Our key take-outs from the 2018 Tech Nation report

The latest Tech Nation report was released in May, providing the digital sector with probably the most comprehensive set of data and insight in to the UKs most promising industry.

Here at Mango, we pride ourselves as being at the forefront of people innovations, and specialise in helping tech/digital firms to scale successfully. And the insights from this years’ survey are more eye-opening than any previous reports.

Here are our top take-outs:

1) 83% of digital clusters cite ‘access to talent’ as their main issue.

That’s right, you read it correctly. Of 30 separate ‘digital clusters’, ranging from Glasgow and Edinburgh in the north, to Truro & Redruth in the south, 83% say that access to talent is a major problem for them.

We’re not surprised to hear this is one of the major issues, but usually access to finance is higher up the issues list. However, the ever-growing skills gap in the UK, and across the globe for that matter, is really impacting firms, and SMEs in particular.

We talked and wrote recently about a worsening skills ‘civil war’ in the UK, with average tenure dropping and a whopping 63% of digital employees expecting to change jobs within the next year.

Never mind the impact on individual firms, including the circa 8,000 new tech firms started last year. This skills crisis risks stagnating the growth of the whole industry in the UK, and our competitive position on the global stage.

Firms are learning that they need to plan and look after people to the same degree, if not more, than they plan product, brand and finance. As a firm’s most crucial resource, people are increasingly making and breaking promising new digital businesses.

Additionally, there are early signs of improved collaboration between industry and educational institutions to respond to the long-term risks being generated through skills gaps. This collaboration needs to stretch the limits of possibility, as with big players like Facebook and Google firmly set up shop in the UK, competition for talent just got hotter.

2) Bristol is most productive digital region with a whopping £320,000 turnover per employee

Though London accounts for more than half of total turnover, the impact of rising wages (due to the skills civil war) and high cost of living, combined with a higher proportion of start-up firms choosing the capital as their base, is impacting our capital’s digital productivity (£201,000 per employee), so much so that London’s major competitors in the south, Reading and Bristol, have jumped ahead by a sizeable margin (£234,000 for Reading and £320,000 for Bristol).

Perhaps unsurprisingly given the phenomenal inroads Bristol and surrounding regions have made over recent years to become one of the most exciting digital hubs in the UK, Bristol is attracting both start-up and established firms alike, meaning the region is now classed as a ‘balanced’ eco-system. The combination of experience and ambition is proving an exciting cocktail, taking total turnover up to £7.9bn, making Bristol the UKs 3rd largest tech powerhouse, more than twice the size of 4th placed Manchester (£3.2bn).

Team Mango already work with a large number of firms in and around Bristol and love every one of them. The vibe, ambition and drive or all digital firms in this area is infectious, clearly a symptom of a culture of progress that Bristol should be very proud of.

3) The UK has the edge on global reach

Though classed as ‘the shining light’ of digital Europe, the UK is still some way behind the mother of tech, Silicon Valley.

Perhaps surprisingly, though, the UK is one of the world’s leaders in terms of global reach. In fact, 33% of customers for the UK digital sector are outside of the UK, compared to 30% for Silicon Valley, and only 7% for Beijing.

Or is this surprising? One criticism often levelled at new Silicon Valley businesses in particular is there often insular focus, perplexed by the scale and opportunity presented by the US market, and tailoring products to suit American needs, often being neglectful to the rest of the world. A growing global reach by the UK is surely a positive thing, particularly as we head in to a post EU world.

This is becoming a hot topic in UK tech. The concept of ‘going global’ can be scary. And it means that teams are no longer fixed to one location. Firms are increasingly setting up remote teams and creating multiple bases, utilising tech themselves to ensure communication, performance and culture don’t suffer. Not an easy task but doable with the right mentality and values. And a trend that is increasingly important as global reach helps UK tech to cement its position on the world stage.

4) The UK is behind on talent

‘Competition is increasingly evident across borders and determined by conditions in each ecosystem’. A very clear statement from Tech Nation.

Perhaps not surprisingly, most US digital hubs have an improved talent picture when compared against the rest of the world, and the UK in particular, with both quality and availability of talent scoring high.

You could say that this is due to the nation being a bit further down the road, with Universities like Stanford churning out top talent year after year, and a culture of tech being present from Kindergarten stage.

However, it’s not just that. In fact, average salaries are driving a great deal of cross-border movement for the most talented of developers, with US salaries averaging $95,000 (£67,500). By contrast, average salaries in the UK are around £49,000, including the impact of London weighting.

This difference is leading to a large number of experienced developers moving to the US, either physically, or working remotely, sometimes as ‘digital nomads’, in search of greater financial reward.

As the talent gap becomes more challenging in the US, US digital firms are increasingly looking globally to access experienced and cheaper talent, another major risk for the UK digital sector.

Salary inflation in the UK is accelerating, with certain skills seeing a 10—15% rise in the last year, compared to inflation of less that 3%. Bad news for SMEs in the short term, but potentially good news for the macro tech economy as the wage gap between the US and the UK reduces.

5) Young men continue to be attracted to Tech careers more than young women

Perhaps unsurprisingly given females only represent 19% of the total workforce within Tech, females placed a career in Tech as their 5th choice, behind ‘Professions’, ‘Creative and Design’, ‘Starting my own business’ and ‘other’. In fact, only 13% of females chose a career in tech, compared to a whopping 36% of men.

Why is this? Well, there’s a variety of factors to be explored, with a great deal of focus now being put in to this area. The image of tech from an outsider looking in can be quite scary, and the high proportion of start-up and fast paced scale-up firms can present a challenge for flexibility, something which females tend to seek more often than males.

In what is a huge opportunity to help address the growing skills gap, women in tech is now becoming a much-needed movement, with some inspirational women taking the lead on encouraging others to follow suit.

To facilitate this, the issues of diversity and flexibility need to be addressed by all firms. The requirement, for example, of a young mum to work within school hours so they can balance home and work life effectively should never stand in the way of them entering the tech world. Surely it’s better as a firm to employ 2 highly motivated and highly capable women part time (which they traditionally seek as a contract more than men) than 1, full time developer who can only be productive for a maximum of 80% of their long week?

The potential for women to transform our talent issue in the UK is huge. But it’s not just about image and skill set. It’s about culture and diversity. The more tech firms who adapt to this, the greater our chance of our attracting more females to a career in tech.