Scottish Technology Industry Survey 2017
Sponsored By
Contents
01
Welcome
3 4
Key Messages
6 Review of 2016 8
Outlook for 2017
10 International 12 Industry Overview 16 Benchmark One: Smaller Companies
“ Technology can be used as a tremendous force for good if we really understand how we interact with it and apply its unique position in our lives positively.� oss Tuffee R ile Ltd Founder and CEO, DOGFI.SH Mob
20 Benchmark Two: Medium-sized Companies 24 Benchmark Three: Larger Companies 28 Employment & Skills 34 Advice From Peers About ScotlandIS
2 | Con tent s
35
on the Please note: All numbers shown
ntages. infographics within denote perce
02
Welcome who would like to thank everyone ScotlandIS and Nine Twenty Technology Industry Survey for took part in this year’s Scottish in ng feedback on performance their invaluable input, providi 17. 2016 and their forecasts for 20 gy Industry Survey provides a Each year the Scottish Technolo performance during the last th, heal s measure of the industry’ in 2017. The analysis breaks year and expected development ; small, medium and pany down the results by size of com report is an analysis of this of end the at large. Also included ok for 2017. the employment and skills outlo d for more than 10 years, This survey has been conducte over the years to ents lopm deve allowing trends and ey reports are a valued be identified. These annual surv stors and public sector inve ers, resource for business lead stakeholders.
IS to represent the digital The survey results help Scotland provide support to and r technologies industry bette grow their businesses and to r secto r wide the members and omic growth. thus contribute to Scotland’s econ
out by ScotlandIS in early This survey fieldwork was carried sor the survey. spon ly rous 2017. Nine Twenty gene
Polly Purvis
Chief Executive, ScotlandIS +44 (0) 1506 472200 polly.purvis@scotlandis.com @scotlandis www.scotlandis.com
Wel com e | 3
03
Key Messages Industry Continues To Grow Despite Challenges that Scotland’s The results of this year’s survey show to grow despite an s inue cont stry indu gies nolo digital tech businesses reported of 48% uncertain political environment. share of companies the and 2016 in ins increased profit marg historic low. a at was experiencing decreasing margins to increase in 2017 82% of businesses expect sales ases are smaller than incre icted pred even though the . year ious prev in the
82% 48%
experienced increase in profit margins
year with 78% of businesses Optimism has improved since last view for 2017, compared istic optim or istic having a very optim about political uncertainty to 70% in 2016, despite concerns and the election of the it Brex to and developments linked
expected sales increase in 2017
78%
are optimistic for 2017
new US President.
Employment Growth Picking Up
78% predicted to hire more staff in 2017
4 | Key Mes sag es
predicted employment growth After a slight downturn last year, s forecast they will hire esse busin of is picking up again. 78% in 2016. The percentage 66% to sed oppo as , 2017 in more staff numbers has fallen loyee emp of companies planning to reduce from 15% to 1%.
e it will source new talent Industry anticipates changes to wher iting most new staff recru from. 73% of companies predict forecast new talent 9% . 2016 in 60% from Scotland, up from d pare to 21% in 2016. will come from outwith the UK, com related to Brexit and the erns This is likely to be a sign of conc international talent. for UK the of ness ctive decreasing attra
72%
of businesses likely to recruit graduates in 2017
Higher Demand For Experienced Staff And Modern Apprentices
83%
of businesses looking to hire experienced staff in 2017
nt remains strong with 72% of Demand for graduate recruitme likely to recruit graduates in are they all businesses reporting th, the greatest demand 2017. However, to aid business grow panies requiring these com of is for experienced staff, with 83% s. uate grad iring requ operatives and 77% es has picked up. The demand for modern apprentic they are likely to recruit 38% of respondents reported that d to 29% in 2016. This pare com , 2017 in modern apprentices of new digital apprenticeship may be linked to the introduction frameworks in Scotland.
38%
of businesses likely to recruit modern apprentices in 2017
Key Mes sag es | 5
Review Of 2016
04
good year in 2016, with sales Businesses reported another n though these were more growth and profit increases, eve moderate than in 2015.
