Skills gap yet to bite tech firms’ optimism

The mood of cautious optimism but not confidence among freelance computer contractors appears to be shared by small IT suppliers more generally, three sets of data suggest.

Firstly, a poll of 150 UK technology companies by KPMG shows that more than half (53%) are expecting a rise in business activity in 2015, against just 7 per cent who foresee a fall.

Their hiring plans are also upbeat, albeit less so. Thirty-nine per cent plan to grow their workforce, while just 5 per cent will shrink it. The rest (55%) will keep it the same size.

Where the sentiments for their outlook were negative, the reasons given by the IT companies were varied, ranging from ‘macroeconomic uncertainties’ to ‘geopolitical concerns.’

Strong competition was cited as another reason, as was a skills shortage --- an issue that caused the smallest of the tech companies “recruitment difficulties” at the close of last year.

Both pressures emerge in another survey as the top two concerns of IT start-ups, even though these start-ups were only quizzed because they turnover millions and enjoy stellar growth.

In particular, increased competition is the main worry this year for such IT-business firms, while their “ability to attract and retain talent” is their second biggest worry, found Barclays.

From an external viewpoint though, the skills issue isn’t deterring outside investors, as they tend to regard the UK as a “talent magnet,” says the bank’s technology boss Sean Duffy.

But at a local level, which is the focus of another study unveiled last week, one third of digital firms regard a lack of talent in their vicinity to be one of the biggest barriers to growth.

Similarly, a good talent pool is the top factor determining company location (alongside a strong technical infrastructure), found the study Tech Nation, by Tech City UK.

Keen to head off claims that the capital is a controlling influence on the UK’s digital fortunes, the group pointed out that three quarters of digital firms are based outside London.

Indeed, Brighton has the highest density of digital firms; Manchester is the fastest-growing tech cluster by turnover, and Bournemouth and Liverpool are joint-first for start-up growth.

Often part of a “vibrant” cluster of similar firms, the 47,000 digital firms studied seem to share the optimism of contractors and IT suppliers, as 56% said their revenues rose last year.    

“[But] there is a skills shortage wherever you look,” said one of the study’s participants Tom Quay of digital services firm We Are Base. “Although I suspect this is the same as the rest of the country.”

His comments come as the Home Office is exploring which jobs within the ICT and Digital industries should be added to the Shortage Occupation List.

Editor’s Note: Related Reading –

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Contractors’ prospects set to plateau in 2015

Feb 24, 2015