Scots tech sector has 'stabilised', with increased exports and plans to hire, says trade body ScotlandIS

Scottish tech businesses are planning a major employment drive amid a “mission critical” skills shortage, and are reporting increased exports, according to new data from trade body ScotlandIS that cheers evidence of the sector having “stabilised”.

The Linlithgow-based organisation has released its latest annual Scottish Technology Industry Survey, which it says reveals a “steadying” financial position and increasingly international outlook from relevant firms. It points out that the technology sector already employs more than 80,000 people in Scotland, with 15,600 digital technology jobs created every year.

ScotlandIS found that 83 per cent of companies surveyed expect to increase their headcounts in the coming 12 months, a 7 per cent year-on-year increase, and none anticipated cutting jobs, while nearly two-thirds of the roles being created are expected to be sourced in Scotland.

It added that one of the factors driving the jobs boost is demand for services internationally, and the number of tech companies planning to or already exporting is at its highest level (87 per cent) since the Covid-19 pandemic, reversing a decline in exports from last year. North America and Europe remain the top two export markets for Scotland’s tech businesses outside the rest of the UK, the trade body added.

'If we cannot fill vacancies and source talented people, the potential for growth will be stymied,' says ScotlandIS chief executive Karen Meechan. Picture: Rebecca Holmes Photography.

ScotlandIS chief executive Karen Meechan said: “The skills shortage has long been a challenge for the Scottish tech sector, but it is now mission critical. If we cannot fill vacancies and source talented people, the potential for growth will be stymied. The Scottish economy can ill afford to let growth and opportunity slip through its hands, when so many other sectors are struggling.”

The organisation added that the expected increase in headcount is a positive contrast to the broader job cuts faced by the tech industry in 2023, and Ms Meechan in February said layoffs were “always devastating”, but noted that these cuts were also “a rare opportunity for growing Scottish companies that are struggling to find skilled candidates as they release an experienced pool of talent back into the industry.”

Consolidation

According to ScotlandIS, the number of companies having consolidated their growth has risen “sharply”, with the proportion of those smashing the £1 million sales barrier having increased to 37 per cent in 2023 from 22 per cent in 2022.

Furthermore, rapid sales growth (defined as 21 per cent or higher) is expected to decline as business models consolidate after a rush in post-pandemic demand, and 19 per cent of tech companies expect rapid sales growth this year, down from 39 per cent in 2022. By contrast, the volume expecting sales growth of 20 per cent or less has increased this year to 57 per cent from 44 per cent.

Ms Meechan added: “A very positive outcome from this year’s survey is the way in which our tech sector has stabilised. Huge change was needed to cope with the ebbs and flows of the pandemic era, and that has now settled into more predictable and sustainable growth. Not only are more companies recording seven-figure turnovers, but more and more are also seeking to export their services outside of Scotland. The tech sector needs to export to grow, so this is an encouraging sign for the future.”