50%+ INCREASE
0-10% DECREASE
Figu re 1
20-50% INCREASE
10-20% DECREASE
Sales Level
10-20% INCREASE
20-50% DECREASE
0-10% INCREASE
50%+ DECREASE
an increase, with 70% of businesses reporting Sales in 2016 continued to grow than in the previous r lowe were ases incre sales overall, a similar level to 2015. However 20% in 2016 (as than s reporting an increase of more year, with only a fifth of businesse a decrease in rted repo es pani com r same time, fewe opposed to 27% in 2015). At the (16%). sales in 2016 (10%) than in 2015
2015
20 11
6 9
15
15
22
20
6
8
5 3
3
3
5
2 1 2
5
8
15
18
23
20
15
28
20
17
10
2013 2012
18
17
2014
8
13
14
21
6
5
17
21
19
13
14
2 1
3
5
20
28
22
10
10
2016
STAY THE SAME
2
3 2
3
INCREASED SIGNIFICANTLY
Figu re 2
2016 Actuals Compared To 6 Budget At The Beginning Of 201 as or better than Results show that 2016 was as good of businesses 30% . year the of et outs the at predicted r than budgets bette were lts reported that their actual resu esses, actuals busin of 47% For . year the of set at the start original forecasts, compared were very much in line with their rted actual results were repo 24% er to 35% in 2015. A furth . cted expe worse than
6 | Rev iew Of 201 6
4
INCREASED SLIGHTLY
5
STAYED MUCH THE SAME DECREASED SLIGHTLY
20 25
47
DECREASED SIGNIFICANTLY
INCREASED SIGNIFICANTLY 3
Figu re 3
Profit Margin Performance In 2016 Compared To 2015
11
INCREASED SLIGHTLY STAYED MUCH THE SAME
10
DECREASED SLIGHTLY DECREASED SIGNIFICANTLY
rmance The reported increase in sales perfo nesses Busi t. profi to ed for 2016 also contribut t margins profi in ase incre an ed rienc again expe ins and with 48% reporting increased marg
38 38
38% stable margins.
INCREASED SIGNIFICANTLY INCREASED SLIGHTLY
Figu re 4
Profit Margins Over The Years
STAYED MUCH THE SAME DECREASED SLIGHTLY
ased ber of companies reporting incre In addition to the rise in the num ease decr t fican signi a rting repo e thos margins, there was a decline in s that of profit margins since 2011 show compared to 2015. A comparison ber num st lowe the with , 2016 in low ric decreasing margins reached a histo . sure pres r unde ins of companies reporting marg
2016
12
34
2013 2012 2011
12
9 8
31 36
17
31
5
21
35 35
2
20
36
29
13
2014
7
16
35
30
3
11
38
38
10
2015
DECREASED SIGNIFICANTLY
17
4 5
Rev iew Of 201 6 | 7
05
Outlook For 2017
s last year with 78% of businesse Optimism has increased since to ed par com 7, 201 imistic view for having a very optimistic or opt . view istic sim pes y ver pessimistic or 70% in 2016. Only 11% have a
Figu re 5
“ Be mindful of uncertainty and political change but don't let it distract you from business goals or get you down.�
Optimism d their About a third of respondents linke products, new of ion duct intro optimism to the ucts and strong demand for existing prod her services or a growing market. Anot s was esse busin of ber num a by reason cited effort. an increase in sales and marketing political 9% of respondents indicated that for 2017. The ok outlo their ed taint ty rtain unce mentioned current political situation was also d about aske when nts onde resp by one fifth of , namely 2017 in s enge chall key three their in the US, the election of President Trump pendence inde nd seco ntial pote a Brexit and referendum in Scotland.
Callum Sinclair r, Partner, Head of Technology Secto LLP l Paul Burness
VERY OPTIMISTIC OPTIMISTIC
57
NO CHANGE PESSIMISTIC VERY PESSIMISTIC
21 11
9 2
8 | Out look For 201 7
Figu re 6
“ Learn the difference between a good idea and a commercial one. They’re not the same thing.”
Expected Change In Sales Over The Next 12 Months istic about Businesses are even more optim 82% of expected sales levels for 2017 with 16% and ase incre an companies predicting . These same the stay to sales cting expe asts figures are broadly in line with forec a was there , ever How y. in the 2016 surve esses busin of ge enta perc the in ction redu in 2016 to forecasting a decrease from 14% . 3% this year
50%+ INCREASE
0-10% DECREASE
20-50% INCREASE
10-20% DECREASE
10-20% INCREASE
20-50% DECREASE
0-10% INCREASE
50%+ DECREASE
Dave Sharp Director, Binary Asylum
STAY THE SAME
14
13
27
28
16
1 1 1
Out look For 201 7 | 9
06
International
a continued Export levels remain high with markets. US and an focus on the Europe
Figu re 7
Attractive Markets For Exports raphical When asked to highlight three geog (52%), pe Euro ed rank nts onde resp markets, ) as (47% UK of North America (52%) and Rest ide outs sales for ets mark the most attractive Scotland.
