the existing educational system by opening small-scale centers of excellence. Within the frame of this approach, the role of the change agent is distributed among a much larger number of institutions and the best professional resources are more spread throughout the system. Funding diversification can be implemented through attracting R&D grants and establishing endowment foundations. Currently, except for the American University of Armenia, no other Armenian university has an endowment fund. The number of university-based laboratories that are established with the help of multinationals should be scaled up. The establishment of laboratories in cooperation with multinationals helps to expose students to global best practices and the latest technologies. Similar to the establishment of ANEL together with National Instruments, USAID, and the Government, more laboratories need to be established on the university premises to strengthen the technical environment for students. The spread of labs with different multinationals will help mitigate the risk of concentrating the students’ learning only on the technologies of a limited number of multinationals. Creating a certification program that would allow preparing software programmers in less than four years will help increase the supply of labor in the medium term. Taking into consideration the rapid dynamics of the industry it may be beneficial to augment four year degree programs with certification programs. The educational solution to the current industry speed that can be considered is an introduction of globally recognized certification programs or, when applicable, associate degrees. Such programs can be university-based and be provided in addition to standard degree programs. 50 The advantages of introducing non-degree programs are their intensity as well as their shorter duration, which is aligned with the high speed of industry development dynamics. The disadvantages are the absence of general education subjects; however, these programs is not intended to substitute for traditional degree-based education. These university based training programs would complement certification or training programs provided by private training centers. This will increase availability of labor force for outsourcing and entrepreneurial models. Currently, the value of such trainings is crucial in the sector. The universities would benefit from transforming their career centers into a modern support mechanism for their graduates. Universities may consider redefining the role of career centers by making them an important element of their service delivery process. Specifically, apart from information dissemination, the role of the career centers in the recruitment process should be improved and highlighted. The centers may also institute advanced performance measurement systems to track the progress and communicate to potential applicants, graduates, and alumni. Publicly accessible performance data will help create a transparent competitive landscape. A dedicated technical assistance program may help spread such practice in leading universities. If Armenia aspires to transition from an outsourcing and development center destination to an innovation and design center functioning under the entrepreneurship model, it has to integrate fundamental and hard-core research into its university system. The innovation in IT requires world class research, knowledge and expertise. The development of innovation and R&D capabilities is easier to inculcate if students are accustomed to performing fundamental research from the early years of their study. The integration of public research in university education can substantially enhance the role of universities. Outsourcing of R&D projects to university groups and engaging students would gradually increase the level of complexity and sophistication. High-tech accelerators can become the new type of schools for entrepreneurs. The growth of the entrepreneurship model suggests the need for new types of skills and knowledge in addition to the traditional approach, as discussed in the report. As the new model is based on more innovation and product development, it eventually requires radically new approaches to education and skills development to move up the innovation value chain. The model is crucial for the further development of the IT industry as Armenia is a small country, which realistically cannot compete on cost over the long term without a higher skill level. Currently, different types of accelerators and mentorship programs are becoming the new type of educational establishments for high-tech entrepreneurs. More and more young entrepreneurs in advanced economies prefer to gain practical experience of building startups in accelerators for a short period of time rather than spend years in business schools and other mainstream establishments. The number of accelerators, incubators, mentorship programs, and startup competitions is also growing in Armenia, but needs more highlighting. Specifically, the proliferation of accelerators and 51 entrepreneurship programs and contests should be supported by public money at the initial stage, which will trigger private players to step in and take advantage of the trend. Mentorship programs with Diaspora representatives of the entrepreneurial ecosystem need to be organized for better knowledge transfer. Similar to the Israeli model, some Armenian entrepreneurs that have been successful in developed markets should be heavily involved in building the ecosystem. This should be organized mostly by public intervention with the support of the local private sector. 