A Baltimore-based company is using data to disrupt the way U.S. firms outsource technical talent abroad, and some billionaire investors think that’s a great idea.
Software engineering services firm Catalyte has raised $27 million, used some of the money to acquire another firm, and it’s training software developers in the U.S. from populations that have traditionally been overlooked for tech jobs.
Catalyte is building a disruptive domestic software services model to promote onshoring and address the U.S. tech talent shortage, the company said in a statement. According to the U.S. Department of Labor, there will be 1.4 million computer specialist job openings by 2020. Projections show universities are not likely to produce enough qualified graduates to fill even 30 percent of these jobs.
Catalyte has become one of the largest U.S. software engineering services companies in the U.S. after buying Surge, a Seattle-based software development and consulting service firm, the company said in a press release. Surge is an onshore provider of custom web, cloud, mobile, digital, and desktop services.
Catalyte raised $27 million in a Series A funding round, with backing from venture capital firms including Cross Culture Ventures, Revolution’s Rise of The Rest Seed Fund, Expon Capital, and Palm Drive Capital.
Now Catalyte is looking to find and train developers in cities across the U.S. It’s doing this, the company said, by applying proprietary artificial intelligence and predictive analytics to identify talented individuals who are often overlooked for technology jobs due to outdated hiring practices that rely too heavily on resumes and college degrees:
These individuals come from all backgrounds and have the innate potential and cognitive ability to be great software developers. Catalyte gives them career opportunities in an in-demand and growing field while also producing high-quality software for Fortune 500 clients.”
Marlon Nichols, co-founder and managing partner at Cross Culture Ventures, said in a tweet, “Cross Culture Ventures is proud to help Catalyte transform software engineering recruiting and change the face of the industry.”
With a $27M series A + Surge acquisition, @Catalyte_io is now 1 of the largest SW Eng. Scvs. Cos. @CrossCultureVC is proud to help Catalyte transform SW Eng. recruiting & change the face of the industry. https://t.co/pSczwJnHPg #crossculturevc
— Marlon C. Nichols (@MarlonCNichols) February 15, 2018
Catalyte works with large firms such as Under Armour, AT&T and Microsoft on software development projects. It provides teams to work on the projects, as well as consulting services.
However, Catalyte is one of several firms that are looking for tech workers inside the U.S. rather than outsourcing to India and other countries. It’s a process known as “onshoring” and it represents a change, Technically Baltimore reported:
Instead of looking at other companies or to colleges, Catalyte finds and trains workers who may be in other jobs to become software developers. The company uses predictive analytics to identify people who show promise for tech careers, but may be otherwise overlooked. One approach is by posting a simple ad on a common jobs board that says ‘Get paid to become a software developer.’ Some think it’s a scam at first, but it’s actually an approach to reduce bias in hiring. Instead of looking at resumes, college degrees or referrals, Catalyte looks at data points around behavior, skills and the ability to adapt thinking quickly.
Led by CEO Jacob Hsu, Catalyte is trying to identify talented people often overlooked for tech jobs due to outdated hiring practices. The company says it wants people from all backgrounds who have the potential to be software developers.
“Catalyte provides a real solution to tech’s diversity problem,” said Troy Carter, co-founder of Cross Culture Ventures, in a statement. “It has the chance to change America from within, to build a multicultural workforce not just for the sake of diversity, but to deliver better business outcomes. We fully support the company’s audacious vision.”
In a field with a diversity problem, Hsu said Catalyte’s approach can open up careers to people regardless of race, gender, age or education level.
“We’re trying to to introduce zero bias,” he said. “It’s literally as broad a brush as we can find.”
As part of its growth plans, Catalyte plans to expand its geographical footprint, opening development centers in new cities in 2018 and expanding access to software engineering careers to more Americans.
Catalyte is one of the first investments for the Rise of the Rest Seed Fund, which Revolution raised from several billionaires to fund companies outside the major tech hubs, according to Technically Baltimore. Revolution is a Washington, D.C.-based venture capital fund that aims to build disruptive, innovative companies.
“One of the fundamental ways our economy is going to both remain competitive on the international level and expand opportunities to more Americans is by changing the way we identify talent,” said Steve Case, co-founder of AOL and chairman and CEO of Revolution, in a statement. “Catalyte proved to us that not only can it bring new and underrepresented groups into the fold, it can do so while helping its own clients grow.”
Catalyte can solve some of the biggest tech challenges facing companies today, Hsu said:
