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A blog about economics in the South Caucasus.

IT Flu in the Armenian Labor Market

This article is based on field research and interviews with IT experts.

We are living in an era of advanced technology, and with such rapid development the changing landscape of the online world has dramatically changed our daily lives. There is no doubt that over the years technology has created amazingly useful resources, which has placed all the information we could need at our fingertips. Software is devouring the world, and you can imagine that this is great news for IT professionals. It’s not just Facebook and Google that need IT professionals. Almost every single industry is becoming dependent on those who know how to write code. The data backs this up, according to the U.S. Bureau of Labor Statistics, careers in software development are expected to have grown 17% from 2014 till 2024. They categorize this growth as “much faster” than the average rate among other professions. Because technology is only going to change more and more over the following ten years, there has never been a better time to be a developer.

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A few months ago, I came across at an article listing Yerevan, together with New York, San Francisco, Singapore, etc., among the best cities for tech career opportunities. Crucially, it identified that “Research shows that by 2025, the need for programmers in Armenia will have tripled to 30.000”. The World Bank also highlights the issue, “Due to growing number of IT companies in Armenia, demand in IT specialists will continue to increase” (IT Skills assessment in Armenia, World Bank, 2014).

Not long after, my younger brother (a fourth-year student at Yerevan State University, studying Actuarial and Financial Mathematics) and I had a conversation about his future education and career development possibilities. I shared this information, and I told him that IT specialists are now in greater demand than any other specialists, and have been for at least the last 5-7 years. Moreover, many people are retraining as IT specialists. Consequently, I suggested he should also think about applying his skills in the IT industry. He could readily start learning programming languages, either by himself or by taking a short (6 month) programming course. We left the conversation there, though a little while later I started wondering whether I had given him good advice!


WHY ARE SO MANY PEOPLE ATTRACTED TO THE IT SECTOR?

While working in an Armenian commercial bank (it was a few years ago), I got to know a young finance fella, Vahag, who at the time was leading the “Operations in Securities Market” department. A little later, I found that Vahag’s career goal was to become an IT specialist. “Imagine, without applying any physical strength, I can write a code, and the next second I can see a running dude in my screen, isn’t it fantastic”, Vahag once told me. He also added that it is a world of endless creativity. A year later, he quit his job and started pursuing his dream career. Today, guess what, Vahag, in his early thirties, is a senior IT specialist, and his desire has been achieved!

A few days ago, chatting with Vahag, I brought up my recent queries, “Why are so many people changing their occupation and switching to IT professions? Are they unsuccessful in their current jobs or has the IT sector become so attractive in Armenia that people do not mind starting from the very bottom?” Also, of equal importance, “Is the profession feasible for anyone? Can just anyone become an IT specialist?”

Are there any challenges in the process of retraining?

Hayk, a teacher at the Armenian-Indian Center for Excellence in Information and Communications Technology (ICT), also confirmed my hypothesis, that many people are changing their profession and taking private courses. He revealed that he spends 6 hours a week with his students. And, most importantly, he said that if someone wants to become (retrain) an IT professional, they should spend 6-8 hours a day on home assignments and beyond, no less, by themselves. Without this training, their goal to become an IT professional will fail.

Essentially, Vahag, not being a fresh graduate nor in his early twenties, had only two options; either to learn by himself or to take a short (typically 6 months) course offered by various centers (such as the Armenian-Indian Center for Excellence in Information and Communications Technology (ICT), the Microsoft Innovation Center Armenia (MIC), the Innovative Solutions and Technologies Center in Armenia (ISTC), etc.), which deliver training on the fundamentals of programming for beginners. As he pointed out, taking those courses alone is not enough, “Either basic and simple stuff is being taught during those courses or the jump from simple to hard stuff is so sharp that it is difficult to keep up. Even if someone takes such courses, they’re required to spend an enormous amount of time to also learn by themselves.” Vahag emphasized that was what he actually did. He spent a lot of time learning by himself, watching thousands of videos and reading literature day and night to fill the gaps in his knowledge. Four years later, having started in a junior position, he has now attained a senior level. He, moreover, highlighted that 90% of his colleagues are hardworking, self-taught programmers too.