52 5. APPENDIX 5.1 COMPANIES SURVEY Questionnaire ID Nr. ____ EV Consulting contracted by the World Bank is conducting a research study of Armenia’s IT sector aimed to assess the sector’s need in qualified personnel and human capital. The survey will require about 20 -30 minutes of your time. CONFIDENTIALITY: Survey responses are strictly confidential and individual responses are not identified. Date of the interview _________________________________ GENERAL INFORMATION ABOUT THE COMPANY Name of the company _________________________________________________________________ Name of the respondent ________________________________________________________________ Position of the respondent_______________________________________________________________ Location of the company ____________________________________________________ 1. Please, state the main services/products offered by your company 1.1 __________________________ 1.2 __________________________ 1.3 __________________________ HUMAN RESOURCES 2. Please, state the total number of PERMANENT employees at your company __________ 3. Please, state the total number of NON-PERMANENT employees at your company_________ 4. Please, state the number of your permanent TECHNICAL/MANAGERIAL STAFF_________ 53 5. Please, state the share of your specialists in the total number of TECHNICAL/MANAGERIAL staff by the following factors. % in total TECHNICAL/MANAGERIAL staff 5.1. Specialists with foreign education/work experience 5.2. Specialists with good knowledge of English 6. Please, state the educational level of your PROFESSIONAL/MANAGERIAL staff. % in total TECHNICAL/MANAGERIAL staff 6.1. Technical (non-higher) 6.2. Higher education – Bachelor’s degree 6.3. Higher education – Master’s degree 6.4. PHD (including candidate of science and doctor of science) 7. Please, state what are the constraints in recruiting? � 7.1. Lack of qualified candidates � 7.2. Lack of recruiting personnel � 7.3. Lack of budget � 7.4. Lack of attractive salary � 7.5. Lack of future business opportunity/contract pipelines � 7.6. Others________________________________________ 8. Which recruiting channels do you use and how frequent? 5= Every Channel 1= Never 2= Rarely 3=Sometimes 4= Often time 8.1. Online sources 8.2. References 8.3. Recruiting agency 8.4. University relationship 8.5. Newspaper 8.6. Other_______ 54 9. Do you have any preference for recruiting from certain universities or training institutions? � Yes �No (Pass to Q11) 10. If yes, please state from which universities and training centers you prefer to hire and why. University/Training Center Reasons for preference 10.1.1. 10.2.1 10.1.2. 10.2.2. 11. Does the candidate’s discipline/major of study matter when hiring? � Yes �No 12. If yes, please state from which discipline/major of the study you prefer to hire and why. Discipline/major Reasons for preference 12.1.1. 12.2.1. 12.1.2. 12.2.2. 13. How important are each from the following factors, when recruiting candidates? 1=Not 2=Relatively 3=Important important important 13.1. Subject matter knowledge/Technical skills 13.2. Education qualification/University degree 13.3. Attitude/Motivation 13.4. Soft skills (communication, team-work) 13.5.Ethics/fit with the company culture 13.6. Other_____________________________ 14. How many hours on average per year does your company spend on training a newly recruited candidate? _________ 55 15. How much budget do you spend on average per newly recruited candidate per year? _________ 16. Please, describe your off-job trainings (duration, depth, etc.) _________________________________________________________________________________ _________________________________________________________________________________ 17. What are the main topics the off-job trainings cover? � 17.1. Technical knowledge/skills � 17.2. Soft skills (teamwork, communication) � 17.3. Managerial skills/Project management � 17.4. Sales and marketing � 17.6. English � 17.7. Other _________________________________________ We would like to understand your company’s need for specialists and management in SHORT-TERM (coming 3-4 months) and LONG TERM (next 3 years) perspectives. SHORT-TERM perspective 18. Does your company need to recruit new specialists in the coming 3-4 months? � Yes �No (Pass to Q18) 19. If yes, state the number of employees by specialization and level your company needs in the coming 3-4 months. Requirements Number of employees Specialization (education level, soft needed in the coming 3- skills, experience etc.) 4 months 19.1.1. 19.2.1. 19.3.1. 19.1.2. 19.2.2. 19.3.2. 19.1.3. 19.2.3. 19.3.3. 56 LONG-TERM perspective 20. What are your expectations regarding the number of your PROFESSIONAL/MANAGEMENT STAFF in the next 3 years? Average annual increase/decrease, % The number of specialists will increase The number of specialists will decrease (Pass to Q20) The number of specialists will roughly remain the same (Pass to Q20) 21. Please, state specifically what specialists you plan to hire in the next 3 years. Requirements Number of employees Specialization (education level, soft needed in the next 3 skills, experience etc.) years 21.1.1. 21.2.1. 21.3.1. 21.1.2. 21.2.2. 21.3.2. 21.1.3. 21.2.3. 21.3.3. IT AND ENGINEERING GRADUATES 22. Please, evaluate the graduates of local universities in IT and high tech by the following factors. 5=Excellent 4=Good 3=Average 2=Fair 1=Poor 22.1. Subject knowledge 22.2. Practical technical skills 22.3. Soft skills (communication, team-work) 22.4. English 22.5. Other_________________ 57 23. Which skill do you expect the potential candidate to be trained at the university/training institutions before joining the workforce? And how important each skill is? 1=Not 2=Relatively 3= Important important important 23.1. Subject matter knowledge 23.2. Practical technical skills 23.3. Soft skills (communication, team-work) 23.4. English 23.5. Other_________________________ 24. Which is THE MOST CRITICAL skill/knowledge that in your opinion most IT and Engineering graduates lack and need to improve. _________________________________________________________________________ 25. In your opinion what could be done to improve the quality of graduates and young specialists in IT and high tech sector. __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ Tel. number of the respondent _______________________________________________ Thank you for taking the time and answering our questions! 