Scotland's digital tech sector poised for growth

As the sector behind Scotland's two unicorns and its first Aim flotation for several years, it's hard to overstate the economic impact the digital technologies industry is currently having.

ScotlandIS boss Polly Purvis says the digital tech sector is becoming 'more and more important' to the wider economy. Picture: Chris Watt
ScotlandIS boss Polly Purvis says the digital tech sector is becoming 'more and more important' to the wider economy. Picture: Chris Watt

The fact that the digital technology industry is now cited as a key driver in pushing up demand for office space in Edinburgh and Glasgow also underlines continued employment growth in a sector which already employs some 90,000 people in Scotland.

While 2016 was a year when the sector was rarely out of the headlines thanks to the likes of Skyscanner, FanDuel and Freeagent, there appears to be no pause for breath on the horizon.

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Research from industry body ScotlandIS depicts a sector in rude health and continuing to grow sales, profits and headcount.

Its Scottish Technology Industry Survey 2017 found that 82 per cent of businesses expect sales to increase in 2017 and 78 per cent have a “very optimistic” or “optimistic” view for the year ahead.

That comes on the back of a year when seven out of ten companies reported an increase in sales, some by more than 50 per cent year on year. Predicted employment growth has also increased since last year’s survey. Overall 78 per cent of firms forecast that they will hire more staff in 2017, compared with 66 per cent in 2016.

Polly Purvis, chief executive of ScotlandIS, said the results highlight the “confidence and resilience” of the industry despite uncertainties in the political environment. This is great news not just for our sector, but also for the economy as a whole,” she says.

“The digital technologies industry generates over £5 billion in gross value added (GVA) for Scotland every year and is becoming more and more important in our increasingly digital world.”

While skills shortages remain an issue for firms, the survey shows that companies are actively looking at alternative routes into the sector, with 38 per cent of respondents reporting that they are likely to recruit modern apprentices in 2017, up from 29 per cent last year.

For the first time since 2013, demand for experienced staff has outstripped that for graduates, although the need for university graduates continues to be a priority for firms of all sizes. Software and web development remain the most in demand skills but there is also a strong requirement for commercial, business support and project management skills, which are required by more than two thirds of companies. Sales and business development skills are particularly highly prized.

A growing number of firms (73 per cent) expect to recruit the majority of new staff from within Scotland, compared with 60 per cent in 2016. At the same time, the percentage of businesses forecasting that new talent will come from outside the UK has dropped from 21 per cent to 9 per cent.

Purvis says that the fact that more companies are looking to Scotland to recruit new employees was likely to be a sign of Brexit related concerns and the decreasing attractiveness of the UK for international talent. She cites initiatives like digital skills academy CodeClan in Edinburgh and Glasgow, which enables people to retrain and transition into new careers in the digital technologies sector, for helping Scotland to meet the increasing demand for home-grown talent.

“However, further industry investment in skills is now needed more than ever, particularly around work-based learning and up-skilling the existing workforce,” Purvis says.

ScotlandIS also welcomed the Scottish Government’s commitment to develop a new £36m, three-year support fund to meet the upfront business costs of digital skills training. It will see up to 6,000 people per year able to access the training they need in key areas like software development, web design and digital marketing.

Although the public sector has a role to play, Gordon Brown, board member and head of technology and digital at Glasgow-based recruitment firm Nine Twenty Technology which sponsored the survey, believes businesses also need to do more to ensure they have access to the skills they need to grow.

“There are some huge opportunities for Scottish businesses to take responsibility for change. As business leaders we need to promote our sector by partnering with schools and universities to showcase the opportunities and career paths that are available for the next generation to pursue,” he says.

“The reality is, if we don’t invest more heavily in our sector and in the early lives of future generations we will never be able to keep up with demand for skilled people.

“People want to feel valued, engaged and part of the company journey, and in a candidate driven market it is a risky tactic for employers to ignore what the next generation is looking for,” he warns.