Improving access to talent is a multi-stage process. In the immediate term, ready access to high quality visas is critical to unlocking growth potential of startups. Many of these in-demand roles are at the cutting edge of technology, and are in low supply globally.

In his foreword for Crossroads in December 2017, Atlassian co-founder Scott Farquhar said, ‘attracting talent is now the single biggest barrier facing Australian startups’. Companies consistently report that this remains true heading into 2020.

IMPORTING TALENT

Young technology companies are typically looking to compete in global markets right from the outset. To succeed in such a competitive landscape, Australian firms need to have access to the best tech talent in the world. The skills required to build a high-growth tech firm are in fierce demand, driving a global war for talent. And digital tech is often a ‘winner-takes-most’ environment, where firms who can attract large user numbers often quickly overrun rivals, creating feedback mechanisms that make talent even more valuable.

IMMIGRANTS HELP AUSTRALIANS GET EMPLOYED

As we have seen, attracting talent is the biggest barrier to the growth of Australian startups. In this context, ‘growth’ results in boosting local employment in almost all cases. Which means, for most startups, importing talent in key positions helps boost Australian employment. StartupAUS data over the last two years strongly supports this reasoning, with difficulty finding high quality candidates for key positions in product management, digital marketing, UX and UI design, and data science often holding companies back from further growth.

Simply put, skilled migrants help companies grow and employ more Australians.

Migrants are also over represented when it comes to starting high-value technology businesses. In the US, Fortune Magazine notes that of the 25 most valuable privately-held tech companies, 60% were founded by first or second-generation migrants.7 Those companies now employ 1.9m people. These figures align closely with Australian data - StartupAUS analysis suggests more than 50% of the most successful Australian founders in the last 10 years are also first or second generation migrants.

OPEN FOR BUSINESS: NEW GLOBAL TALENT PROGRAMS

Companies everywhere are scouring the world to hire the best talent. For Australia to be competitive startups here need – at the very least - to have the ability to offer easy-access, high quality visas. The Global Talent Scheme, now called the Global Talent Employer Sponsored (GTES) program, was introduced in mid-2018 and has begun to help achieve this goal. The GTES pilot phase ended in mid-2019 and the program has now been formally adopted as part of the mainstream visa system. For more information on the GTES and its new partner program, the Global Talent Independent Program, see our breakout section below.

LACKING AGILITY: ANZCO CODES

Outside the GTES and the GTI, Australia’s mainstream skilled migration visa scheme has struggled to keep up with the pace of development in the tech sector. Standard skills visas, known as Temporary Skills Shortage (TSS) visas, are based on occupation lists prepared by a number of government agencies. These lists identify particular occupations by assigning an ‘ANZCO code’ - an occupation-based designation used by Australian and New Zealand authorities. This is then used as the basis for identifying occupations for which there is a skills shortage in Australia.

Perhaps unsurprisingly, many important tech roles do not have ANZCO codes. A high proportion of these roles didn’t exist 13 years ago, when the ANZCO codes were written. Data scientists, digital product managers, user experience designers - none of these roles have ANZCO codes. They are just the top of a long list.

One of the reasons the GTES is so promising for startups is that it moves away from the occupation list model. It is difficult for a system built on occupation lists, which necessarily involves input from a wide array of sources, to move quickly enough to meet the demands of such a fast-moving sector. The GTES model is therefore very welcome as an alternative for startups. But as technology companies mature and grow they will need to continue to operate under the TSS/ANZCO model for broader visa needs. More regular reviews, in consultation with industry, would help the mainstream visa scheme align more closely with business needs in the technology sector. Other tech sector representative organisations, including the ACS, have also called for similar movement on ANZCO occupation classifications.

Global talent programs - GTES and GTI

Since June 2018, the Department of Home Affairs has been trialling a new pathway to recruiting talent from overseas named the Global Talent Scheme (GTS). The announcement came off the back of strong advocacy from the tech sector, including in the 2017 Crossroads Report, and includes a unique stream for startups in addition to the broader established business stream. That program has passed its probationary period, and is now permanent under the name Global Talent (Employer Sponsored).

