The IT industry in the United States has a problem. There are more than 600,000 unfilled tech jobs and not enough people in the pipeline to fill them. Outsourcing coding and software development to other countries is not the bargain it used to be, and it compounds another big problem: lack of diversity in the tech workforce.

Big companies know this and are struggling to fix the problem. Meanwhile, Techtonic Group, an IT firm in Boulder, Colorado, has created a successful model for developing locally grown, diverse talent.

"We started our company using an offshore model and we'd done that for 10 years. To save money, we were outsourcing app development work to Armenia," explains CEO and Founder Heather Terenzio.

She flew to Eastern Europe twice a year to work with the team there. Over time, the foreign programmers' salaries were rising. Time zone and language differences further complicated the arrangement, and it struck Terenzio as the wrong way to do business. There was too much hand-holding required to make offshoring work.

Four years ago, Terenzio had an epiphany.

"We were having to give more and more detailed instructions to our Armenian team to get things right. We realized that a mid- to junior-level person in the States, with the same level of explaining, could probably do the work," she says.

Instead of hiring tech talent halfway around the world, Terenzio decided to build a local talent pipeline. Today her company outsources work to Boulder, where her company is located. Moreover, Techtonic Group has created a talent pipeline that is not just local but also unusually diverse for the IT industry.

The firm's success is built on a new approach to recruiting software developers. "I'd been in IT a long time and had learned that it's not necessarily the college grads with the pedigrees who are always the best developers. We all know people who dropped out of college, taught themselves to code, and love poking around computers."

She's not talking about famous college dropouts such as Steve Jobs or Mark Zuckerberg, but ordinary people with a passion for computer software who lack the credentials to get jobs in the industry.

One day, Terenzio was giving a talk at a vocational school in Boulder about tech careers. After the talk, a young man who was working for the event caterer approached her and said, "Your company sounds really cool. I'd love to work there but I never graduated from high school. I only have a GED, but I've been teaching myself to code for 10 years. And I promise if you hire me, you will never regret it."

It was a timely encounter. "I'd just had a couple of experiences hiring really, really expensive consultants to do work for us and they hadn't panned out. So, I thought, let's take a chance at the other end of the spectrum. Let's give this person a try. And he came onboard with us.

"He had come through the foster care system, and dropped out of high school, but he absorbed everything we told him and he was a pleasure to work with," Terenzio says. "Within three months we were asking him, 'Are there other people out there like you?' And of course, there are. We just had to find them." Thus began the quest to seek out nontraditional candidates to make Techtonic Group's pipeline as diverse and full as possible.

Expanding the pool

"We were hearing a lot of people talking about improving diversity in software development but we didn't see it happening. We saw the Facebooks and Googles of the world fighting over the very few minorities graduating from top schools with computer science degrees. What we're doing is trying to increase the pool of people," says Terenzio.

"We went all in on the notion that we can train people with different backgrounds and make them software developers," she explains. "Our program opens a path to a high-paying career and entrance into the middle class for people without a college degree.

"We take people with all different kinds of backgrounds and ethnicities—women, minorities, veterans, at-risk youth—and we've been able to make them successful. We're taking baristas and busboys and turning them into software developers."

The path to a software development job at the company starts by applying for Techtonic Academy, which is five weeks of classes where students learn basic coding literacy (how code works, fundamental computational thinking, logic structures, and more) and gain familiarity with the most common coding languages. Graduates of Techtonic Academy may qualify for the company's eight-month, paid apprenticeship in information technology and software development, registered with the U.S. Department of Labor.

"We had to rewrite all of the apprenticeship documents because they were aimed toward plumbers and electricians and not software developers," Terenzio notes. "Many apprenticeships are based on numbers of hours worked, but ours is based on competencies that the apprentice has to acquire."

Looking for a natural fit

Terenzio hired Chris Magyar to manage Techtonic Academy. With several years of experience in tech recruiting, he shared her view that it was time to disrupt the hiring process and look for people who were a natural fit for the work even though they lacked traditional credentials.

Typically, there are at least 400 applicants for 15 spots in the academy program, which runs several times a year. The classes are free to the applicants but are subsidized in part by the city of Boulder and its workforce centers. During five weeks of training in coding and app development, it becomes apparent which students pick up new skills quickly, show up on time, and work well in teams. The classes help identify people with skills in logic and problem solving, and who exhibit persistence and humility. Successful coders tend to have these skills and traits, according to Magyar. "Over the course of five weeks we get to see who's the best of the 15, and we take the top five or six."

Students in the program learn the technical and soft skills of information technology and software development. They also gain understanding of what it's like to work in a project environment, work with users, and create software using the iterative and incremental software development methods known as Agile. They learn to do quality assurance testing and pair programming, in which two programmers work together at one workstation. One, the driver, writes code while the other, the observer or navigator, reviews each line of code as it is typed. The two programmers switch roles frequently. They learn to review computer source code for mistakes overlooked during development. In short, they leave the training ready to function in a real-world software development environment. For people who taught themselves to code late at night in the basement, this is a giant leap forward.