47%
52%
North America
“ Challenging times mean changing times and that creates opportunities for small and medium-sized companies.� Neil Logan CEO, Incremental Group
10 | Inte rna tion al
14%
Central and South America
Rest of The UK
Figu re 8
Export Levels ets remains Engagement in international mark s reporting esse busin of 64% with level at a high her 19% they are already exporting and anot planning to do so in the future.
2016
201 7
14
18
52%
Rest of Europe
30%
Asia
19
19
64
2014
2015
20%
Middle East
11%
27
25 58
17
67
16
57
2013
Africa
EXPORTING
34
PLANNING TO
53
9%
Australia and New Zealand
NO PLANS
13
Inte rna tion al | 11
07
Industry Overview
Figu re 9
Main Activity Of Business and Development of software solutions (18%) ucts prod are softw and ) services (19% t activities continue to be the most significan respondents are engaged in.
19
Software Solutions And Services
28
18
Software Product
15
14
Services To Technology
“ Plan where you need to be and update your business ready for tomorrow. Ensure you remain competitive in your market while delivering controlled development of your existing skill-sets to meet next year’s needs.” Ron Macfarlane ll Group Ltd Business Support Manager, Daco
14
7
IT Business Consultancy
10
9
Application Development
8
4
Infrastructure & Network Management
7
8
e-Commerce & Web Development
6 5
Telecommunications
4
2
Data & Storage Management
2 3
Systems Integration
Software Testing Other
1
1 0 10 5
2016 2015
12 | Ind ustr y Ove rview
Figu re 10
Headquarters Location ondents’ There is little change in survey resp spread headquarters’ locations, which are er is in across the country. The biggest clust Edinburgh 2014 Until ians. Loth & h burg Edin hed, and Glasgow were very evenly matc g based bein nts onde resp of with about 29% three years in each city. However, over the last ng Scottish Edinburgh has become the leadi area. gow Glas ter Grea the of d base ahea & Another significant cluster, Aberdeen pared com ne decli t sligh a Grampian, has seen . year to last
0% 0%
0%
Highlands & Islands
7%
1%
6% 4% 4%
4%
4%
2%
3%
10% 13%
12%
Aberdeen & Grampian
4%
Fife & Tayside
Forth Valley
2017 2016 22%
2015
29% 23%
2014
Glasgow, Lanarkshire, Renfrewshire & Dunbartonshire
22%
0% 2%
1%
Ayrshire
1%
10%
6%
10%
UK Outwith Scotland
10%
2%
1%
2%
EU Head-Quartered
2%
9%
6%
8%
US Head-Quartered
38%
7%
29% 37% 34% Edinburgh & Lothians
0%
1% 0%
1%
Borders, Dumfries & Galloway
4%
4%
Other
1%
2%
Ind ustr y Ove rview | 13
07
Industry Overview
Figu re 11
Sectors Being Supplied e of The industry supplies a wide rang ted by selec three top sectors and of the ), financial (15% r secto ic publ the es, compani tions unica omm services (13%) and IT& telec s. onse resp t mos the (11%) received businesses Compared to 2016, the share of from ned decli ies supplying energy & utilit rose ces servi cial finan eas wher 12% to 8% from 10% to 13%. ase Respondents indicated a likely incre e of shar the and rs secto all in in demand in demand businesses expecting a decrease rs, has declined in a number of secto those of (7% ies utilit & gy ener ly particular ease decr g supplying this sector forecastin drink & food ), 2016 in 39% as opposed to and electronics.
Public Sector
Financial Services IT Communications
Professional Services Energy & Utilities Healthcare & Pharmaceuticals Manufacturing & Logistics Media & Entertainment Retail Tourism & Leisure Defence
Food & Drink Property & Construction Life Sciences
Electronics 2016 2015
14 | Ind ustr y Ove rview
“ Keep focused on what your customers really want - not what you think they want!�
Figu re 12
Size Of Customer Base nisations with Respondents report that large orga mer base in 29% of custo main 251-1000 employees are the organisations with sized ium med to l smal by cases, followed compared to ories categ 27%. This is an increase for both supply mainly that s esse busin of ge 2016 whilst the percenta eased. decr nisations multinationals and very large orga
Kate McClorey Co-Founder/MD, SoulTek
Large (251-1000 Employees)
Multinationals & Very Large Organisations
Small Firms (<50 Employees)
(+1000 Employees)
Small To Medium (50-250 Employees)
Individuals
24 29 27
16
42 22
14
5
16 6
2016 2015
Ind ustr y Ove rview | 15
08
Benchmark One:
Smaller Companies 1/ 2
Figu re 13
Reflections on 2016 2016 was a good year for smaller increase businesses, with 66% reporting an t profi their asing incre 47% and in sales outlook margins. 78% have an optimistic for 2017.
