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second year Computer Science student and I'm currently looking for a placement (preferably in Software Development).

I think my biggest weakness is my programming skills, I'm scared I'll get called up for an interview, be asked to create an algorithm to do so and so, and just sit there looking stumped!

My fellow classmates who have gotten SE placements told me that they were not asked to code, just general questions about projects carried out in university.

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    I don't know about your classmates. A software engineer's job is to write code. You may not be asked to code in the interview, but you will need to code eventually - if not at the internship, in your eventual career. – Telastyn May 28 '14 at 18:26
  • You should expect to answer thought process questions, like "how would you order this list". You may not be required to write compilable code, but you shouldn't be surprised if they ask you to tell them how you'd do it, or to write pseudocode out on a whiteboard. – Garrison Neely May 28 '14 at 19:32
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This can be an extremely wide breadth of things that vary from company to company, but I used to work in job placement for students so I'll try to give you some points of focus. (this is assuming you have zero professional experience)

Professionalism

You need to come across as generally trying to be professional in behavior, by all means if you're fresh out of school you probably have an idea how you should act, but are likely Rough around the edges

Enthusiasm

This is probably one of your strongest assets right now (other than that piece of paper for school) If you don't look like you want to work for me, I'm not going to hire you, it's as simple as that.

Willing to listen

A real problem with most fresh graduates (and young talent in general) is often they assume they know best, there is only one right way, etc. (basically that they know best) Which is probably 99.9999% of the time not the case. One of the worst things you can do is plop down in your first job and try and change things right away. Basically do what you can, but listen to those with more experience than you, once you settle into a job THEN strive to improve things wherever you can (but pick your battles)

Willing to learn

Some people have raw talent, experience, etc. These are all good things, but your willingness and ability to learn is far more valuably at the beginning of your career. Depending on my needs I often pursue "new talent" that is fresh grads with little to no experience, and often they aren't yet confident in their technical skills. (this sounds like where you sit right now) You haven't developed any coding habits yet. When I grab an old vet they are going to have habits. Some good, some bad, and it's a extremely hard to change them, you're new, fresh, and malleable. I can train you with what habits I need you to have, and go out of my way to prevent you from developing habits that would be crippling to our workflow.

Technical skills

I consider your technical skills the least important of the above, but it can push you past a similar candidate (usually if it comes to this point I'd still interview you and let the interviews determine which way I go with my hiring choices) This early I'd prefer a broader array of technical skills than a huge focus in one. (for entry level I want someone who's just gotten their feet wet, otherwise I'd hire someone with more experience)

Summary

My advice to you is not worry about getting stumped. Entry level we tend to focus very little on your technical skills, but expect you to still have reasonable soft skills since you needed those to manage your time in college. If you do get a technical interview be honest if you don't know something just say so, worst thing you can do is try and fake knowing something (cause it'll almost certainly be wrong and throw a red flag for the potential employer)

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