The U.S. economy has grown rich in job opportunities but poor in skills. Since COVID-19, surveys by Gartner, the National Federation of Independent Business (NFIB), the Society for Human Resource Management (SHRM), and others have consistently shown that employers can’t find people qualified to fill their open roles. The zero-sum competition for scarce workers like software developers, data scientists, and cybersecurity specialists is encouraging job hopping and wage inflation.
I know what it’s like to fight this pyrrhic war for talent. A decade ago, my prior company, Phone2Action, couldn’t fill technical roles with a conventional hiring strategy. We launched an apprenticeship program as an experiment, and within a few years, former apprentices made up 30% of our team.
Since then, I’ve gone on to help companies implement their own tech apprenticeships. However, I’ve found that widespread misconceptions about apprenticeships deter many employers.
This piece will set the record straight on what tech apprenticeships are, why they cost less than hiring externally, and how they create powerful ripple effects in organizations and their communities. As I’ll illustrate, apprenticeships are the only sound foundation for a sustainable talent strategy.
1. A Tech Apprenticeship Is Structured Job Training, Not an Internship
Many business leaders confuse tech apprenticeships with internships, which have some reputational baggage. Executives who felt they babysat interns earlier in their careers hesitate to place that responsibility on key talent. These fears are understandable but don’t apply to apprenticeships.
A registered tech apprenticeship is a paid, full-time job that immerses the apprentice in a team and its work to create a professional. Apprentices are hired at will; start with a modest wage; and usually learn hands-on for 2,000 hours, or about 1 year. Registered apprenticeships must meet Department of Labor (DOL) standards to ensure the program can produce a software developer, data scientist, cybersecurity specialist, etc., with zero asterisks.
Internships, on the other hand, aren’t required to meet any standards around pay, duration, skill development, or outcomes, which is why internships can vary so much in quality.
Tech apprenticeships also differ from the more familiar trade apprenticeship, which relies on a one-on-one “master-apprentice” relationship. Modern tech workers tend to operate in a collaborative, cross-functional environment with shared software applications and culture. Thus, tech apprenticeships immerse apprentices in a team and network of mentors who provide feedback and coaching. In other words, the burdens of training are distributed.
2. Training an Apprentice is Less Expensive Than Hiring Externally
Many employers assume apprenticeships cost more than hiring “qualified” candidates. This assumption is wrong, and the reason is turnover.
The Department of Labor (DOL) reports that 94% of workers who complete a registered apprenticeship program retain employment, and their 3-year retention rate is 89%. Apprentices are motivated to complete their program because doing so can easily triple their income and transform their career trajectory. Anecdotally, apprentices usually feel loyal to the organization and team that believed in their potential.
For comparison, the average churn rate at brand-name tech companies was under 2 years before COVID-19 and the Great Resignation. Moreover, Monster.com’s February Jobs Report found that 96% of workers plan to search for a new job in 2023, and 43% are already on the hunt.
Employers can’t count on critical employees to stick around, and replacing them costs one-and-a-half to two times their salary by Gallup’s estimate. Plus, it can take 5 months to 8 months before a new professional hire is fully productive.
Let’s do the math. You can hire a software engineer with a $120,000 salary; spend 8 months bringing them up to speed; lose them in a year and a half; eat a $220,000 replacement cost (by Gallup’s estimate); and repeat. Or, you can hire a software engineering apprentice for about $63,000; mold them to your organization’s needs; and retain them for at least 3 years. Likewise, you can hire a customer success professional with a base salary of $80,000 and pay $160,000 to replace them or hire an apprentice at $45,000 and enable upward mobility based on performance. A customer success manager with on-target earnings (OTEs) can easily bring home $300,000.
3. Tech Apprenticeships Have Powerful Ripple Effects
Apprenticeships are more than a talent solution for employers with skills shortages, and business leaders often underestimate their wider impact. Essentially, apprenticeships democratize opportunities for reskilling and upskilling. That’s a win for apprentices, employers, and cities.
Tech apprenticeships can and should serve people who are chronically overlooked by employers, whether because of age, disability, neurodiversity, race, socioeconomic status, or education. Factoring diversity, equity, and inclusion (DE&I) into apprentice selection isn’t political; it’s just smart business.
As consulting firm McKinsey has shown time and again, teams with gender, racial, and cultural diversity are more likely to achieve higher-than-average financial performance. Employers that understand that advantage and try to increase DE&I often say they can’t find diverse people qualified for their open roles. Apprenticeships solve that problem with skills-based training.
The result is a virtuous cycle of career and social mobility that can transform cities. Residents who apprentice into higher-earning jobs will pay more in taxes and create demand for higher-quality housing, restaurants, shops, and other businesses. In turn, those local amenities will attract more workers, businesses, and outside investment. I predict the next great tech hub will be a city that cultivates talent within communities that have long been denied access to tech careers.
Organizations that wage the “war for talent” will find there’s no winning. They will continue to overpay and churn tech workers at the expense of their innovation strategy and long-term competitiveness.
By addressing the misconceptions about apprenticeships, I hope to show that the better alternative is to upskill and reskill people in-house. Rather than depend on universities or competitors to train their talent, organizations must take on this responsibility. There are only upsides in trying.
The reality is that people can no longer stay in the same job function throughout their career and use the same skills. The only sustainable talent strategy is a culture that turns raw potential into skills.
Ximena Hartsock is co-founder of BuildWithin.