Increase In Sales 66
Increased Profit Margins 47
Optimism 78
Figu re 14
International Sales The share of businesses selling 58%. internationally remained stable at es that pani com ler smal of ge The percenta unlikely to do not currently export and are tly from do so in the future increased sligh . 16% to 2016 13% in
ALREADY EXPORTING PLANNING TO EXPORT UNLIKELY TO EXPORT
2016 16
2015 13 27
58
29
16 | Sma ller Com pan ies
58
Figu re 15
People and Skills
RECRUIT MORE STAFF STAY THE SAME DECREASE IN STAFF
to increase 84% of small businesses expect ble increase idera cons a is This s. level employee ar levels simil from 68% in 2016, returning to , expect 68% e, thes of t Mos reported in 2015. expect 16% . staff l tiona addi 5 to up loy to emp of the none and staff numbers to stay the same to s level loyee emp their ct expe respondents . ease decr recruit graduates 62% of respondents are likely to ern apprentices. mod on take to and 23% are likely contractors of 48% of respondents make use of rs in their racto which 44% have 1-10% of cont 30% of than more t coun third a workforce and . staff their ngst amo rs racto cont
Figu re 16
Sales Outlook for 2017 their sales 85% of smaller businesses expect ths, 14% to increase over the next 12 mon , while 2% anticipate they will stay the same is a more This . sales in ease decr a forecast h as last year, positive outlook than for 2016. Muc ict sales pred , 37% s, esse more smaller busin d to the survey pare com more or 21% of th grow ler businesses average of 27%. The share of smal increased has same the stay to expecting sales . 2017 in 14% to 2016 in 7% from
50%+ INCREASE
0-10% DECREASE
20-50% INCREASE
10-20% DECREASE
10-20% INCREASE
20-50% DECREASE
0-10% INCREASE
50%+ DECREASE
STAY THE SAME
31 22 15
17
14
2
Sma ller Com pan ies | 17
08
Benchmark One:
Smaller Companies 2/ 2
Figu re 17
Financial Environment esses was Turnover for 94% of smaller busin there is a ever in the region of £0-£5M. How esses busin of bulk the with marked contrast highest or ) 250K (£0-£ st lowe the in r eithe not bands (£1M - £5M). The figures have . year last since tly fican changed signi
£0 - £250K £251K - £500K £501k - £1M £1.1M - £5M £5.1M - £10M
35
29
20 10
Figu re 18
Funding Model esses is Funding for 71% of smaller busin and generated from founders’ capital retained profits. esses that For the majority of smaller busin growth in need additional finance, e.g. for angel or 2017, private investment such as n (42%), optio rred prefe the is al capit ’ founders ing fund bank ), followed by grant funding (26% ). (12% al capit (12%) and venture
18 | Sma ller Com pan ies
6
INED PROFITS FOUNDERS CAPITAL & RETA / LOAN FUNDING MIX OF BUSINESS ANGEL / BANK MAINLY VENTURE CAPITAL OTHER
9 5
15
71
Figu re 20
Figu re 19
Actuals Compared to Budget
r Cash Flow Compared to Last Yea
et stayed close to the In 2016, actuals compared to budg companies with increases ler smal of 47% for s predicted level by 24% of businesses. reported by 30% and a decrease
change in their cashflow Smaller businesses reported little ed some improvement rienc expe 46% . 2015 compared to . The share ulties while just 8% had substantial diffic what more some be to flow cash of companies reporting 6%. to 14% from d ease difficult decr
4 13
8
SOMEWHAT BETTER
25
INCREASED SLIGHTLY
T SOMEWHAT MORE DIFFICUL LITTLE CHANGE
20
INCREASED SIGNIFICANTLY
6
ICULT SUBSTANTIALLY MORE DIFF
5
STAYED MUCH THE SAME DECREASED SLIGHTLY
33
DECREASED SIGNIFICANTLY
40
SUBSTANTIALLY BETTER
Figu re 21
2016 Sales Levels Compared With 2015
47
50%+ INCREASE
0-10% DECREASE
20-50% INCREASE
10-20% DECREASE
10-20% INCREASE
20-50% DECREASE
0-10% INCREASE
50%+ DECREASE
STAY THE SAME
s reported an increase in In 2016, 70% of smaller businesse up from the previous are s sales from 2015. The sales level t of that growth mos with scale r lesse a year, although on e of businesses shar the being between 1% and 20%, with . Those reporting same the ng stayi not experiencing a change 10%. at year last from down is sales a decrease in
28 22
20
1 10
10
5
3
2
Sma ller Com pan ies | 19
09
Benchmark Two:
Medium-Sized Companies 1/2
Figu re 22
Reflections on 2016 an Medium-sized businesses enjoyed sales r bette rting repo , 2016 exceptional or and profit figures than either large ive posit arly simil small businesses with . 2015 in figures , 82% reported an increase in sales ins marg t profi 61% increased their ok and 83% have an optimistic outlo for 2017.