The company recruits candidates for Techtonic Academy and the apprenticeship program through the social media channels its target population uses to look for work. "Facebook, LinkedIn, and Craigslist are where a lot of our recruits look for work opportunities," says Magyar. "They're looking for ways to pay their bills, and an IT apprenticeship that pays a salary from day one is very attractive."

He and Terenzio also put out the word about Techtonic Academy to charter schools, workforce centers, veterans' organizations, community groups, and nonprofits throughout Boulder.

Thirty-five candidates have gone through the academy, and 32 have made it to the apprenticeship program. Thirty are still working in IT. Some of the apprentices were hired to work directly for Techtonic Group; others were placed with the firm's clients and business partners after several months on the job. The company achieved its diversity goal for the program after only nine months.

Most of Techtonic Group's employees work in one large room on the ground floor of a two-story building that houses small businesses in downtown Boulder. The front door of the office opens directly into the common workspace for the coders and developers. It's impossible to tell which of the men and women working there have computer science degrees and which came to the company through the apprenticeship program.

Apprentices who started as junior developers several years ago are mentoring newer arrivals and helping screen new applicants. "It's a clear path for growth and development," says Terenzio.

Big companies, take note

Besides creating a diverse pipeline for Techtonic Group and its clients, Terenzio wants to wake up larger companies to the benefits of selecting nontraditional candidates for IT jobs.

"We see so much potential in this model. Instead of paying 20 percent to a recruiter to look in the small pool of computer science graduates, you can invest in developing nontraditional candidates yourself. It costs about the same," says Terenzio. An added benefit, she notes, is that the apprentices work on entire processes and learn how everything fits together. "You don't get that in coding bootcamps or online courses."

IBM, Walmart, and Google have contacted Terenzio to find out more about how Techtonic Group builds its diverse pipeline. "We're also talking to Pricewaterhouse and Deloitte. Diversity is a real problem in software development. They're all trying to figure this out.

"We created a model that allows our clients to leverage our senior team for building their software and then hire trained apprentices as full-time employees. Everyone wins. We are looking for more companies which are truly dedicated to diversity and inclusion and want to work with us to make a difference."

Trying to change the minds of HR personnel about this has been a struggle, however. "We've found that as a group, people in HR aren't very open to changing the way they recruit for IT talent even though it's not working well for many of them. If they truly are dedicated to diversity, which all of them say they are, they really need to change their thinking. What we're looking for in our growth model is HR managers who want to do things differently in recruiting and onboarding IT talent."

Terenzio's passion for advancing diversity in IT stems in part from her experience at the University of Colorado, where she obtained a graduate degree in civil engineering. As the only white woman in most of her classes, she felt out of place, but the program's sole female professor became her adviser and persuaded her to stick with it. The lesson she took from that experience was "You have to get more women into tech in order to keep women in tech."

Besides recruiting women along with other nontraditional IT candidates, Techtonic Group hosts summer programs for Girls Who Code, a nonprofit organization that aims to increase the number of women in computer science. Its summer programs teach computing and programming skills to high school girls.

Scaling up and out

Techtonic Group is in the process of expanding its academy and apprenticeship program to 10 more U.S. cities. "It's a bold goal, but why not?" says Terenzio.

Already, George R.R. Martin, author of the books that inspired Game of Thrones, has invited the company to bring an onshore software development center to Santa Fe, New Mexico, with his help. The company also is exploring expansion opportunities in Montana, Kansas, and Wyoming.

Local sourcing of IT work reflects the changing geography of the industry. Gartner research shows domestic sourcing of IT is growing while growth of the offshore services industry is slowing. Average yearly growth abroad will slow during the next five years from 15 percent to 8 percent, according to IDC.

Terenzio is pleased with the way her small company is developing. "We love that while we're writing code and developing new applications, we're changing the course of people's lives. We have customers and billable hours, and we're also launching people on their way to great careers. So, for me personally, it's changed everything. I've been in this business for 18 years, and this is the most fun I've had in a long time. I get up excited to go to work every day because we have people who are excited and grateful to be here."

Tech Giants and the Digital Skills Gap Conundrum

In October 2017, Google announced a $1 billion training initiative to support nonprofits in education and professional training. The program, called Grow with Google, is meant to address the gap between the tech skills companies need and those taught in schools. The Grow with Google website (https://grow.google) features free training, teaching tools, and events related to tech skills, careers, and businesses.

In May 2017, Apple announced a $1 billion investment in advanced manufacturing, which uses next-generation technology such as artificial intelligence in robots or 3-D printing. The purpose of the investment is to create jobs, says Apple.

However, creating tech jobs also worsens the task of finding workers to fill them. A survey by the National Association of Manufacturers found that while manufacturers see opportunity in advanced manufacturing, 40 percent say the skills gap is the chief barrier to taking advantage of that opportunity. Food for thought.