As a nation, the UK has a tendancy to embrace the latest tech trends, which permeate into all aspects of our personal and professional lives. The UK tech industry creates employment for over 1.2 million people, however skills shortages are affecting the sector in a similar way to its counterparts in the US and Asia. In this whitepaper, we take a look at the state of play for the UK Tech industry as we reach this year's midway point. The paper highlights the key trends which all suggest that the UK is seeing a resurgence in growth as one of the most technologically advanced nations in the world.

1. The UK Tech Industry
- State of Play 2014.
A Technically Compatible Whitepaper. 20 May 2014
Connect
Technically Compatible Tel: 0800 488 0175
The Evolve Building Int Tel: +44 191 305 1042
Rainton Bridge Business Park
Houghton-le-Spring Co Durham
DH4 5QY @TechCompatible

2. INTRODUCTION
Britain is one of the most technologically advanced nations in the world, alongside the United States, the
obvious Asian tech hubs and a few other hotspots. We embrace the latest tech trends in our personal lives and
professional lives, shaping the way we do business with each other, learn new skills and enjoy our free time.
With such a strong affiliation with technology, it’s no surprise that contemporary Britain has a strong industrial
presence in the IT arena. According to the Department for Business, Innovation & Skills (BIS), the UK tech
sector contributed 8% to UK Gross Value Added (GVA), or the value of goods created by the economy’s various
industries, in 2012. It’s a sector that employs 1.2 million people, with well-known UK hubs including ‘Software
City’ in Sunderland and the Thames Valley corridor – oft described as Britain’s answer to Silicon Valley.
British Tech.
It’s worth here defining exactly what we refer to as the ‘Tech’ industry. A popular acronym to describe some
of the most integral subjects to UK industry is STEM; ‘Science, Technology, Engineering and Mathematics’,
often used in relation to educational policy and school curriculum choices. For the purpose of this Whitepaper
however, we borrow from KPMG, who define 5 sub-industry groups that make up the UK tech industry:
1
of UK Gross Value
Added was contributed
by the UK Technology
industry in 2012.
8%
.... creating employment for over
1.2 millionpeople.
• Software Publishing. • Computer programming
and related activities.
• Data Processing and
related activities.
• Manufacture of computer,
electronic and optical products.
• Manufacture of electical
equipment.
England’s capital city, one of the financial and business capitals of the world, is another hive of activity.
According to the BIS, the tech sector here grew 16.6% between 2009 and 2012; impressive growth that
reflects a wider tech trend and London’s ability to prosper regardless of the external economic context.
London.
In this whitepaper, we discuss the state of the UK Tech industry, as it stands midway through 2014. The wider
British economy is experiencing a resurgence, approaching the peak levels not seen since the economic crisis
of 2008. Positivity is in abundance and many industries are enjoying strong upturns, which is certainly the case
for technology.
Once we’ve addressed they key facts and figures, the whitepaper steers towards jobs. What’s the market like
for UK technology employees and what is the level of demand? Finally, the whitepaper focuses a couple of
the key trends in the industry, to shed some light on the topics at the forefront in the mind of employers and
emploeers throughout the industry.