Figu re 23
International Sales esses The share of medium-sized busin ined rema that are already exporting fewer stable compared to last year while rt in the companies are planning to expo future.
Increase In Sales 82
Increased Profit Margins 61
83
82 61
Optimism 83
ALREADY EXPORTING PLANNING TO EXPORT UNLIKELY TO EXPORT
2016
21
2015
10
12 69 18 70
20 | Med ium Com pan ies
RECRUIT MORE STAFF
Figu re 24
STAY THE SAME
People and Skills
DECREASE IN STAFF
s expect to increase 79% of medium-sized businesse 85% in 2016. from down tly sligh s, employee level ct to take on up Most of these companies, 58%, expe respondents the of none to 20 additional staff and . ease decr to s level loyee expect emp recruit graduates 76% of respondents are likely to ern apprentices, mod on and 40% are likely to take . 2016 in 29% from the latter up contractors of 71% of respondents make use of rs in their racto cont of which 80% have 1-10% 30% of than more t coun 10% and workforce contractors amongst their staff.
Figu re 25
Sales Outlook for 2017 s expect their sales 81% of medium-sized businesse ths, this is slightly mon 12 next the to increase over the survey average down on last year but in line with companies that sized iumof 82%. The share of med increased from same the stay will sales predict their 0% in 2016 to 15% for this year.
50%+ INCREASE
0-10% DECREASE
21-50% INCREASE
11-20% DECREASE
11-20% INCREASE
21-50% DECREASE
0-10% INCREASE
50%+ DECREASE
STAY THE SAME
33
19
7
22 15
4
Med ium Com pan ies | 21
09
Benchmark Two:
Medium-Sized Companies 2/2
Figu re 26
Financial Environment
1M TURNOVER GREATER THAN 2M THAN E MOR OF TURNOVER
s (97%) Nearly all medium-sized businesse 32% and £1M than ter grea ver have a turno . have a turnover of more than £20M
32 97
INED PROFITS FOUNDERS CAPITAL & RETA / LOAN FUNDING BANK / L MIX OF BUSINESS ANGE
Figu re 27
Funding Model
MAINLY VENTURE CAPITAL UNLISTED PLC
esses is Funding for medium-sized busin ’ capital and largely generated from founders a mix of by wed follo ) (52% ts retained profi ing at fund loan and bank l, ange ess busin
QUOTED COMPANY ALTERNATIVE INVESTMENT CROWD FUNDING OTHER
15%. 52
15
12
9 3
22 | Med ium Com pan ies
MARKET
Figu re 29
Figu re 28
Actuals Compared To Budget
r Cash Flow Compared To Last Yea
et increased for 29% of In 2016, actuals compared to budg on target reported by medium-sized companies with sales . 32% for 39% and a decrease
a better cashflow Medium-sized businesses reported rted improvements repo 41% . 2015 to d pare com situation from 27% in down s, ultie while 19% reported some diffic 2015.
ICULT
SUBSTANTIALLY MORE DIFF
13
T SOMEWHAT MORE DIFFICUL
4
7
INCREASED SIGNIFICANTLY INCREASED SLIGHTLY
19
STAYED MUCH THE SAME
LITTLE CHANGE
25
25
DECREASED SLIGHTLY
SOMEWHAT BETTER
DECREASED SIGNIFICANTLY
28
SUBSTANTIALLY BETTER
39
41
Figu re 30
2016 Sales Levels Compared With 2015
50%+ INCREASE
0-10% DECREASE
20-50% INCREASE
10-20% DECREASE
10-20% INCREASE
20-50% DECREASE
0-10% INCREASE
50%+ DECREASE
STAY THE SAME
esses reported an increase In 2016, 82% of medium-sized busin a decrease in sales. These in sales, with only 11% reporting better than for the survey and figures are similar to last year sample as a whole.
43
18 11
11
7
7
4
0
0
Med ium Com pan ies | 23
10
Benchmark Three:
Larger Companies 1/2
Figu re 31
Reflections On 2016
her good year Larger businesses reported anot in sales and ase incre in 2016. 68% reported an reported 32% . ease decr a rted only 12% repo better than their actual 2016 performance was profit margins. forecasted, 36% increased their 2017 and for ok outlo istic optim an 74% have 73% expect sales to increase.
