While 2020 has been a year of both personal and economic hardship, the UK tech sector has demonstrated its resilience through continued job creation and investment deals.
In fact, data for the last year shows that the tech sector is making positive steps towards recovery from the impact of Covid-19, with job vacancies climbing 50% since the year’s lowest point in July. Since then, job opportunities have increased at a rate of 2.6% a month, reaching 75,353 open job advertisements in November.
Digital Secretary Oliver Dowden said: “It’s fantastic to see the UK’s tech companies flourishing, despite all the challenges of 2020. The thousands of high skilled jobs they are creating will be a crucial part of our economic recovery and the government is committed to supporting the tech sector through an unashamedly pro-tech approach.”
According to new data compiled for Tech Nation and the Government’s Digital Economy Council, 10% of all current UK job vacancies are for tech jobs, beating the benchmark from the Office for National Statistics that 9% of the UK workforce are already employed in the digital tech sector. Not only does this represent the increasing importance of tech to the economic health of the country but also highlights the extent to which the digital tech sector is providing jobs at a critical time for the UK population.
The growth in skilled tech jobs also promotes economic acceleration with higher-than-average salaries. The average tech salary in the UK is £53,318, up 4% on 2019 figures, despite low inflation and the difficult economic backdrop. In contrast, the average UK salary for non-tech jobs stands at £36,903.
Specialised tech roles are particularly in demand, like network security jobs for which salaries increased 69% on average this year to £85,894. Given the nationwide shift to remote work which relies on digital networks, specialised security professionals are more necessary for businesses than ever before.
Andrew Hunter, co-founder at Adzuna said: “We’ve been tracking the UK tech industry over the year and have observed the recovering jobs market closely. Specialist tech workers are very much in demand and the high salaries commanded by developers and network specialists show how crucial it is for businesses to have access to skilled staff.
“The challenges for 2021 will be ensuring startups and established tech companies alike can hire the talent they need to facilitate business growth and recovery.”
As the sector continues to grow it’s important to ensure that there are opportunities for everyone and that a diversity of skills and perspectives can contribute to UK innovation. Around 37% of employees in the digital economy are in non-digital roles, such as HR, marketing, legal, and compliance.
This digital tech boom of 2020 is creating jobs with good salaries and prospects across the whole of the UK. Whilst London makes up nearly one-fifth of all tech vacancies, the South East comes second with 15,038 opportunities and North West England has over 7,000 available jobs. This year, Manchester cemented its reputation as the fastest-growing tech city in Europe, in part due to the successful IPO of e-commerce giant The Hut Group.
The UK’s regional tech clusters have also seen sharply higher levels of venture capital investment in 2020. Four cities – Oxford, Cambridge, Bristol and Newcastle – achieved more VC investment than last year. Oxford has also overtaken Cambridge to rank second for tech investment by city in the UK.
Oxford’s startups and scaleups raised $479.6m in investment this year, thanks to interest in the city’s dynamic health-related companies including Oxford Nanopore which raised $84.4m in October.
“The success of our regional tech hubs is something to celebrate, as is the industry’s resilience by offering high-levels of employment opportunities across a variety of disciplines,” said Digital Minister Caroline Dinenage. “Over the upcoming months, we will work closely with the sector to support tech firms and ensure this momentum can be maintained.”
Investor confidence remains high
The venture capital investment that UK tech companies have attracted this year should be seen as a vote of confidence in the UK’s fast-scaling innovative businesses. The UK continues to outperform every other country in Europe for VC investment, as it has done for the past 10 years. In 2020 UK companies raised $15bn+, exceeding last year’s record total of $14.8bn, according to Dealroom. This investment figure is more than Germany and France combined ($14.5bn).
It was boosted by a series of mega-rounds raised by companies including fintech Revolut and digital insurance provider Ki, which both secured $500m in funding.
Gerard Grech, chief executive, Tech Nation, said:
“The UK’s tech businesses have faced one of the biggest upheavals in a century, and still pulled in more than $15bn. At Tech Nation we have been delighted to continue supporting these incredible businesses and are on track to support over 1000 tech scale-ups by March 2022, delivering over $1bn of Gross Value Add to the UK economy.”
UK success stories
The UK’s strong track record in creating unicorns – private companies valued at $1 billion or more – continued, with seven new unicorns created this year bringing the total up to 80.
Hopin, a startup that provides online events software, became one of the big UK success stories of 2020 when its lockdown growth attracted a $125m round raised at a valuation of $2.1bn, according to the company.
Other new UK unicorns include electric vehicle startup Arrival, recipe box company Gousto, green energy provider Octopus Energy, e-commerce platforms Gymshark and Cazoo, and cloud communications platform Infobip.
Ronan Harris, Google’s managing director for the UK and Ireland, said:
“This is an exciting time to be part of the UK tech industry. Dynamic businesses are born out of challenging times and the investment going into UK startups and scaleups is a clear sign that investors think UK companies are the ones to watch. Google is very happy to be a part of this ecosystem and looks forward to the next year.”
The UK also has 136 potential unicorns – companies with a value of $250m to $800m. This is more than twice as many as Germany and France, the countries with the next largest pipeline of future unicorns (61). In the last two years, investment allocations – previously concentrated on early-stage startups – have shifted towards later-stage companies which now representing more than half of venture capital investment received in the UK. The increasing focus on later-stage UK scaleups shows how quickly the UK tech sector is maturing and explains the significant pipeline of potential unicorns.
2021: a new wave of entrepreneurship
Looking ahead to 2021, the prospects for the UK’s startups and scaleups looks strong. The last financial crisis catalysed an entrepreneurship wave in the UK with the launch of TransferWise, Farfetch and Zoopla – and the ongoing commitment to VC investments throughout lockdown is set to catalyse a similar response following coronavirus.
Charlotte Bax, Captur founder explained: “The coronavirus pandemic has caused major shifts in the way we live and work. It’s the perfect opportunity for entrepreneurs to rip up the rule book and use tech to rethink how we can make our post-coronavirus world more inclusive.
“Open-access technology is the key to building trust and this will be central to rebuilding the UK in 2021.”