Scottish tech sector in ‘growth mode’ after bumper 2018

Scotland’s digital technologies industry remains in “growth mode” with companies in the sector enjoying a rise in revenues and profits for 2018, new research indicates.

'The digital technologies industry is a major contributor to the Scottish economy,' says Polly Purvis, chief executive of ScotlandIS. Picture: Chris Watt
'The digital technologies industry is a major contributor to the Scottish economy,' says Polly Purvis, chief executive of ScotlandIS. Picture: Chris Watt

The Scottish tech sector overcame competition for top talent and ongoing political uncertainty to boost performance last year, although staff recruitment and retention remains the foremost industry challenge, according to the latest annual industry survey conducted by ScotlandIS.

The trade association found that the number of tech firms in Scotland seeing increased sales rose from 68 per cent in 2017 to 75 per cent last year, while those reporting improved earnings rose from 47 per cent to 51 per cent.

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Its Scottish Technology Industry Survey 2019, which gathered responses from 160 businesses, also indicated that industry growth is likely to continue in the current year, with the majority of participants planning to create jobs (81 per cent) and predicting that revenues will rise in the next 12 months (83 per cent).

Digital industries support around 63,000 Scottish jobs and generate an estimated £6 billion in gross value added to the economy.

Around £3.3bn of this comes from annual export earnings, with 53 per cent of respondents already selling internationally, while a further 19 per cent are planning to do so.

ScotlandIS hailed digital technologies as the nation’s fastest growing sector and forecast it will expand by 17 per cent in the next five years.

Polly Purvis, chief executive of ScotlandIS, said: “The digital technologies industry is a major contributor to the Scottish economy, so it’s great to see the vast majority of Scottish tech businesses are expecting a successful year, anticipating growth in sales and new job creation.

“2018 was a very strong year, and despite ongoing uncertainty, this year’s survey highlights the strength and resilience of the industry within Scotland.”

However, tech companies have identified a number of challenges which contributed to a slightly less favourable outlook for 2019, with the number of firms expressing optimism dropping by 8 per cent to 72 per cent.

The sector anticipates key issues for 2019 will be staff recruitment and retention (52 per cent) and political uncertainty (41 per cent), followed by sales and winning new business (30 per cent).

Demand for university graduates remained steady, with seven in ten respondents likely to recruit graduates this year.

Purvis added: “The technology landscape is constantly evolving and provides huge opportunities in areas as diverse as data, cyber, AI [artificial intelligence], robotics, fintech, healthtech and agritech.

“As increasing use of technology products and solutions permeates all parts of the economy, underpinning increased productivity and enabling innovation, there has never been a better time to be in tech.”