Increase In Sales 68
Increased Profit Margins 36
83 74
82 61
Optimism 74
Figu re 32
International Sales
rted that they Most larger business (73%) repo whilst 19% nally natio inter are already selling rt. expo to tion inten have no
ALREADY EXPORTING PLANNING TO EXPORT UNLIKELY TO EXPORT
2016
19
2015
6 6
8 73
88
24 | Larger Com pan ies
Figu re 33
People And Skills
RECRUIT MORE STAFF STAY THE SAME DECREASE IN STAFF
to increase With 60% of respondents expecting expecting 5% only and bers num loyee their emp larger for ok a decrease, the recruitment outlo pared com bly idera cons oved businesses has impr increase and an ast forec 39% only when to 2016 s are planning 43% a decrease. 25% of businesse and another staff new 50 than to take on more 20 people. 25% expect an increase of up to than other Large businesses are more likely entices with appr ern mod on take businesses to are likely to 78% of respondents reporting they . 95% of 2016 in 50% to d take them on, compare uates. grad it recru to likely are nts responde contractors of 76% of respondents make use of rs in their racto cont of which 77% have 1-10% contractors of 0% 11-2 t coun 23% and workforce amongst their staff.
Figu re 34
Sales Outlook For 2017
64
their sales to 73% of larger businesses expect This is similar ths. mon 12 next the over increase are more ases to last year but the expected incre growth 10% to up g astin forec modest with 64% than a 20% more cting expe es pani com no and have a negative increase. Only 5% of respondents . 2017 for sales outlook
50%+ INCREASE
0-10% DECREASE
21-50% INCREASE
11-20% DECREASE
11-20% INCREASE
21-50% DECREASE
0-10% INCREASE
50%+ DECREASE
STAY THE SAME
23
9 5
Larger Com pan ies | 25
10
Benchmark Three:
Larger Companies 2/2
Figu re 35
Financial Environment
100M TURNOVER GREATER THAN 20M TURNOVER OF MORE THAN
turnover 79% of larger businesses have a 21% and more or M £100 of more than . have a turnover of more than £20M
21 79
INED PROFITS FOUNDERS CAPITAL & RETA / LOAN FUNDING BANK / L MIX OF BUSINESS ANGE
Figu re 36
MAINLY VENTURE CAPITAL
Funding Model
UNLISTED PLC
ally
Larger businesses (50%) are typic quoted companies.
QUOTED COMPANY ALTERNATIVE INVESTMENT
MARKET
CROWD FUNDING OTHER
50
18 9 3
26 | Larger Com pan ies
Figu re 38
Actuals Compared To Budget
Figu re 37
r Cash Flow Compared To Last Yea
et increased slightly for In 2016, actuals compared to budg s quo reported by statu the with 28% of larger companies esses are expecting busin More . 24% by ease 44% and a decr to 44% in 2016. 2015 in sales to stay stable, up from 33%
s, the cashflow situation of Similar to medium-sized businesse d to last year. In 2015, pare com oved impr larger businesses difficulties while only 23% 46% of respondents experienced difficult last year. more reported that cash flow was
4
ICULT
SUBSTANTIALLY MORE DIFF
20
INCREASED SIGNIFICANTLY
20
20
T SOMEWHAT MORE DIFFICUL
4
3
7
28
INCREASED SLIGHTLY STAYED MUCH THE SAME
LITTLE CHANGE
DECREASED SLIGHTLY
SOMEWHAT BETTER SUBSTANTIALLY BETTER
44
DECREASED SIGNIFICANTLY
50
Figu re 39
2016 Sales Levels Compared With 2015
50%+ INCREASE
0-10% DECREASE
20-50% INCREASE
10-20% DECREASE
10-20% INCREASE
20-50% DECREASE
0-10% INCREASE
50%+ DECREASE
STAY THE SAME
ing steady with 68% reporting Sales in larger businesses are hold 12% reported a decrease and 2015 an increase in sales from iled figures reveal that the deta the ess, busin r large in sales. For as last year. h muc increases were mainly marginal,
56
20 12 8 4
0
0
0
0
Larger Com pan ies | 27
Employment & Skills 1/ 3
11 Figu re 40
Change In Employee Numbers Over The Next 12 Months loyment growth than last year, 2017 looks set to see stronger emp g they will increase employee with 78% of respondents forecastin to 2016 when only 66% ared numbers. This is an increase comp people. The percentage more loy emp to ed of respondents plann loyee numbers emp in of businesses projecting a decrease , about a third of time same the At 1%. has fallen from 15% to tion as one of reten nt and staff respondents mention recruitme . 2017 their three key challenges in
41
50+ INCREASE
1-5 - DECREASE
21-50 - INCREASE
6-20 - DECREASE
6-20 - INCREASE
21-50 - DECREASE
1-5 - INCREASE
50+ DECREASE
STAY THE SAME
26
21
2017 7
0
6
0
1
0
40
19
2016
16 8
4
28 | Emp loym ent & Skil ls
6
2
1
4
Figu re 41
Use Of Contractors ded a question about the For the first time, the survey inclu nts reported that they use of contractors. 59% of responde 1-10% of contractors have 63% , these Of rs. employ contracto 30% of contractors than more in their workforce and 18% have not expect this to do nts onde resp of amongst their staff. 80% change during 2017.
