What and where is the digital economy?

Tech Nation: powering the digital economy 2015 is a report by TechCity on the UK’s digital industry, and follows on from an earlier post on the subject of tech jobs and chimes with other posts on this blog on advertising, digital and big data.  Interestingly, TechCity started life in 2010 with a mission “to support the emerging Silicon Roundabout digital cluster in East London” but has since expanded to cover “all of London and cities across the UK” – a shrewd move given that their report finds 74% of digital companies are based outside of London.

The report is easy to read and features lots of infographics.  Of interest to students and graduates, it examines a buoyant industry employing 1.46m across the UK, with 45,000 jobs being advertised in January 2015 (62% outside Inner London).  The good news continues with findings that:

  • “The UK’s digital industry sector is diverse in sector and capability
  • Digital technology companies are thriving right across the nation
  • The digital sector is growing in terms of revenue, number of companies and employment”

The report analysed 47,200 digital companies, of which 98% are small businesses (meaning job seekers should be pro-active in their approach).  This should come as no surprise, given digital is relatively young: “over half of the companies analysed were formed since the start of 2008, with 15% set up in 2013-14 alone”.  That said, digital does include some older, established sectors alongside the newer ones, to create an industry which, according to the companies surveyed, is broken down as follows:

  • Advertising & marketing  (11%)
  • Data management & analytics  (6%)
  • E-commerce  (6%)
  • EdTech Education Technology  (4%)
  • Electronics & components  (2%)
  • FinTech Financial Technology  (4%)
  • Games development & publishing  (4%)
  • Hardware & devices  (5%)
  • HealthTech  (4%)
  • Marketplace and lead generation  (6%)
  • Media & entertainment  (11%)
  • Software development  (22%)
  • Telecommunications & networking  (4%)
  • Other  (11%)

It is interesting to see that, given the size of the UK’s communications industry, advertising & marketing only accounts for 11% of the digital economy – a testament to growth of the newer sectors.  (A similar argument might be made for electronics & components, offering a mere 2% of the digital companies in the survey, yet with huge companies such as Cirrus Logic, Selex, STMicroelectronics and Toshiba on the city’s doorstep).

The report identified 18 key skills wanted by the sector (many of which match an earlier post on skills demanded on LinkedIn job ads):

  • Software engineering
  • Cloud computing/SaaS/Web services
  • Systems design and integration
  • UI and UX design
  • Mobile and tablet development
  • Visual and audio design
  • Content and media production
  • Digital marketing
  • Machine to machine communications
  • Network infrastructure and protocols
  • Cyber security
  • Firmware and OS development
  • Artificial intelligence
  • Payments infrastructure
  • Data science
  • Computer simulation
  • Hardware development
  • Machine learning

and examined the extent to which each of the tech sectors used these – handy for assessing where your own skillset might be valued/fit in.

It then identified 21 digital clusters across the UK, which were analysed to look at variables such as:

  • Which clusters have the fastest growth?  (Bournemouth & Poole: 24% of its digital sector companies were formed in 2013-2014; 212% growth in new tech companies 2010-2013)
  • Which are the largest?  (Inner London)
  • What are the top 3 sectors making up each cluster (e.g. Edinburgh = Software development, FinTech and EdTech)
  • What are the key skills strengths of each cluster?  (Useful if you have a particular strength, to see in which locations it might be most valued; or if you want to work in a particular location, to see which skills are most needed there and consider if you have them/can you develop them?)

A two-page overview for each of the 21 cluster areas is then provided, profiling aspects such as the size, the key sectors within the sector, drivers for growth and barriers.  This might be handy if you are set on a particular location for a summer internship or graduate job.  Taking our own local cluster, Edinburgh is thought to employ 7,136 in the digital economy, with a growth rate of 33% (2010-2013).  Positives noted included:

“Edinburgh is a recent startup success story, with local examples including comparison website Skyscanner, online accountancy form FreeAgent and fantasy sports firm FanDuel, which recently raised £70m in funding.  Local companies feel a strong sense of community, with 88% reporting that they are part of a digital cluster.  A solid support network of incubator programmes exists in the city centre, including TechCube and CodeBase.”

However the main barrier to growth was identified as talent:

“While Edinburgh University has one of the strongest computer science undergraduate courses in the UK, digital companies still report that they have challenges around attracting talent.  Both talent production and talent migration emerged as barriers to growth.”

Perhaps not such bad news if you are looking for work here?!!

For more on careers in the sector visit the Careers Service’s website, specifically the occupational information for:

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