The department store chain, one of a growing number of firms to focus their IT recruitment efforts on young people, said the scheme is more cost-effective and produces better results than traditional methods of recruitment.
The company hires IT undergraduates from universities running "thick sandwich" courses with a 12-month work placement between their second and third years of study. It offers retainers worth £150 a month to the brightest students to encourage them to join the firm after they graduate.
House of Fraser IT director Frank Berridge said, "We find it very good because they know us and we know them. We have had them working for us for 12 months. They know the House of Fraser and its waysÉ They would not have accepted our offer to come back the following year if they were not happy."
Although in theory House of Fraser can demand that graduates repay their retainers if they fail to take a job after their final year, in practice this has only happened once in 10 years of running the scheme.
Berridge said the undergraduates who join the firm during their sandwich year are able to carry out productive work within weeks of joining, with only a minimum amount of training.
"They effectively work as analyst programmers. They have had two years at college, and they get a certain amount of training with us, but they are doing productive work," he said.
House of Fraser recruits the majority of its IT staff through this route, although it is occasionally necessary to hire people with specialist skills, such as Oracle Financials.
"Most of these guys are pretty bright and they have a rapid promotion plan. Within two or three years they certainly could be senior analyst programmers earning £30,000 a year," said Berridge.
The retailer also occasionally takes on pre-university students for a year before they start their degree courses. Although they need supervision, the scheme has been a cost-effective way of recruiting extra help during large roll-outs.
"Let's say we wanted to put new Epos kit in our stores, the recruits might be physically installing new systems. After a short period of having experienced people with them, they are able to go into stores on their own," said Berridge.
E-Skills UK, the public, private sector partnership for training, said a growing number of firms are looking at innovative ways to recruit young people, now that the jobs market has picked up.
Terry Watts, chief operating officer at E-Skills UK, said, "Companies are looking for people to bring into the business as soon as possible. Hiring a new graduate and training them up is an expensive business. If they can find someone earlier and watch how they work, it makes financial sense."