The Global Talent - Independent Program (GTI) is a new initiative that sees Home Affairs fund Global Talent Officers in key cities around the world, including Shanghai, Santiago, Singapore and Berlin. These officers, equipped with the talent needs expressed by industry representatives across the country, are then empowered to seek out high level talent and bring them into the country. They essentially both advertise Australia as a destination and help administer the visa process for promising candidates.

These programs do not represent a massive shift in the overall makeup of Australia’s skilled migrant intake. The GTI has an allocation of 5,000 places in the 160,000 strong permanent migration stream. However it does represent the beginnings of a cultural shift. In 2001, John Howard famously declared, ‘We will decide who comes into this country and the circumstances in which they come’. An initiative that includes actively pursuing high-value people across the globe is a break from that mindset, and potentially valuable for businesses at home.

Best parts of the GTES: The GTES visa is very flexible - you don’t need to have the occupation on an ANZCO list, and there are concessions around age restrictions and permanent residency. Finally, it’s fast - once registered to the scheme and approved as a startup, your visa applications can be processed significantly faster than traditional routes.

What you as an employer need to do: First you’ve got to demonstrate that you are a genuine startup - a legitimate business in a digital or STEM field. Then you need to show that people coming in under the GTES will support job growth and skills transfer for Australians, and that you’re having trouble finding their skills locally.

What the visa applicant needs to show: They need to meet certain visa requirements - things like health, character and security checks. They can’t be related to directors/shareholders of the business, and they need the qualifications and experience to back up their skills. You also need to be offering them a salary package of at least $80,000. That can include equity, but it’s got to have at least $53,900 in cash.

GROWING OUR OWN TALENT

Education: In the longer run, Australia will need to continue to drive digital skills development domestically by integrating high quality technology curriculum elements across all levels of education. The national Digital Technologies Curriculum has been a good start. It will need to continue to be deepened, expanded, and linked with emerging curriculum areas including entrepreneurship, creative problem solving, and critical thinking. Significantly more work still needs to be done in identifying key areas of future skills demand and aligning education outcomes to meet the needs of the economy. And equipping teachers with the skills they need to deliver high-quality digital education is an important priority.

Australians abroad: As a relatively young ecosystem, Australia’s depth of experience in building global-scale tech companies is limited. However, Australians living and working overseas have built a wealth of experience with world class tech companies. There are roughly 20,000 Australians living in the San Francisco Bay Area alone, many in senior positions in tech companies. Australians are in high demand with US software companies because of their cultural fit with the US, strong technical skills, and uniquely straightforward visa arrangements under the E3 work visa. Lots of highly-skilled Australians travel to the US to work, learn, and build expertise. Many then look to return to Australia, adding enormous value to companies here in the process. Amplifying this effect by increasing awareness of Australian technology opportunities among relevant parts of the Australian expat community could have a strong positive impact.

ATTRACTING AND RETAINING TALENT

Employee equity: A critical factor in tech companies attracting talent is their ability to offer equity in the business as part of remuneration packages. This model has emerged as a feature of tech companies around the world, aligning employee and employer motivations and giving staff skin in the game.

Employee equity arrangements in Australia improved substantially in 2015, with changes legislated specifically to help startups issue options under Employee Share Options Plans (ESOPs). This was an important step, but some amendments still need to be made in order for Australia to have a truly world class equity access regime. In particular:

  • Employees receiving equity through a share plan should be excluded from the investor ceiling for proprietary companies under the Corporations Act; and
  • The startup concession should be extended to all tech companies as it is standard industry practice for tech firms of all sizes to offer equity as part of remuneration.

More detail on these recommendations can be found on the StartupAUS website at www.startupaus.org/policy/ESOP