Scots tech firms 'back in growth mode' - but staffing concerns remain

Scottish tech businesses bounced back in 2021, but the staffing shortage remains a concern and more must be done to tackle this to stop growth being stifled, according to a new report out today from ScotlandIS.

The Linlithgow-based organisation – which works to catalyse Scotland’s digital economy – has published its latest annual Scottish Technology Industry Survey, which reveals a return to pre-pandemic levels of sales growth reported in 2019, after a “significant” drop last year.

It reports that tech businesses are expecting to reap rewards from growth in data analytics, artificial intelligence, and the Internet of Things (everyday and other devices being connected to the internet), but the largest increase in potential growth opportunities has been found to be in cyber security, with about a third of relevant Scottish companies now seeing that as having strong potential in the year to come.

The study also found that while the sector is on a positive trajectory, exports are in decline, last year dropping to 56 per cent, and one in five Scottish tech businesses have no plans to export this year. Of those that are planning to do so, key markets are the rest of the UK (77 per cent), Europe (68 per cent), and North America (60 per cent).

ScotlandIS also said talent continues to stay in high demand across the industry, with wider impacts of a skills shortage across most sectors seeing the issue becoming increasingly challenging. Efforts to support businesses in this regard will continue to be a priority in 2022 as it remains one of the top barriers – alongside pandemic recovery – to achieving ambitions in the year ahead, the organisation added.

Karen Meechan, chief executive of ScotlandIS, said: “Data gathered from this year’s survey gives clear signals that the tech sector is back in growth mode after weathering initial impacts of the pandemic.

“As it comes to the end of the academic year for many Scottish students, we are pleased to see how many organisations across the sector are planning to recruit graduates, but the year ahead will require continued collaboration across industry, academia, and our education system to build a pipeline of talent within Scotland. We’ll continue to do as much as we can to support that.”

'The year ahead will require continued collaboration... to build a pipeline of talent,' says Karen Meechan, CEO of ScotlandIS. Picture: Rebecca Holmes.

Encouraging

Scottish Economy Secretary Kate Forbes said: “It is encouraging to see more technology businesses in Scotland reporting increased sales, in line with the return to pre-pandemic retail sales levels more generally.

“We want to establish Scotland as one of Europe’s leading start-up economies – that is why the Scottish Government is committed to the most radical reforms of the Scottish entrepreneurial system since devolution.

“A key ambition in our strategy to transform the economy is to establish Scotland as a world-class entrepreneurial country, founded on a culture that encourages, promotes and celebrates entrepreneurial activity.”

ScotlandIS – which last year announced the appointment of Alison McLaughlin as its chairman – says its members have about 60,000 staff and boost the Scottish economy by about £4.7 billion.

It also states that Scotland has 3,900 digital technologies companies, with the sector growing 1.5 times faster than the overall economy, while filling all of the 13,000 job opportunities created every year north of the Border in the sector would boost the economy by £1bn.