Just 1 per cent of graduates can hit the ground running across Australia, a figure that’s dropped 2 per cent from last year, and this is leading some employers to look offshore, according to the Australian Information Industry Association’s State of the Nation 2024 report.

AIIA chief executive Simon Bush told The Australian that most tech companies found graduates needed at least half a year to reach a level where they were productive. “Six to nine months of training is what’s required – at least that’s the feedback from our members to train university graduates and get them job ready,” he said. “Obviously, we’ve got a very small to medium enterprise-heavy economy, and SMEs cannot afford to bring someone in that’s unproductive for that period of time.”

There had also been an increase in reported labour costs, further pushing employers to look overseas. “As a result of that and skills shortages, we are seeing an uptick in jobs and skills going offshore,” he said.

AIIA data showed that Australians were one of the most “supportive” countries in the world when it came to hiring remote workers from overseas, Mr Bush said.

“We’ve always kind of done it and we’re very comfortable doing it, but there is a preference to keep jobs in Australia. But where we can’t due to costs and skills shortages, then Australians are going overseas,” he said. Many of these workers are being hired from India, The Philippines and Vietnam, according to the AIIA.

Vietnam has for some time been rising up to meet Australia’s tech worker shortages, with a report released in February this year finding hiring from the southeast Asian nation had grown 126 per cent over the past 12 months.

Vietnamese recruitment firms say that many workers have found Australian working conditions, even on remote contracts, are more generous than those from the US and Korea.

Mr Bush said while AIIA’s new report showed that most overseas workers were being hired on remote contracts, occasionally those with highly sought-after skills were being sponsored and brought into the country.

The AIIA wasn’t against the hiring of remote offshore workers but said the association had a preference for hiring in Australia.

“I certainly think we should always try to make sure we have a labour market that delivers jobs in Australia for Australians … that’s obviously the desire,” he said.

“But if you can’t get workers and you can get them more cheaply overseas, you can see why as a business that might be an option.”

On graduate readiness, Mr Bush said the tech sector was one of many that had begun to try to fill gaps with short courses.

“The industry is looking toward integrated learning and micro courses, particularly when it comes to cyber skills,” he said. While short courses to meet skills gaps were welcomed, the completion rate of IT degrees, which was around 50 per cent, was a cause for concern for the AIIA.

That was one reason a reduction in international students would harm the nation’s tech sector, Mr Bush said.

“Concerned by the massive cutbacks in international students, we know universities are particularly concerned about it because it’s obviously a revenue stream for them,” he said.

“But we’ve got skill shortages in the tech sector and we need to ensure that we’ve got graduates to fill these roles. Overseas students do not drop out at anywhere near the rate of domestic students.”