Growth pressure

Skills gap threat to tech firms’ job ambitions

Karen Meechan

Karen Meechan: mission critical

Scottish technology businesses may find their job creation ambitions frustrated by continuing skills shortages.

A survey by digital trade group ScotlandIS found that 83% of respondents expect to increase their payroll this year – up from 76% last year.

None anticipates cutting jobs, while two in three (63%) of the new jobs created are expected to be sourced in Scotland.

However, a separate cross-sector poll by the Institute of Directors (IoD) Scotland revealed continuing concern about skills shortages in organisations, with 44% of businesses reporting they do not currently have the right number of skilled people in their workforce.

The report also highlights that 43% of SME’s are not confident in being able to recruit the right people for the vacancies they need to fill over the next 12 months, down from 51% in 2022.  

Catherine McWilliam, nations director – Scotland at IoD Scotland commented: “These new statistics provide real insight into Scottish boardrooms in 2023.

“While concerns remain high around the skills gap across organisations, we are committed to working with the government to ensure new ways to develop the necessary skills are reached.”

The ScotlandIS survey found that international demand was a factor in driving job creation. The number of tech companies planning to or already exporting is at its highest level (87%) since the Covid-19 pandemic. This reverses a decline in exports last year.

Karen Meechan, CEO of ScotlandIS, 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 job creation contrasts to the broader job cuts faced by the tech industry in 2023 from global giants such as Meta, Google and Spotify.

According to ScotlandIS, the proportion of Scottish businesses with a turnover of more than £1 million has increased from 22% in 2022 to 37% in 2023.  

The overall number of tech businesses expecting sales to remain flat or grow is broadly unchanged compared to last year (94% in 2023 vs 95% in 2022) and an improving picture compared to 2021 (88%). 

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.”

Scotland’s tech companies report seeing the greatest opportunities for their business over the next 12 months in cyber security (46%), followed by data analytics (45%), and artificial intelligence (43%).

See also:

VC investment falls as boom looks more like blip

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