Published on by Guest Contributor

It hasn’t been an easy road to get here, and nor should we expect it to be so moving forward. While the tech sector has achieved great success, the UK’s phenomenal digital potential must be matched with a robust and growing talent pipeline to realise the opportunity for the UK to be a global leader in tech for decades to come.

Digital skills are not just about the needs of tech companies – be they start-ups or multinationals. The UK needs people with the skills to help them keep pace and thrive in a digital future. This starts with inclusion – we must make sure that no part of the UK is left behind in the digital revolution, and people of all ages, genders, ethnicities, and socio-economic backgrounds are given the tools and access to education to develop their digital skills.

Hired’s ‘Mind the Gap’ report brings the issue of the skills gap to the fore and highlights the need for a new and innovative approach in the UK to growing our skills base. We need to look to our culture, and shift to a model of lifelong learning. We must commit to challenging our employees and peers to learn new skills, or to update their current set, to ensure we remain ahead of the curve.

It’s time for industry leaders, government and think-tanks to work together to truly seize the moment to fulfil our potential as a digital nation of significance. By using the findings of this report, we can ensure that everyone has the opportunity to become engaged in the UK technology industry. We are on the cusp of a digital revolution; let’s not let it slip through our fingers.

EXECUTIVE SUMMARY

Over the last few decades, the UK has become the leading tech hub in Europe, with more tech “unicorns” – businesses valued at $1bn or more – than any other European country. The UK is now the largest digital economy as a percentage of GDP in the G20, with expected growth of 15% next year. And, according to global accounting firm EY, London is now the second most likely city in the world after San Francisco to create the next tech behemoth.

The question now is – in light of Brexit, the uncertainty around freedom of movement, and the growing appeal of other global tech hubs in Europe, the US and Asia – can the UK maintain this position? It’s a particularly salient point given that a recent study by O2 suggests that the UK will need to fill more than 750,000 new digital jobs by 2020 and train almost 2.3 million people to meet the demand for digital skills.

To get at the root of this issue, we’ve looked into the state of the UK’s talent and skills base, to see how it aligns with the skills that companies are demanding to help their businesses grow.

This report provides a unique insight into the UK’s skills landscape, and will inform the debate about what the UK needs to do next to maintain its position at the forefront of the global tech industry.

METHODOLOGY

This report is based on proprietary information gathered and analysed by Hired’s data science team. The data was pulled from the hundreds of companies and thousands of candidates that participated in our UK marketplace over the last 18 months.

SKILLS: SUPPLY AND DEMAND

Over the past few years, successive British governments have prioritised growing the tech industry as a way to ensure that the UK economy can thrive in an increasingly digital world. From the creation of Tech City UK in 2010 to the introduction of coding onto the school curriculum in 2014, a number of new policies have helped encourage innovation and increase awareness of the socioeconomic benefits of the growing technology sector for UK plc.

This collaboration has started to pay off. According to recent statistics, the UK’s thriving digital industry is now worth £161bn to the economy and supports over 1.5m jobs. Home-grown tech success stories include Deliveroo, Zoopla, Transferwise, ASOS and Shazam.

That said, the history of the tech sector has shown us that the only constant is change and resting on one’s laurels is a sure-fire way to be upended by a rival. Countries – just as much as businesses – must keep innovating. That certainly applies to the UK right now, particularly in light of Brexit.

One in three people working in the UK tech sector comes from another European countries. To date, Britain’s position as a digital powerhouse has been dependent on attracting these kinds of high-skilled workers as a supplement to the country’s homegrown talent. To maintain its status as a global tech leader following the results of the EU referendum, having the right skills available to businesses will be more vital than ever.

To gauge the UK’s potential skills gap, we analysed the skills where demand from employers outstrips candidate supply.

That gives us a snapshot of the skills landscape today. But what areas of talent are rapidly emerging and likely to be most in-demand in a few years’ time? To better understand this, we looked at which roles have generated the largest uptick in interview requests from the employers on our platform over the past 12 months. This confirmed that demand for UI, UX, data and security roles are booming – these are where skills gaps are starting to open up.

EDUCATIONAL BACKGROUND OF THE UK’S TOP TALENT

After analysing the current tech skills landscape, we now want to turn our attention to the educational landscape and better understand whether the UK is educating enough people in computer science to fill the pipeline for the years ahead.

The UK should certainly have an advantage here: the country is home to some of the world’s best universities, from Oxford and Cambridge to St Andrews and Imperial. But the reality is the UK has struggled for years to significantly increase the numbers of undergraduates and graduates studying computer science.

