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Digital firms see prospects emerging from lockdown

Jane Morrison-Ross: ‘clear determination’ (pic: Terry Murden)

Digital companies believe they can continue to grow this year as the UK economy emerges from the Covid-19 crisis.

A third of those surveyed by trade group ScotlandIS expect business opportunities to emerge from increased or new demands related to Covid-19.

These include cloud services, digital connectivity, remote working technology, and digital health solutions.

Compared to sectors expecting a high number of failures, only one in ten respondents said that “avoiding insolvency” is among their top three challenges.

This is taken as an indication of the sector’s buoyancy over the last 10 years which has made many businesses resilient to the more brutal economic impacts that the pandemic has brought. The survey revealed an increase in sales and profit margins last year.

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There is also a high expectation that they can hold on to their staff – with many expecting to continue hiring.

Almost three-quarters (71%) of respondents expect to retain the same number of staff or to increase (27%) their headcount by the end of 2020.

Nearly a third (29%) have already hired new people or are planning that in the near future, and only (8%) have already or are planning to make staff redundant.

The survey also revealed that demand for the recruitment of university graduates has increased, with 81% reporting that they are definitely or quite likely to recruit graduates in the next 12 months, up from figures around 70% over the last five years.

However, the data does recognise a lowering of expectations. In December and January 80% had expected to increase headcount and, in line with many other industries, digital companies expect to face challenges securing new business, managing cashflow, staff health and wellbeing.

About a third of respondents have already furloughed staff following the Covid-19 outbreak, with 30% planning to do so in the next few weeks.

Jane Morrison-Ross, chief executive of ScotlandIS said: “The industry has demonstrated strong growth over the past decade and optimism had risen in 2019 prior to Covid-19.

“Naturally, the pandemic has impacted the outlook for the rest of the year for many, but there is still clear determination across the sector to adapt and respond to several new challenges.

“Digital connectivity has never been more important for businesses and individuals across Scotland, and it is heartening to see the support Scotland’s tech sector is offering to try and make sure no person, and no business, is left behind due to a lack of digital resource.”

Earlier this week tech leader Brian Corcoran took a more negative view of the outlook, warning that many startups will not survive the COVID-19 crisis, with many falling through the gaps for government support.

A survey by Turing Fest of 100 tech startups and senior executives revealed that more than half of startups (52%) said the Scottish Government is doing too little to support entrepreneurs.

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