58 5.2. UNIVERSITY SURVEY Questionnaire ID Nr. ____ EV Consulting contracted by the World Bank is conducting a research study of Armenia’s IT education. The interview will require about 30 minutes of your time. CONFIDENTIALITY: Interview results are strictly confidential and individual responses are not identified. Date of the interview _________________________________ GENERAL INFORMATION ABOUT THE UNIVERSITY Name of the university ___________________________________________________________ Name of the respondent __________________________________________________________ Position of the respondent _________________________________________________________________ The main IT and high tech related departments and quotas at each department Department Quota STUDENTS AND GRADUATES 1. The total number of graduates with IT majors per year _________________ 2. The total number of graduates in Engineering majors per year _____________ 3. The total number of graduates per year _________ 4. The total number of currently enrolled students in IT departments __________ 5. The total number of currently enrolled students in Engineering departments ___________ 6. The total number of currently enrolled students ___________ 59 7. What are your expectations regarding the enrolment and number of your graduates from IT and Engineering departments in the next 3 years? __________________________________________________________________________________ __________________________________________________________________________________ __________________________________________________________________________________ INSTRUCTORS 8. The total number of your teaching staff _____________ 9. The total number of your teaching staff in IT department _____________ 10. The total number of your teaching staff in High Tech department _____________ 11. The average age of your instructors _____________ 12. Do you have instructors that work in private sector and have hands-on industry experience? � Yes �No 12.1 (if yes, detailed description) _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 13. In your opinion what are the main impediments for recruiting highly qualified teaching staff? (e.g. low salary of professors) ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ CURRICULUM AND STUDY PROGRAMS 14. In your opinion, do the curriculum and study program at your university meet the demands of the private sector in preparing qualified graduates and job candidates? ____________________________________________________________________________________ ____________________________________________________________________________________ 60 15. (Only for computer science departments) Which programming languages do you teach? 15.1. Describe the courses (number of hours, teaching methods etc.). ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ 16. Do you have internship programs for students? If yes, is it mandatory? Please, describe the internship (duration, depth etc.). � Yes �No 16.1. (internship description) ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ 17. Do you have a joint program/initiative/lab with a private company? � Yes �No 17.1. If yes, please, describe. _____________________________________________________________________________________ _____________________________________________________________________________________ 18. Do you get any input from private sector on your course materials/curriculum development? � Yes �No 18.1 (if yes, please, describe) _____________________________________________________________________________________________ _____________________________________________________________________________________________ 19. Do you offer a professional skills certification program (e.g. SAP, Oracle etc.) in addition to regular degree programs? � Yes �No 61 STUDENTS JOB PLACEMENT 20. Do you have dedicated career center/employee to support your students with job/internship search and placement? � Yes �No 20.1 (if yes, please, describe) ____________________________________________________________________________________ ____________________________________________________________________________________ 21. Do you track the job placement of your students? � Yes �No ____________________________________________________________________________________ ____________________________________________________________________________________ 22. Do you have any statistics regarding the job placement of your graduates? � Yes �No 22.1. (if yes, please, describe) ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ 23. Do you teach your students’ job search related skills such as resume writing, networking, job interview etc.? � Yes �No 23.1. (if yes, please, describe) ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ 62 24. Do you know which job search channels your students use? Please, rate how often each channel is used. 5= Every Channel 1= Never 2= Rarely 3=Sometimes 4= Often time 24.1. Online 24.2. Personal connections/ references 24.3. Recruiting agency 24.4. University-Private sector relationship 24.5. Other______ Tel. number of the respondent _______________________________________________ Thank you for taking the time and answering our questions! 63 5.3. TRAINING CENTER SURVEY Questionnaire ID Nr. ____ EV Consulting contracted by the World Bank is conducting a research study of Armenia’s IT education. The interview will require about 30 minutes of your time. CONFIDENTIALITY: Interview results are strictly confidential and individual responses are not identified. Date of the interview _________________________________ GENERAL INFORMATION ABOUT THE TRAINING CENTER Name of the training center _______________ Name of the respondent _______________ Position of the respondent _______________ Main courses offered _______________ 1. Was the establishment of the training center a private initiative or a government/international organization initiative? � Private initiative � Government/international organization initiative 1.1. (Description) ____________________________________________________________________________________ ____________________________________________________________________________________ TRAINEES AND GRADUATES 2. The total number of graduates of your center per year ____________ 3. The total number of graduates in IT per year ____________ 4. The total number of graduates Engineering per year ____________ 5. The total number of currently enrolled trainees at