The tech industry is growing – and growing fast. Since the Covid-19 pandemic and subsequent lockdowns, the sector has experienced the kind of growth that we would have normally observed over a decade. As such, the tech industry is now one of the most exciting places to be in right now, but it also presents some serious challenges.
The industry accounts for 5.5% of the UK economy. That’s an estimated £82.7bn and, by the government’s own estimates, it could bring an additional £41.5bn to the economy by 2025, generating thousands of jobs and creating incredible technology built to improve the lives of citizens across the country.
That is very much within the grasp of the sector – but in order to get there, we have to face one of the biggest challenges the industry is presented with: the digital skills gap.
As it stands, technology innovation is developing at a faster pace than the skills needed to apply such technology. According to techUK’s recent Digital Economy Monitor, 57% of UK IT firms find the present talent shortage and access to skills among the biggest barrier for their companies. This is creating a vicious circle, whereby there are fewer people to do the jobs we desperately need to keep innovating. In time, this will slow down the pace of innovation, constricting the growth of our economy while we face a cost-of-living crisis.
Following the pandemic and the ‘Great Resignation’ of 2021, businesses are struggling to fill roles that require specialist digital skills. A shrinking talent pool is leading to wage inflation, with organisations fighting each other to offer applicants larger pay packets than their nearest corporate rivals. Indeed, techUK’s own research has found that 65% of tech firms cite staff costs as their biggest cost increase from last year.
As recent job cuts across the industry have shown, this approach is unsustainable and does not necessarily guarantee long-term retention of staff. The onus is on us, as an industry, to facilitate the training and development of new talent so that they can then be deployed to solve bespoke business objectives.
Private sector responsibility for the digital skills gap
The tech industry must work together with government and the education sector to build a long-term and diverse pipeline of talent. As techUK President, I am proud to say our members are working towards achieving this result. As an organisation, techUK is actively working to open up new pathways for people from diverse backgrounds to thrive in the digital economy, which will not only will help the sector to develop better products and services that recognise diverse user needs, but also combat pervasive skills shortages. This principle is at the core of FDM’s Returners Programme, which is dedicated to helping those professionals who have taken a career break or have been furloughed to get back into work. In a fast-changing and innovative sector like tech, where new technologies are transforming work practices every day, this prospect can seem daunting. Nevertheless, initiatives like the FDM’s Returners Programme help to ensure that the sector will retain its most experieced individuals, while preserving a talent pool which conventional recruitment methods may miss.
The issue of skills echoes across many aspects of the sector. To cite one, many organisations continue to struggle to adopt digital innovation, using, for example, outdated legacy systems to perform core business functions. In time, this can lead to complex technical issues and impede scalability. More than 50% of UK employees, for example, are dissatisfied with their existing workplace technology, while a staggering 90% of businesses fail to optimise efficiency and profitability because of outdated tech.
There is a bigger question here about resources. Bigger tech companies will inevitably have access to better resources to implement new innovative systems, while SMEs might struggle. Government programmes such as Help to Grow: Digital, of which techUK is a firm supporter and helped develop with the government, are welcomed to support businesses in the digital adoption journey, as well as expanding the eligibility criteria for this type of programme. However, this alone won’t solve the problem. More needs to be done at a national and local level to create interventions that encourage digital adoption for SMEs who wouldn’t see themselves as a ‘tech business,’ or who could grow into new markets with digital support.
As the president of an organisation that represents more than 940 businesses in the UK, the digital skills gap is the one challenge that I can see affecting all of them. But if there is one thing I have been able to observe over these past few years, it’s the innate resilience of the tech sector. Technology is the answer to most of the challenges the world is facing, from the climate crisis to the recent volatility in the global economy. Closing the digital skills gap is in the interest of everyone who wants to overcome these challenges and those that will emerge in the future, and build a better future for our industry, the British public, and the planet as a whole.