3. KEY FACTS & FIGURES
Like so many industries, UK technology businesses suffered
significantly during the global economic downturn of 2008, and
the resulting years of economic uncertainty. Many companies
chose to delay potentially capital intensive IT projects, needing
instead to focus on damage control and riding out the storm. Such
strategic decisions are not uncommon; according to research by
McKinsey, during recessionary periods, the spending on goods
and services generated by the high-tech sector drops four to
seven times more than GDP.
Positive Growth.
Source: Adapted from ‘‘KPMG Tech Monitor UK - April 2014’
2
After the dot-com bubble
burst in 2000, US IT
spending fell 27%, while
GDP fell only 3.7%
“
”Jump to May 2014, and we find a UK economy in resurgence. 2014 first quarter growth hit 0.8%, marking a fifth
consecutive period of GDP growth. It would be foolish to warrant the end of economic troubles, but the much
promised green-shoots of recovery are certainly now flourishing.
The graph below shows the Purchasing Managers’ Index (PMI) for the UK Tech industry, a statistic that gauges
the purchasing intention of managers at any one particular time. We can clearly see the impact of the economic
downturn on the tech industry. With a fall that begins in the middle of 2007, the market reached to its lowest
point in 2009, where PMI reached 40 (50 = no change).
2013 however, was a year of very
strong growth. We can see that PMI
reaches almost 65, the strongest
performance for a decade. As of
Q1 2014, PMI stands at 60.0, down
slightly on the end of 2013. However,
this does demonstrate that the sector
is continuing to experience strong
levels of growth.
Industry Drivers.
So, it’s fair to say that growth is a major trend in the industry, but what’s driving it?
We can find clues by looking closely at technology sector demand patterns. With an
improving wider domestic economy, increased IT spending and investment has resulted
in a greater backlog of work becoming evident.
Again, we can use purchasing manager indexes here, in particular the ‘PMI Backlog of
Work’ Index. Since mid-2010, the index has provided a negative result, below the 50 no
change level. This demonstrated that tech companies were experiencing less backlogs
of work, with more available capacity. However, in mid-2013 the index rose over 50 for
the first time in three years, and continued to rise, almost hitting 55 in 2014. Although
less dramatic than the PMI figures quoted above, this provides clear evidence that tech
companies are experiencing greater capacity pressures, causing backlogs of unfinished
work - a clear sign of more buoyant client ordering activity.
Tech Sector
Profitability

4. With the combination of a growing number of jobs and a shrinking number of talented individuals to fill them,
candidates have seen salaries for IT roles grow considerably; April 2014 saw the most marked increase since
July 2007. ITJobWatch monitors UK IT positions, providing some useful insight into the kind of specific wage
increases the market is experiencing, shown here.
As a consequence of a recovering economy, the UK has enjoyed an unemployment rate gradually falling
in recent months. The latest figures produced by the Office of National Statistics (ONS), suggest that UK
unemployment now sits at 6.8%, a five-year low.
With technology businesses experiencing more frequent backlogs of work, accompanied by a general trend
of industry growth, it’s good to report that the job market too is in healthy shape. The IT recruitment agency,
Langley James, publishes a monthly report commenting on recent employment trends for the industry. Their
recent key findings point towards a market that is increasingly skewing in favour of the skilled candidate. Firstly,
the number of both permanent and contract IT positions available is rising. According to research published
by the Recruitment & Employment Confederation (REC) and KPMG, the Permanent IT job market was ranked
fourth for positive growth by industry sector in March, with contract IT jobs slightly behind in sixth.
Leading the way.
THE JOB MARKET
3
Source: Adapted from ‘‘KPMG Tech Monitor UK - April 2014’
This graph, using data from the
‘Markit Business Outlook Survey
February 2014’, shows that hiring
intentions of tech companies are
persistently higher than the wider
average. This is again evident in Feb
2014, where tech companies had a
net balance of 38.6%, as opposed
to 35.7% for the wider all company
average.
Clearly then, there are more IT jobs available. The other side of the coin is that there has also been a relatively
sharp reduction in candidate availability. Langley James report that the availability of IT staff to fill positions
in April 2014 fell at the sharpest rate since October 2004 for permanent placements, and the sharpest since
December 2000 for contract positions.
Super Salaries.
Keyword Average Salary
3 months to May 2014
Average Salary change
from same period 2013
‘Developer’
‘.NET’
‘HTML’
‘Java’
‘Linux’
‘Oracle’
£42,500
£41,500
£40,000
£50,000
£45,000
£50,000
+6.25%
+3.75%
+6.66%
+6.38%
+5.88%
+7.52%
Candidates know they can warrant
greater remuneration for their time.
Such impressive salary growth figures
provide a further indication of the high
demand of these skilled tech employees
in the UK. Another reason often noted
in reference to such figures is the
apparent ‘skills shortage’ situation,
which we’ll move on to address in the
next section of our whitepaper.
Source: ‘IT Jobs UK’ - http://www.itjobswatch.co.uk/