your center ____________ 6. The total number of currently enrolled trainees in IT ____________ 7. The total number of currently enrolled trainees in Engineering ____________ 64 8. What are your expectations regarding the number of your enrolments and graduates (and those who are in IT and Engineering majors) in the next 3 years? ____________________________________________________________________________________ ____________________________________________________________________________________ 9. What are the selection criteria and requirements of acceptance to your training program? ____________________________________________________________________________________ ____________________________________________________________________________________ INSTRUCTORS 10. The total number of your teaching staff _________ 11. The total number of your teaching staff in IT department _________ 12. The total number of your teaching staff in Engineering department _________ 13. The average age of your instructors _________ 14. What is the final education degree of the instructors? (categorize in proportion among BA, MA, and PhD) _________ 15. Do you have instructors who, also, teach at universities? � Yes �No 15.1. (additional information) ____________________________________________________________________________________ CURRICULUM AND STUDY PROGRAMS 16. Describe your training courses (duration, depth, study plans, main topics covered etc.) ____________________________________________________________________________________ ____________________________________________________________________________________ 17. In your opinion, do your courses meet the demands of the private sector in preparing qualified graduates and job candidates? _____________________________________________________________________________________ _____________________________________________________________________________________ 65 18. (In case of software development) Which programming languages do you teach? 18.1 Describe the courses (number of hours, teaching methods etc.). _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 19. Do you have internship programs for trainees? If yes, is it mandatory? � Yes �No 19.1. Please, describe the internship (duration, depth etc.) ____________________________________________________________________________________ ____________________________________________________________________________________ ____________________________________________________________________________________ 20. Do you have a joint program/initiative/lab with a private company? � Yes �No 20.1. If yes, please, describe. _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________ 21. Do you get any input from private sector on your course materials/curriculum development? � Yes �No 21.1 (Please, provide details) _____________________________________________________________________________________________ _____________________________________________________________________________________________ 22. Do you offer professional skills certification programs (such as SAP, Oracle, etc.), in addition to your regular training courses? � Yes �No 66 22.1. (Please, name the courses) ____________________________________________________________________________________ ____________________________________________________________________________________ TRAINEES JOB PLACEMENT 23. Do you have dedicated career center/employee to support your trainees with job/internship search and placement? � Yes �No 23.1. If yes, please, describe its activities. ____________________________________________________________________________________ ____________________________________________________________________________________ 24. Do you track the job placement of your trainees? � Yes �No ____________________________________________________________________________________ ____________________________________________________________________________________ 25. Do you have any statistics regarding the job placement and career of your trainees? � Yes �No 25.1. (If yes, please, provide additional information) ____________________________________________________________________________________ ____________________________________________________________________________________ 26. Do you teach your trainees job search related skills such as resume writing, networking, job interview etc.? 67 � Yes �No 26.1. (If yes, please, describe) ____________________________________________________________________________________ ____________________________________________________________________________________ 27. Do you know which job search channels your trainees use? Please, rate how often each channel is used. 5= Every Channel 1= Never 2= Rarely 3=Sometimes 4= Often time 27.1. Online 27.2. Personal connections/ references 27.3. Recruiting agency 27.4. Training center - private sector relationship 27.5. Other______ Tel. number of the respondent _______________________________________________ Thank you for taking the time and answering our questions! 68 5.4. LIST OF THE SURVEYED PARTIES COMPANIES UNIVERSITIES 1. National Instruments, Armenian Branch 1. European Regional Academy 2. Symotec LTD 2. Russian-Armenian (Slavonic University) 3. Synopsys Armenia CJSC 3. American University of Armenia 4. Nairi-Tech LLC 4. Yerevan State University 5. Artin Varoujan CJSC 5. State Engineering University of Armenia 6. Agnian LLC 7. Instigate CJSC 8. Ani-Test CJSC 9. CQGI MA 10. Macadamian AR CJSC TRAINING CENTERS 11. Flexible Applications CJSC 12. Monitis GFI CJSC 1. Instigate Training Center Foundation 13. Plexonic 2. Microsoft Innovation Center Armenia 14. SFL LLC 3. Armenian-Indian ICT center of excellence 15. Shahumyan Media LLC 4. mLab ECA 16. LTXC Credence LLC 17. OMD 18. X-tech Studio 19. Idram LLC 20. Essential Solutions LLC OTHER PARTIES 21. Zoom Graphics LLC 22. Mentor Graphics, Armenia 1. Union of Information Technology 23. LynxSEL LLC Enterprises 24. X –art LLC 2. ANEL Laboratories 25. Volo LLC 3. Synopsys Armenia Educational 26. Eyesoft LLC Department 27. Locator CJSC 4. SEUA Career Center 28. Seven Smarts LLC 5. Granatus Ventures 29. LimeTech LLC 69