Scotland is on a journey to become a digital nation

It is impossible to deny the influence of technology today. As the fourth industrial revolution takes hold, the need for tech skills is growing. In the UK, tech sector GVA grew nearly six times as fast as the UK economy as a whole between 2010 and 2018, and UK tech employment now accounts for 9% of the UK’s workforce. This rising demand is not lost on Scotland.

In 2011, the Scottish Government released its plans to pivot to digital. Its digital strategy was designed to extend connectivity, promote the digital economy, digitise public services and promote digital participation. This was followed up in 2017 with the paper ‘Realising Scotland’s full potential in a Digital World’, which built on 2011’s agenda, with renewed focus on data, connectivity, cybersecurity and cloud and infrastructure.

The power of digital

The results speak for themselves. Digital Scotland’s 2019 report shows a thriving tech sector. Scotland’s tech sector growth rate is one and a half times higher than the rest of the economy. It supports 100,000 jobs at 1,500 tech companies (including four digital unicorns), and contributes £4.9 billion to the Scottish economy. Tech Nation’s 2020 report shows a similarly positive picture – with £200m total VC investment poured into Scotland in 2019 and £93m invested in emerging tech over the last four years.

Scotland has staked a claim in high-growth tech verticals, including software development, data science, digital health, clean growth tech and cybersecurity. In the last four years, it has invested more than £25m in artificial intelligence. Scotland’s commitment to digital is also leaving new space to innovate, with plans under way to harness Scotland’s natural tidal energy to create the world’s first ocean-powered datacentre.

In fact, so pivotal a role is tech considered to play in Scotland’s current and future economy, that just last week the Scottish government launched a review into how the technology sector could help economic recovery following the Covid-19 pandemic.

Keeping pace with a booming tech economy

The key to Scotland’s success has been collaboration. As a smaller nation, Scotland is able to pool resources, recognise complex challenges and opportunities and remove barriers between different tech players easily. The Scottish government’s Digital Directorate shows an unparalleled commitment to adopt tech and drive innovation, with different government bodies supporting this, as well as funding and investment support for local businesses.

Cluster management organisations such as ScotlandIS and Technology Scotland work across different subsections of the tech landscape – including academia, research and development, different government departments and businesses – to bridge the gap between innovation and practical application. Meanwhile, publications like FutureScot report on the status of the Scottish Digital Tech Sector to keep everyone informed. Scotland’s tech network is so well connected that part of the challenge for Scotland is keeping pace.

Audit Scotland’s 2017 report ‘Enabling digital governance’ highlighted the need for better strategic direction and tech leadership in order to execute the government’s digital strategy. In particular, it called attention to the need for greater visibility of the various digital projects across different departments and bodies in order to build a clearer picture of investment needs and ensure quality and consistency of all the contributing parts. It also suggested that a role the equivalent of a CIO would be necessary to continue the ambitious work that had already taken place to make tech a lynchpin in the Scottish economy.

In some ways, the need for greater control to manage all the different threads of tech transformation is a nice problem to have. The Scottish government is clearly taking its role in digital regeneration seriously, and the 2017 introduction of the Digital, Data and Technology profession to the Scottish government highlights that it understands tech expertise must come internally as well as externally.

The future of Scotland’s tech economy

The strength of Scotland’s tech economy has shone through over the coronavirus pandemic. A recent industry survey conducted by ScotlandIS found that almost one-third of tech businesses believe their opportunities will increase due to demands related to Covid-19, especially in cloud services, digital connectivity, remote working technology and digital health solutions. Meanwhile, only one in ten respondents cited avoiding insolvency in their top three challenges, showing confidence in the stability of the tech market to overcome some of the more brutal economic aspects of the pandemic.

In fact, 71% of tech businesses expect their employee number to stay the same or to rise by the end of 2020, with 27% predicting a headcount increase, despite just over a third of companies furloughing staff over the last few months.

By laying the ground work for a digital nation, Scotland has created a digital economy that is buoyant and resilient in the face of harsh, unprecedented change.

But this doesn’t mean the work is done. In Scotland, as everywhere, we still face a serious gap between supply and demand. Recent SQA figures highlight a 21% drop in Computing Science Higher entries in Scotland. This is a worrying trend when you consider that already 12,800 digital tech jobs come onto the market every year in Scotland, compared to only around 5,000-6,000 people entering the market each year with relevant tech skills. And even though ScotlandIS and SDS are already looking at ways to narrow the shortage, it will still take time to build a big enough talent pipeline. Bridging this digital skills gap will be key to bouncing back in a post-Covid world.

Scotland’s appetite for digital transformation has poised it for the future. By investing, committing and encouraging collaboration, it has created a booming tech economy that is as attractive to tech start-ups and SMEs as to large corporates. The next challenge will then be about keeping up – and to an extent, controlling – this momentum, as well as finding a way to feed this thriving tech economy.

Digital tech recruitment

Lorien specialises in recruitment solutions for the tech and digital market. We’ve had a presence in Scotland since 2003, and today we work with Scotland’s rich tech ecosystem of big, private corporates, home-grown start-ups and SMEs, and the public sector.

We’re finding more companies in Scotland are reaching out to us to support with their tech and digital hiring due to the competitive nature of the market. The general feeling is that people are hard to find, and this is pushing up salaries.

There may be some truth in this. A recent report published by the UK’s Digital Economy Council found that Edinburgh has the second highest median salary for digital tech jobs in the UK, and a salary 17% higher than the median salary across all sectors in the city. By comparison, for Glasgow, the median salary for digital tech roles is 35% higher than the median salary across all other sectors in the city. In both cities, these salaries are on the rise, perhaps driven by the volume of demand – digital tech job vacancies make up over 22% of total job advertisements in both.

Specialist technology providers like Lorien are helping companies to find the scarce tech talent they need to keep up with Scotland’s high growth tech ecosystem. It’s clear that Scotland is on a mission to become a digital nation – and based on its trajectory, this seems highly likely. For those that can find high quality tech talent, there are few more exciting places to be for tech right now than Scotland.

Reach out to me at sean.bowman@lorien.co.uk to find out how we can help you with your tech recruitment in Scotland.