The UK is seen as one of the fastest-growing tech nations with an industry positively impacting the job market and the economy. However there appears to be growing concern around skills shortages in both digital and tech sectors. So what are the issues facing UK tech talent and how can they be addressed?

 

The State of the UK Tech Sector

According to research by Tech City UK, the tech and digital sectors are growing at a fast but steady pace. It’s clear it’s an area that is driving investment, as seen in 2016 when UK digital tech investment reached £6.8 billion, which is 50% higher than any other European country. Last year, the turnover of digital tech businesses in the UK reached £170 billion, an increase of £30 billion in the last five years.

London accounted for around 80 per cent of all venture capital tech funding in 2017. By subsector, the UK’s financial technology – or fintech – space led the year in terms of investment, attracting a record £1.34bn. The UK’s Artificial Intelligence companies also grew their funding last year. Investment in London-based AI companies surpassed £200m: a 50% increase on 2016 levels.

UK tech talent is at the heart of this economic and business ambition, and skills are now a premium. Just under 10% of LinkedIn’s 23 million UK members have tech skills, which is around 2.2 million people. While there will always be a market for harder technical skills like development, softer tech skills which are transferable are still in high demand. 36% of members now working in tech moved to that sector from non-tech jobs. 7% moved from Professional Services, 5% from Financial Services and Insurance and 3% from Media and Entertainment.

 

Jobs Market

It is estimated that there are now 1.64 million digital tech jobs in the UK. The digital sector is creating jobs 2X faster than the non digital sectors but are there enough of the right people to fill these jobs? The evidence suggests, no.

There seems to be a clear shortage of qualified professionals for these roles and with Brexit looming there could be a worrying impact on the tech and digital sectors. According to City AM, in the third quarter of 2017, just 34% of foreign tech workers accepted job offers from UK firms. This was down from 40% in Q1 2016, before the results of the EU referendum. Their research also found that half of the UK’s tech sector employees have considered leaving the country altogether in the wake of the shock result – 70% of those would be looking to call other European cities home instead. That’s a huge chunk of the UK workforce that no one wants to lose.

To counteract this and boost investment in UK digital and tech, many organisations are creating hubs, financial support, visa advisory groups, crowdfunding and professional development initiatives. The UK government also announced plans in November 2017 to better support UK tech talent.

Prime Minister, Theresa May, met leading digital entrepreneurs and innovators from across the country and has announced a series of measures to support the continued growth and success of the UK’s world-class tech sector. She stated:

“Technology is at the heart of our modern Industrial Strategy, and we will continue to invest in the best new innovations and ideas, in the brightest and best talent, and in revolutionary digital infrastructure.”

The measures included:

  • Doubling to 2,000 the number of visas available to the brightest and best talent from around the world, including in digital technology
  • An investment of £21 million to expand Tech City UK into a nationwide network – Tech Nation – to accelerate the growth of the digital tech sector across the country
  • A new £20 million fund to help public services take advantage of UK expertise in innovative technologies like Artificial Intelligence
  • The launch of a £20 million training programme which will challenge thousands of young people aged between 14 and 18 to test their skills against simulated online cyber threat

 

Skills Shortage

In a survey conducted by Tech City UK, over 50% of UK employers highlighted a shortage of highly skilled employees, with nearly 25% describing the act of sourcing talent as a ‘major challenge’.

It is estimated that for every one skilled candidate there are 5 job opportunities, so skilled professionals can have their pick. This is beginning to be reflected in wage negotiations too.

Over a third of digital tech businesses said that candidates are asking for more money than they can afford to pay. With this in mind, employers are now having to examine their work cultures and work harder to market themselves in an exciting way to candidates. We help our clients do this with branded video, multichannel advertising and interactive jobs specs to build brand loyalty with potential employees.

Interviews are no longer about just finding the right candidate but more about successfully selling your company to that one desired candidate that everyone wants.

 

Equality & Diversity

Another issue impacting UK tech talent is equality and diversity. There is currently no detailed information on the overall levels of diversity in the tech and innovation industry in the UK, although reports suggest that less than 5% of workers in the country’s tech sector are from ethnic and gender minority backgrounds, in comparison to 38% of working age black, Asian and minority ethnic (BAME) individuals working at American Tech companies. 

Fewer than one in 10 management jobs in the UK are currently held by BAME individuals, and only half of FTSE 100 leaders are seen to be actively championing greater diversity, new research reveals. BAME individuals make up 13% of the UK population and 19% of applicants for higher education, but are under represented across both senior and junior levels in the technology sector. London mayor Sadiq Khan recently launched a £7m initiative to help plug London’s digital skills gap by developing the next generation of home-grown BAME tech entrepreneurs. 

Presently, women are severely under-represented. UK digital tech companies rely on an overwhelmingly male workforce – women were in the majority for only one in nine (11%) digital tech companies. Indeed, in over half (53%) of these businesses, men outnumber women by at least 3:1.

According to the Women’s Engineering Society (WES), just 15% of the people working in STEM (Science, Technology, Engineering and Mathematics) roles across the UK are female. Additionally, only 5% of leadership positions in the technology industry are held by women. 

The UK government has become the latest signatory of the Tech Talent Charter, a voluntary vow to boost gender diversity in information technology positions. As part of its commitment to promoting equal opportunities, the government is also writing to global technology giants asking them to sign up as well in an effort to put the country at the forefront of efforts to redress an imbalance between men and women. 

 

Future Talent

To close the skills gap, we need to look at education around tech and digital careers, because we can see that the desire to develop in that industry is there but it needs to be supported. Young people wanting a career in technology cited ‘the fast moving and exciting nature’ of the sector (55%), ‘interesting jobs’ (54%) and ‘good pay’ (50%) as reasons for wanting to work in the sector.

Tech City discovered that Technology was the most popular future career choice for young men at 36% of responses, whilst Creative and Design (26%) and Professions (36%) was most popular for young women. Much like the current industry gender divide, the difference in preference for a tech career shows that of those young people who wanted to work in tech, 70% were young men, whilst only 30% were young women. Of those young people who did not want to work in tech, young men felt that ‘other areas were more appealing’ (50%), while young women felt that ‘they did not have the skills to work in technology (45%).’

It seems the issues of digital education are being addressed for the younger age groups but not enough at higher education and university level. Schools now spend £900m on education technology every year, and it is estimated the global market will be worth £129bn by 2020. It’s making a difference – the 2017 consumer digital index [pdf] suggests that 97% of those aged 15–24 in the UK have basic digital skills – a 4% improvement on 2015.

However, universities are slower off the mark to change. The UK is home to 8 of Europe’s top 20 universities, more than any other European country but in comparison to other countries our digital efforts are falling behind. A report by the digital services organisation Jisc, published by the Higher Education Policy Institute (Hepi), says that with other countries also investing in this area, the UK must capitalise on its strong position to “increase its competitive advantage”.

 

The UK tech and digital sectors have tremendous potential – but for this potential to be realised we need people, skilled people. By acknowledging the issues facing the tech sector and addressing them with innovation and education now, we can solve the skills shortage and diversity issues of the future. This intervention needs to be made not just by governments and universities but also by those already working in the tech sector. From entrepreneurs, to managers, to tech hubs and recruiters, we can all have a positive impact on the tech sector by doing what we do best: innovating.

At Hanover we use smart searching, AI, psychometric assessments and video to help support our clients in making unbiased, merit driven decisions that will result in the right fit for their company. For candidates, we ensure we only work with the most driven and innovative companies that will help them grow professionally.

 

Kieran GeorgeThis blog post was written by Kieran, our Tech Team Manager. Connect with him here!

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