Why a tight labour market could be the tech sector's golden ticket

In our?flagship Market Trends and Forecasts report, we observed growth of 9.3% in the UK Software and IT Services (SITS) market during 2021. Furthermore, we expect demand for #digital, #data and #technology services to persist, as the geopolitical and macroeconomic environment pushes technological transformation up the agenda of many end-user organisations. And so, we are forecasting a compound annual growth rate (CAGR) of 5.9% in the UK SITS space through to 2025.

The economic data released in recent days and weeks show not just the?opportunity?for the tech sector to achieve - or even exceed - this forecast but also the?imperative?of it doing so. Because if the UK economy fails to embrace the opportunity to invest in technology, it risks years of faltering growth.

With the number of economically inactive remaining high after the pandemic,?the economy is now operating at almost full human capacity and the number of vacancies is outstripping the number of people available and looking for work.

The opportunity for the tech sector is sizeable...

The current labour shortage may be eased somewhat if a downturn is triggered by further interest rate rises - though in the worst way, namely through job losses.

But the underlying problem will not go away -?the UK simply doesn't have enough workers to continue to grow its economy in such a labour-intensive way. The net result is that business leaders are sinking vast amounts of time into #recruitment and #retention at the expense of building their businesses and delivering #growth.

The tech sector can seize this opportunity by articulating the benefits of its products and services in improving efficiency and increasing workforce engagement and retention.

Survey data suggests businesses are willing to invest - for example, the government's Business Insights and Conditions Survey indicated only 8% of businesses envisaged capital expenditure reducing. Of course, such expenditure must be accompanied by a drive from business and government to improve skills. Investment in economic growth cannot be decoupled from upskilling the workforce that will deliver it.

...but the tech sector must invest in itself

Whilst there are significant productivity gains to be enjoyed from tech companies selling their products and services into other industries, the tech sector must make investment in technologising itself.

As?we set out last month, the Information and Communication sector (which includes tech) has the second-highest vacancy rate across the whole economy.

And perhaps the most sobering statistic for tech business leaders -?for every new job filled in the Information and Communication sector relative to the start of the pandemic, there are still four vacancies remaining.

If the sector can double down on #skills and retention, there is surely an enormous growth opportunity available.

TechMarketView subscription & UKHotViews Premium clients can read Tania Wilson ’s full article here:?https://www.techmarketview.com/ukhotviews-extra/archive/2022/07/27/a-tight-labour-market-could-be-the-tech-sectors-golden-ticket

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