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Co-op hiring, particularly in tech, takes a hit amid tough economy, but officials expect a rebound

March 27, 2024

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An uncertain economy, characterized by higher inflation, rising interest rates and tighter budgets, particularly in Ottawa’s tech sector, has meant companies are hiring fewer co-op students in 2024. Chantal Yelle, team lead of business development and partnerships for the University of Ottawa’s co-op program, said that during her nearly 11 years in the role, she hasn’t seen a slowdown like this. “Everything’s cyclical,” said Yelle. “This is the first time in 10 years that the industry is so tough to generate co-op placements for our students. We’re hitting a low right now.” According to Yelle, the slowdown started about a year ago, but the effects have become more prominent recently. The summer term, which typically places twice as many students as other terms, saw a significant dip in numbers in 2023. So far this year, with the application process underway for the upcoming summer, Yelle said they’re 12 per cent behind in finding placements for students compared to the previous year. Yelle said she’s also noticed that more experienced students aren’t being snapped up as quickly. About 20 per cent of available uOttawa students, she said, have at least three previous placements under their belt. “It’s not just the University of Ottawa,” said Yelle. “We confer with our local colleagues at Carleton University and Algonquin College, and they’re feeling the same pressure that we are. Other (co-op) directors across the country and North America are also saying the same thing.” While the pullback is concerning, Yelle said awareness isn’t lacking when it comes to the importance of co-op programs to train the next generation. She said major tech companies that are taking on fewer students this year, including Nokia Canada and Ross Video, recognize the short- and long-term benefits and are eager to recover their numbers going forward. “(Co-op students) help companies move projects forward and they’re a good return on investment. It’s cost-effective to hire a student and we often hear that they’re just as effective as those hired on contract,” said Yelle. “Co-op is even more vital in a slow economy, because the economy is cyclical,” she continued. “Organizations have to be ready for the bounceback, because all of a sudden, they’re fighting amongst themselves for the top talent. They can build a pipeline of talent while the economy is slow now, that they could convert to full-time hires when they need them.”

Cuts, uncertainty forcing tech businesses to pull back

While concerns such as interest rate hikes and inflation have impacted all industries, Yelle said the dampening effect on co-op placements is most prominent in the tech sector, which has seen significant cuts and layoffs since the pandemic. “It has a trickle-down effect in all industries, but we’re feeling it mostly in tech,” she said. “The thing we hear most often is that (companies are) uncertain of their budgets at this point. All these cuts create a level of uncertainty in the industry. If you think about it, if you’re going to have to cut somewhere, you’re going to avoid cutting into your regular workforce, but you can certainly afford to cut a few students.” Ottawa-based tech company Ross Video is one organization that decided to scale back the number of co-op students it took on in fiscal 2024, said Cathy McCallion, the company’s stakeholder and community relations director. Last summer, the company went through a restructuring as a result of higher inflation, rising interest rates and multiple other factors, said McCallion. While in past years the company brought on more than 50 students each term – in positions from engineering and computer science to finance and marketing – she said that number will drop to 30-40 students for the 2024 terms. Despite this reduction, McCallion said, the numbers are actually higher than the company expected post-restructuring. “We predicted that our hiring needs would be quite flat for the 2024 fiscal year,” she said. “It doesn’t mean we aren’t hiring, but it’s not as expansive as it was. It’s tough in that sense. But do I expect it to go back up? I absolutely do.” She added that taking on co-op students remains a top priority, allowing the company to fill its talent pipeline while also building up its reputation with the next generation of potential employees. “It’s really important that people know who we are and what we do,” she said. “The main mission is not branding, but it’s really also important that we are part of helping to educate future leaders, future individuals who are going to contribute to our society and our economy. Hands-on experience is essential to developing a well-rounded student and we want to be part of that process.”

Tech industry expecting to bounce back

Tech company Nokia Canada, which has a campus in the Kanata North Business Park, has also pulled back on co-op hiring this year, said campus program manager Linda Krebs. According to Krebs, the company’s nation-wide co-op program more than doubled its numbers in the past four years, from 200 to nearly 550 students last year. Most of those students were based in Ottawa. But 2024 has posed unique hiring challenges for tech companies. While hiring numbers remain fairly high, Krebs projects a drop to about 400 co-op hires this year. “The labour market has shifted quite significantly,” said Krebs. “We’ve been consistently growing over the last several years, but this year the trend for us is to really make sure we continue targeting the right talent to come in.” The job market, especially for tech employees, is even more competitive than usual, she said, with an “unprecedented” number of applicants for fewer positions. When it comes to early career opportunities, Krebs said it’s an employer's market. “We’re making sure that we’re strategic in our hires,” she said. “Our goal is to make sure we’re hiring diverse candidates, mentoring the right talent. We’re looking more at the core competencies that make great leaders or potential great employees.” She added that the co-op dip is not exclusive to larger companies. She said conversations with smaller tech firms have revealed that those companies are also pulling back for similar reasons. Still, Krebs said she expects to see a rebound in the near future. For Nokia specifically, she said its continued expansion in Ottawa will open up more hiring opportunities in the coming years. “It’s nothing we haven’t seen before,” she said. “There’s a cycle in tech and it will always bounce back, so nobody is concerned. There are smaller companies that want to hire but don’t have the budget for it. But the trend I’m seeing is that it’s going to bounce back; 2024 may be slow, but all tech companies are in this position. With that comes initiatives and innovation.”