Official figures show a minimal increase in student numbers since the start of this decade – and in fact numbers in both categories are lower now than in 2002-03. With this in mind, there is a risk that the UK could fall behind other global leaders, particularly when you consider that the EU has stated that France performs better than the UK in terms of producing STEM graduates.

These figures are deeply worrying for the UK’s digital future. The lack of progress in significantly increasing the number of student taking computer science means the UK is highly likely to feel the effects of a tech skills gap for years to come, which could in turn have a serious impact on the country’s tech sector.

Attracting international talent is one way to counter this worrying trend, but only over the long term – and particularly if Brexit makes it harder for employers to attract overseas talent, the UK needs to develop a base of digital skills within its homegrown population.

Equally as concerning is the gender imbalance among computer science students. Of the 63,000 UK students taking the subject in 2014-15, 85% were male, suggesting a massive gender gap that needs to be addressed as well.

So which UK institutions are doing best at producing the highly skilled employees of the future? To understand this, we looked at where candidates on the Hired platform obtained their educational qualifications.

Broadly speaking, these findings highlight that there are two routes into software development: through a university degree and relevant STEM coursework or through being self-taught, although it is still important to certain employers that candidates have a strong academic or theoretical understanding of computer science. Interestingly, this bifurcated path is somewhat unique to the tech industry.

As a group, developers have an unusually strong culture of continuous learning. In the UK, many developers move into this field after starting their career in another area, potentially signifying that this is a group that is, on the whole, more open to regularly learning new skills than the average employee. In addition, the constant tide of technology progress means that developers have no choice but to continually refresh and update their skills, mastering new systems and programming languages.

Given the lack of growth in computer science enrolment at UK universities, hopefully these findings will serve as a call to employers to remain open-minded to non-traditional educational backgrounds or to offer scholarships or apprenticeships to potential junior candidates.

The culture of continuous learning often means that some of the most knowledgeable and talented candidates can appear without formal qualifications, although it should still be acknowledged that having a degree continues to be an important attribute that many employers look for.

THE COMPENSATION LANDSCAPE

One of the keys to attracting people into computer science – and to closing the UK’s tech skills gap – is ensuring that the UK offers comparable compensation to other tech hubs. And while salary is just one component of an overall compensation package, it is an important element. In this section we look at the salaries UK developers currently command, and how they compare both to other industries and to their peers in the US.

Software development is a relatively new career compared to traditional professions such as medicine, law, education or accountancy. This means wage expectations among employees aren’t well-established; though they can expect to earn more than their UK peers. The average starting salary for a developer is £32,500 – a figure between 7-25% higher than their graduate peers according to statistics from the Association of Graduate Recruiters, Office for National Statistics and the British Medical Association. To shed some light on developer salary levels, we crunched our data to calculate the average pay software engineers get at different stages of experience.

As developers continue through their careers, they can expect to see their salaries increase steadily, though this will depend significantly on their specialism. The graph below highlights the jobs attracting the biggest increases in salary offers over the last 18 months, a reflection of mismatched supply and demand in the market.

But of course UK businesses aren’t just competing against their peers in this country when it comes to securing the best and brightest talent. Developers have a uniquely international set of skills that are applicable and valuable around the world, which means that local recruiters are facing a global battle for talent. To better understand how the UK compares with other tech hubs, we compared our results to salaries in the US.

London’s software engineers are earning 38% less than their peers in San Francisco and 35% less than those in New York. Even software engineers in Atlanta – the lowest-paid city in our US survey – were paid more than those in London. This substantial pay gap should concern businesses and policy makers hoping to make the UK more globally competitive against the best tech firms in Silicon Valley and elsewhere in the US, especially as uncertainty about the impact of Brexit looms over the market.

CONCLUSION

In digital terms the UK has come a long way over the past decade. Thanks to the hard work of businesses and good decisions by policy makers, it has established itself as a European tech powerhouse and a global contender.

But our data has found some significant gaps in the UK’s current tech skills base. In important areas such as UI and UX, data and security, businesses are demanding skills that we currently don’t have enough of from our home grown talent pool and are failing to adequately attract from outside the UK. Over the coming years, with market uncertainty fuelled by the Brexit decision, we must look to tackle these issues as an industry if we are to help the UK remain a global powerhouse.

If the UK is to maintain its position as a digital leader, the members of the UK’s tech ecosystem – including start-ups and larger businesses, schools and universities, local and national government – need to address the skills gap that’s starting to open up.

Leave a Reply

Your email address will not be published. Required fields are marked *