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Insider UK
Technology
Peter A Walker

Glasgow's growing tech sector 'needs expansion support'

Glasgow ranks number one in the UK for digital tech graduates, with almost a quarter (23%) of all graduate jobs filled in the last 12 months in the sector.

This is according to a new report from property services firm Savills, which predicts that the city's gross value added (GVA) should grow by 25% over the next 15 years, compared to 13% over the previous 15 years.

This is based on developing strengths in high productivity sectors such as financial services and the creative and technology sectors.

With a global battle for talent, Savills suggests Glasgow is now ‘at its absolute sharpest’ with 46% of Glasgow city region residents having a degree; well above the UK average of 38%.

The city also ranks in the top 10% of regions in Europe for the proportion of working age adults with at least a degree-level qualification.

Savills stated that Glasgow is now in the top three tech cities in the UK outside of London. The city saw total annual venture capital raised increase by 135% in 2021 to £43m, with a further increase of 281% in 2022 to date to just over £165m.

The head of Savills' Glasgow office David Cobban said: “Scotland has proven to be a highly successful ecosystem for high-growth companies and with Glasgow’s start-ups and highly skilled talent coming out of the universities our real estate plays a critical role in creating the right space where people want to live and work.”

The company reported a sustained lack of new supply of homes for sale or rent over the best part of 10 years has led to a shortfall of housing stock in the city centre.

The lack of supply and latent unmet demand has led to 4.7% annual price rise in Glasgow and 13% annual rental growth across the city as a whole in the 12 months to June, according to Citylets.

The city centre’s population has dropped between 2020 and 2021, according to the Scottish Government’s Population Estimates, at the same time that Glasgow's City Centre Living Strategy aims to double the city centre population by 2035. Savills stated that this will only be possible with wider mixed-use regeneration.

Cameron Ewer, head of residential in Scotland at Savills, commented: “The area to the north east of the centre, around the University of Strathclyde, demonstrates the importance of connectivity if neighbourhoods are to be fit for purpose in a modern city.

“It is locations such as this, that are central but poorly accessed, which will need investment into pedestrian and cycling links with the wider city.“

The report pointed to the re-development of Buchanan Galleries as an opportunity to re-invigorate the city centre, alongside the restoration of the Met Tower, which is set to become a new hub for emerging tech and digital businesses.

Alastair Wood, Savills head of planning in Scotland, added: “The role of Glasgow city centre has to evolve as shopping and working patterns have changed for ever, large mixed-use developments will play a pivotal role in its transformation over the next decade.”

A separate report from Addleshaw Goddard and the University of Strathclyde's Fraser of Allander Institute also argued that Scotland's businesses can compete in the 'global technology race', so long their ambition is matched with the support required to create a truly 'digital nation'.

The document interviewed tech industry leaders and surveyed more than 400 Scottish-based businesses, across all sectors.

It revealed that sentiment is positive to progress made since the publication of the Tech Report Scotland 2020 , but additional investment and infrastructure is essential to take advantage of the opportunity that has been created.

David Anderson, co-lead of tech in Scotland at Addleshaw Goddard, said: "Industry leaders believe significant progress has been made since 2020 – something that has been both driven by the pandemic and yet hindered by the health, economic and global supply chain challenges that have accompanied it.

"However, the time is now to capitalise on the Scottish Government’s initiatives and substantial investment - building a robust infrastructure capable of supporting the massive shift to fibre broadband and facilitating access to 5G and the cloud is absolutely fundamental to Scotland’s future success."

There are now 13,000 tech jobs created every year in Scotland, with tech no longer an industry or sector distinct from others.

The businesses surveyed, 40% had accelerated their plans to make a major part of their business digital following the pandemic.

A further 79% of tech industry firms are reporting a positive business outlook, with 76% planning to recruit graduates.

Since the 2020 report, 61% of Scottish businesses investing in communications tech innovation, while 31% are investing in new ways or providing services.

A further three quarters are reporting a permanent change in the way their business operates since 2020, although 56% reported engagement in international markets; a small dip from 60% in 2020

The acceleration of digital plans was most evident in the transport and storage sector (53%), followed by the information and communications (47%) and the accommodation and food services sectors (40%).

Karen Meechan, chief executive of Scotland IS - the membership organisation for Scotland's digital technology industry - said: "This report highlights the challenges our sector faces but by building the right transformational infrastructure and working collaboratively, we can create a digital Scotland that is good for the people, the economy, the environment and the government.

"The report also highlights the ambition that is inherent in our sector and the determination, leadership and innovation that is core to our success and gives me hope that someday soon Scotland will be a truly digital nation."

This research was backed up by statements made ahead of CENSIS’ seventh annual Technology Summit suggesting that Scotland’s ability to innovate could be under threat from the ongoing global electronics chip shortage.

Dr Richard M Marshall, an Edinburgh-based independent technology consultant and former Gartner analyst, commented: “Over 99% of Scottish companies are SMEs and this puts them all at a distinct disadvantage when it comes to buying in international markets, in which there is a shortage of the products they need.

“If our SMEs can’t access the products and components they need to build products and deliver services, then that calls into question whether Scotland as a nation can do those things as well.“

In terms of options to tackle the problem, he proposed creating a co-operative for Scottish manufacturers and tech companies to give more purchasing power on the international stage, or bringing more chip fabrication back to the UK and looking at more geographical diversification for globally-important supply chains.

“Whatever the answer is, we need to start looking at alternatives rather than relying on the market structures in place prior to the pandemic.

“It’s a matter of national resilience, ensuring Scottish businesses have access to the key building blocks and components they require, ultimately making sure they and our economy are not left behind.”

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