Computer Futures

Mind the gap – How the digital skills gap is killing productivity

The UK is now at the forefront of what some call a ‘fourth industrial revolution’, one which is grafting a digital nervous system onto existing business activity. Of course this transformation is not confined to industry, the change is affecting every sector from advertising to utilities. Such a profound change is having significant effects on the recruitment market. According to Kalpesh Baxi, Senior Partner at Computer Futures, “There is a shift from traditional run technologies to the growing transformation technologies: so the skills that are hardest to find are in the newer specialisms – information security, digital, cloud, user-experience and design.”

Rapid growth in the UK ICT jobs market

The UK saw ICT jobs grow three times faster than the rest of the economy between 2011 and 2014, according to the ‘Tech-nation 2016 report’ and 52 per cent of these jobs are now in ‘traditional’ companies, with financial services and the health sector scoring particularly highly. In many cases the jobs involved are about automating internal processes – in some cases replacing jobs done formerly fulfilled by people. Baxi comments, “Lesser skilled jobs are the most exposed to being automated. When you go to Amazon, or Sky or BT you traditionally spoke to someone at a call-centre; now you can go online and use the ‘chat now’ facility. It’s a whole new way of working and opening up the channels for commerce to be conducted.”

As elsewhere, these new systems create huge amounts of data and it is in the handling and processing - trying to extract meaning – that is the focus of many of the new jobs. “Big data created these huge mountains of data. The first challenge was how do you store all of it, then it became a question of how to deliver all this data in formats that make it valuable – a challenge for analytics. The shift now is to finding relevant data”, says Baxi.

The impact on salaries - or rewards more widely – is varied. London, which has an annual ICT turnover of £64bn per year, exceeds the combined turnover of the next four hubs combined - by a factor of three - which has sparked the fastest salary growth at 29 per cent between 2011 and 2014. But this is to gloss over some important differences in the way these rewards are distributed. While senior technology experts making the move into larger companies can expect large salaries when they move, at the other end of the scale, with start-ups and SMEs, the tendency is to instead offer stock options and other types of financial ‘golden handcuffs’ predicated on rapid growth and a successful market ‘exit’.

The emergence of regional Tech hotspots

There are other attractions on offer as well; rated highly among these are the opportunities to work on cutting edge technologies and gain further training. There is also a greater emphasis on lifestyle such as flexible working or working-from-home arrangements. London is still the dominant centre but now we are seeing secondary locations emerge to challenge it. Baxi observes, “What we are seeing is the emergence of hotspots across the UK because it is becoming increasingly expensive to find real estate in London and being based in ‘Tech City’ you are constantly competing to hire and retain talent. Among other things, the emergence of regional hotspots like Bristol and Manchester but perhaps even more so, places like Brighton and Redruth /Truro in Cornwall which offer obvious lifestyle attractions could reduce the concentration on London as physical proximity to customers becomes less of an issue.

Contract workforce on the rise

Another trend in the UK market which mirrors that seen in other countries is a greater use of contract staff. There are advantages on both sides. While contract work in ICT is hardly a new thing – it has been much used in the UK for almost 50 years – the trend is accelerating. Baxi sees many advantages: “It is more common and more desirable in many ways. It allows people to pick up new skills, work in different working environments and a big advantage is that you don’t get involved in the [office] politics: you come in, do your job and go”. Likewise as we head to the gig economy companies will benefit through access to different thinking from different organisations. That said, this cannot reduce the focus on hiring and retaining permanent talent".

Looking ahead Baxi sees the biggest challenge in reducing the imbalance between sexes in the IT sector. “One of the biggest things likely to threaten the UK’s place as world leader is the skills shortage. The change has to start at school by stopping subjects like IT being so male-oriented and we will have to change the way we expect work to be done, the hours that you work the location where you work - and the rewards.”