Businesses still see opportunities for growth, despite pandemic

Scotland’s digital technology sector continued to grow in 2019 with an increase in sales and profit margins, according to the latest annual industry survey conducted by ScotlandIS.

Despite Covid-19, many firms have identified opportunities for growth over the next nine months. Approximately one third of those surveyed believe business opportunities will rise due to increased or new demands related to Covid-19, particularly in cloud services, digital connectivity, remote working technology, and digital health solutions.

Only one in ten respondents indicated that avoiding insolvency is among their top three challenges, indicating the buoyancy of the industry over the last 10 years has made many businesses resilient to the more brutal economic impacts that the pandemic has brought.

However, in line with many other industries, the most common challenges companies expect to face for the rest of the year are securing new business, cashflow and income management, and staff health and wellbeing.

In another indication of business optimism, 71 percent of respondents expect their employee number to stay the same or to increase their headcount by the end of 2020, with 27 per cent forecasting an increase in headcount. In December and January that increase was expected to be substantially higher at 80 per cent.

Around one third of respondents have already furloughed staff following the Covid-19 outbreak, with 30 per cent planning to do so in the next few weeks. Meanwhile 29 per cent have already hired new people or are planning that in the near future, and only eight per cent have already or are planning to make staff redundant.

The survey also revealed that demand for the recruitment of university graduates has increased, with 81 per cent of responding businesses reporting that they are definitely or quite likely to recruit graduates in the next 12 months, up from figures around 70 per cent over the last five years.

Jane Morrison-Ross, chief executive of ScotlandIS said:

“The industry has demonstrated strong growth over the past decade and optimism had risen in 2019 prior to Covid-19. Naturally, the pandemic has impacted the outlook for the rest of the year for many, but there is still clear determination across the sector to adapt and respond to several new challenges.

“Digital connectivity has never been more important for businesses and individuals across Scotland, and it is heartening to see the support Scotland’s tech sector is offering to try and make sure no person, and no business, is left behind due to a lack of digital resource.”

Commenting on the findings, Peter Proud, Founder and CEO of Cortex said: 

“The marketplace has changed significantly due to Coronavirus but it’s important to remember that digital does underpin the economy.  I have no doubt that as a company and as a sector, we will come out the other side of this. Rapid digital transformation is taking place not just across Scotland and the UK, but across the globe.

“As a business, Cortex leads with digital delivery and so had a solid and robust business continuity plan in place from the beginning.  Our staff have been working from home for longer than most, having closed the physical office a week before lockdown was announced.  They have the same access to the tools, files and everything else they need to do their job regardless of location and from a client’s perspective there has been no difference or interruption in service.

“With solid planning, resilience and agility at its core, and an ingrained entrepreneurial mindset I believe that Cortex has the opportunity to grow and thrive, despite the challenges currently facing us.”

Ritchie Somerville, Head of Strategy for the Data-Driven Innovation initiative, added:

“At this difficult time our thoughts are obviously with those directly affected by Covid-19.  When we move out of the lockdown, innovation will be a vital part of how we get the economy working again. This report provides clear signals that Scottish companies, whether start-ups or large enterprises, were moving in a positive direction in their use of data. It also highlights the need to combine talent, adoption, data and enterprise to drive the full value of data, both in companies and for our citizens.

“This is one of the Data-Driven Innovation initiative’s biggest objectives, so we’ll continue to play our part in promoting investment in innovation across all these aspects to realise Scotland’s full potential, through the Covid19 recovery and beyond.”

The Scottish Technology Industry Survey 2020 was supported the University of Edinburgh’s Data Driven Innovation Initiative –  part of the Edinburgh & South East Scotland City Region Deal –  and was carried out between December 2019 and January 2020 through an online survey platform. To ensure the survey took the latest developments into account, ScotlandIS collected follow-up responses during April to gauge the impact of the Covid-19 crisis on the sector’s outlook for 2020.

The full survey is available to view: https://www.scotlandis.com/scottishtechsurvey/