5. Another key trend that has been particularly relevant in 2014 is the conversation around opportunities for
women in the technology sector. A recent report by Gartner on Chief Information Officers (CIOs) found that only
14% of UK CIOs were women, a figure which has remained static for the past decade, when analysis by gender
began.
It has long been agreed that the situation isn’t simply caused by gender
preference, but an inherent cultural problem within the technology industry.
One such cultural feature that Gartner identify is the ‘hero mentality’ of job
promotion in tech. It is more often men who associate with such a mentality,
where people work very hard to fix problems after they have occurred and
are then positively rewarded for their ‘heroic’ work. Women however, are
often more proficient and effective at identifying and rectifying problems
before they happen, arguably as or more important, but in the current
generalised structure, this can be overlooked.
Again, however, both the British government and leading technology organisations
are pro-actively trying to remedy the situation. The recently launched government campaign
‘Your Life’ (http://www.yourlife.org.uk/) aims to help make careers in the UK’s STEM industries a more attractive
proposition to young professional women. Meanwhile, techUK, which represents the industry on a number of
issues, plan to launch the ‘WalkTall’ campaign in summer 2014, aimed at helping women who have left the
industry for a career break re-join the workforce. These are just two of a number of high profile campaigns that
hope to address the obvious gender imbalance that is evident in the tech workforce.
One of the main reasons attributed to the lack of tech
candidates is an apparent skills shortage within the
wider British population. The problem is a serious
one; according to research published by PWC in May
2014, just under two-thirds (64%) of UK businesses
are concerned that they will be unable to find the
people they need to fill particular positions.
The Skills Shortage.
While a skills shortage may appear to be favourable to those employees who are widely proficient,
evidence does suggest that it can have a negative effect once in a position. As vacancies are left
unfilled, it is often the rest of the staff who are required to pick up the slack. 2014 Research by
TalentParty.com of 200 UK managers found that 66% thought unfilled vacancies left current staff feeling
overworked, while 54% felt it caused staff to be more stressed and 42% attributed it to lowering morale.
Be careful what you wish for.
INDUSTRY TRENDS
Women in Technology.
4
Skills shortages are a common
denominator across the sector.
Many companies report
difficulties in filling
vacancies.
“
”
Victor Chavez
Co-Chair, Information Economy Council
There is some light at the end of the tunnel however. The Information Economy Council (IEC) are leading a
partnership that aims to result in 100,000 more young people being likely to pursue technology careers by 2018,
with funding provided by employers and the UK government. There is also hope that increased engagement
with Massive Open Online Courses (MOOCs) will give people more of an opportunity to build their personal
repertoire of skills in a relatively easy and cost-effective way.
of UK CIOs are
women.
14%
Only

6. Connect
Technically Compatible
The Evolve Building
Rainton Bridge Business Park
Houghton-le-Spring
Co Durham
DH45QY
Tel: 0800 488 0175
Int Tel: +44 191 305 1042
@TechCompatible
www.technicallycompatible.com
Sources
KPMG - 'Tech Monitor UK - April 2014'
Mckinsey - 'High tech: Finding opportunity in the downturn'’
The BIS -‘'Industrial Strategy Progress Report - April 2014 '
Langley James - ‘'IT Recruitment Market Summary - April 2014'’
Rullion - 'IT Recruitment Market Update - March 2014'
Talent Party - 'Revamping recruitment in the UK'
The Guardian - 'Women in Technology - no progress on inequality for 10 years'
techUK - 'Your Life’campaign to back Women in Tech'