Therefore, it turns out many people are able to learn the profession. Though, their achievements in the field directly depend on their efforts. “However, I think that people with backgrounds in computer science or related fields will make the IT sector stronger”, Vahag suggested.


WHAT ADVANTAGES DOES THE IT SECTOR OFFER TO INCENTIVIZE SWITCHING PROFESSIONS?

As Vahag and other IT experts mentioned, there are several key reasons:

  • High wages;
  • Fairness in IT sector;
  • Easy entry conditions;
  • IT Profession is feasible to anyone.
Average monthly nominal wages by type of economic activity, 2018, January – December
IT $800
Public administration and defense, compulsory social security $500
Construction $400
Health and social work activities $300
Education $250
 Source: armstat.am

In order to highlight the issues, it is important to discuss each one separately and thoroughly. Firstly, although Armenia is still regarded as a low-cost location for outsourcing software development (State of the Industry Report: Information and Telecommunication Technologies Sector in Armenia, Enterprise Incubator Foundation, 2018), salaries are relatively high (the average salary for a junior IT specialist- $350; a mid-level IT specialist- $700; a senior IT specialist- $1.500) compared to other local sectors, and in some cases are even more attractive than in Europe. Imagine a retrained IT professional, who worked, for instance, in the banking sector for five years, and switched into IT. Would they take a junior position, where they have to take a lower salary than with the bank? The answer is clear, a freshman IT specialist, with no experience, would be earning at least as much as a retained worker, with five years in the banking system. Clearly, high salaries are the chief factor behind incentivized migration into the sector.

Secondly, as the experts stated, fairness prevails in the IT sector. How can one differentiate a bad programmer from a good one? How can one measure the quality of a programmer’s work? In essence, the quality of a programmer is perceptible within the code developed. Thus, cases where poorly qualified programmers achieve, for instance, a senior level, are at a minimum. Subsequently, everyone attains the levels they deserve. The IT sector therefore offers a level of fairness, which incentivizes people to grow and further demonstrate their positive qualities.

Easy entry conditions: Are fresh IT graduates and retrained IT specialists in the same shoes?

Many in the Armenian job market will remember how it feels to have recently graduated and to lack any workplace experience. Employers usually require a certain number of unpaid work hours in order to demonstrate employee skills. Could a retrained IT specialist, most probably not in their early twenties, likely having left another job, and in some cases with a family to support, agree to such terms? While a fresh IT graduate may settle on such entry conditions, it is unlikely to be the case for somebody retraining into IT!

With this in mind, I interviewed IT experts to discuss the question, and it turns out that, besides the formal IT sector labor market, freshman IT professionals also have the option of the informal labor market- going freelance. As the experts highlighted, many IT workers (regardless of education background) started their career, with ease, by completing freelance jobs. Doing so, they gained necessary experience and were able to move into the formal labor market of various operational IT companies. The experts also crucially pointed out that, regardless of career or past education, everyone with the necessary knowledge and skills has the chance to try and start a career in the IT sector. Moreover, any required unpaid hours are an exception in the sector. Therefore, there are no entry or monetary obstacles for individuals switching into the IT sector.

IT profession is feasible to anyone

A 2014 World Bank report, IT Skills assessment in Armenia, shows that, of all technological companies, 87% are IT companies and the remaining 13% are High tech companies. It is thus worth noting the difference between such companies:

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.

Therefore, the majority of companies operating in Armenia are concentrated on software and web development. As Vahag and other experts explained, most programming languages are high-level languages, and IT specialists do not deal with computer hardware. The relative ease of learning those programming languages is undoubtedly one of the key reasons why so many people change their professions to IT.

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Finally, returning to whether the advice to my younger brother was appropriate. As he is about to graduate, without work experience, the message of this story is that if you are ready to devote a lot of time and effort into learning a new profession, into IT, only then is it worth a shot. Only then will you have a chance to succeed, otherwise, you will likely remain in a junior role.


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Friday, 06 December 2019

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