41
59
DONâ&#x20AC;&#x2122;T USE CONTRACTORS USE CONTRACTORS
ors: Out Of Those Who Use Contract HAVE 1-10% CONTRACTORS
IN THEIR WORKFORCE
IN THEIR WORKFORCE HAVE 11-20% CONTRACTORS IN THEIR WORKFORCE ORS HAVE 21-30% CONTRACT
CE RACTORS IN THEIR WORKFOR
HAVE MORE THAN 30% CONT
18 2
17
63
Emp loym ent & Skil ls | 29
Employment & Skills 2/ 3
11
â&#x20AC;&#x153; Freeing technologists to learn and be creative in how they achieve their job is the best engagement mechanism you can useâ&#x20AC;?
Figu re 42
Location Of Talent recruit most of their new staff Companies predict that they will from the rest of the UK and 9% 17% et, mark (73%) in the Scottish the world. This is a notable from either Europe or the rest of s predicted 60% of new talent esse change from 2016 when busin from outwith the UK. would come from Scotland and 21%
Greg Love land Regional Board Member, BT Scot
60% 19%
Rest of the UK 17%
73% Scotland 9%
5% Europe
12%
Rest of the World 4%
2017 2016
30 | Emp loym ent & Skil ls
DEFINITELY WILL RECRUIT
Figu re 43
QUITE LIKELY
Recruitment Of Graduates
UNLIKELY VERY LIKELY
uates remains Demand for the recruitment of grad s reporting they esse busin all of 72% with g stron it graduates in are definitely or quite likely to recru e over the stabl ined rema has and dem 2017. This last years.
8
NOT APPLICABLE
6
32 14
level of When businesses were asked what to aid growth, s need ess busin their e rienc expe most popular â&#x20AC;&#x2DC;graduatesâ&#x20AC;&#x2122; were only the second some or was there rting repo 77% group with rienced staff a high requirement, behind expe 2013 that with 83%. This is the first time since outstripped that has staff ed rienc expe for and dem for university for graduates. However, the need ity. prior a ins rema s graduate
40
DEFINITELY WILL RECRUIT
Figu re 44
Recruitment Of Modern Apprentices es is The demand for modern apprentic uates but it grad for than r lowe bly idera cons respondents has increased since 2016. 38% of quite or itely defin are they that reported es in 2017, likely to recruit modern apprentic said they were compared to 29% in 2016. 46% modern unlikely or very unlikely to recruit significantly are anies comp apprentices. Larger entice appr ern mod a it recru to likely more quite or itely defin with 78% saying they are . 2017 in es entic appr ern mod likely to take
QUITE LIKELY
2017
16
12
UNLIKELY VERY LIKELY NOT APPLICABLE
16
26
2016 14
30
5
24
26
31
Emp loym ent & Skil ls | 31
12
Employment & Skills 3/ 3
Figu re 45
Most In-Demand Skill Sets
remain the most in Software and web development nts indicating onde resp demand skills with 80% of skill set in this for ent irem requ a they will have 2017, up from 70% in 2016. commercial There is also strong demand for ired by 72% of requ , skills ort supp ess busin and is a close third ent businesses. Project managem these skills. ing seek nts onde resp with 66% of ined stable Demand for these skill sets rema compared to last year.
HIGH REQUIREMENT LOW REQUIREMENT NO REQUIREMENT
15 20
Software & Web Development
51
12
50
strong demand Medium-sized businesses have very skills (80%) ent lopm deve web and are for softw skills (78%) and followed by project management ent skills agem man and ort supp infrastructure (70%).
Executive Management
38
19
41
28
Commercial & Business Support
53
32 | Emp loym ent & Skil ls
Project Management
39
test demand Amongst larger companies the grea (88%) skills ent lopm is for software & web deve and ) (71% ent agem man ct proje followed by ent (62%). infrastructure support & managem
l and business For smaller businesses commercia lopment, both deve web and are softw and support sets. Project skill and at 78%, are the most in dem required by are skills ent agem man and executive business growth. 58% and 57% respectively to aid
34
41
Infrastructure Support & Management
44
15
Employment & Skills Commentary From Nine Twenty ties for Scottish There are some huge opportuni for change. ility onsib resp businesses to take ction strategy attra l digita a race emb can you If brand, you can and create a desirable employer ssionals. As profe IT ted talen re secu and still find untable for acco be to business leaders, we need schools with ering partn by r secto our promoting opportunities and universities to showcase the for the next and career paths that are available survey results s year’ This ue. purs to n ratio gene ve IT talent show that 73% of respondents belie compared and, Scotl n withi from come to is going reality is, The year. to 60% who thought this last r and secto our in ily heav more t if we don’t inves rations, we will in the early lives of the future gene demand. never be able to keep up with that continue to To summarise, for companies to , modern grow and succeed, talent attraction n planning essio succ and s ique techn engagement rtunately a strategies need to be flexible. Unfo company social pool table, free fruit and the odd le want to Peop ore. anym it cut t won’ just t even company the of part feel valued, engaged and risky r longe no it’s lt, resu a as and journey start-ups. for people to seek out careers with et, with 78% mark n drive idate cand However, in a headcount of companies planning to increase risky tactic for in this next year, it definitely is a generation is next the what e ignor to s employer looking for.
Technical Skills
a irements of respondents showed Analysis of the technical skills requ with .net, , skills ent lopm deve are and web continuing strong demand for softw for iOS and ent irem Requ and. dem in most g java, python and java script bein lower than reported in 2016. android expertise is considerably be strong development, there continues to Looking beyond software and web related skills and cloud as well as sis analy and demand for data management than DevOps were mentioned less often knowledge. Cyber security, UX and previously.
Commercial Skills
sales in demand commercial skills is for Businesses report that the most nd by behi way long a ed follow ), roles (70% and business development type esses are project busin of ber num a by rted repo Marketing (16%). Other skills ractual agement (6%), licensing and cont management (7%), account man understanding (6%).
tough to cut “ It’s tempting when times are velopment is training budgets, but skills de e a leader, crucial for success. And, if you’r nal don’t neglect your own perso development.” Peter Black Managing Director, Energysys Ltd
Emp loym ent & Skil ls | 33
12
Advice From Peers
ents to give advice to To conclude we asked respond : e of their tips and hints for you fellow members. Here are som
“ Be focused and be responsive to customer needs. Don’t over promise and identify at an early stage decision maker and available budget.” Bill Scouller Director, Odro
“ Customer referrals are a fantastic way to grow your business, we win over 90% of new business through referrals from existing customers.” James Lucas CEO, CirrusHQ
“ Focus on innovation and data driven business.” John McGuire Director, Pulsion
34 | Abo ut Sco tlan dIS
“ Seek out people and organisations that have the skills and success you desire and ask them about how they got there.” Graeme Gordon CEO, IFB
“ Don’t bury your head in the sand. If something is not right, deal with it, quickly.” Emma Little CEO, ExecSpace
“ Be open minded and open with your colleagues.” Chris Ellis CTO, CAS
“ Keep calm, focused and agile to future economic change... Where there is change there is opportunity.” Gareth Biggerstaff MD, Be-IT
13
About ScotlandIS
digital technologies • ScotlandIS represents Scotland’s communications, industries, including software, tele IT and digital media businesses. internationally • ScotlandIS members vary from ll start-ups and sma very recognised exporters to kets. mar and s cover a wide range of skill munications • Scotland’s software, IT and com £5 billion in GVA than businesses generate more working in digital are and more than 91,000 people y. nom eco technology roles across the and lobbies • ScotlandIS promotes the industry issues of on government and policy makers importance to the sector.
ng and partnerships • ScotlandIS stimulates networki providing between member organisations, e exchange actic t-pr bes and ing networking, train ps. meetings, seminars and worksho port to help • ScotlandIS provides practical sup iding access prov by ple, exam members trade, for market ng nati emi diss and to industry experts intelligence. with industry, • ScotlandIS works in partnership te and retain the crea to a government and academi support the to ired requ skills and infrastructure digital economy.
Con tact | 35
ScotlandIS Oracle Campus Blackness Road Linlithgow EH49 7LR @scotlandis www.scotlandis.com
www.scotlandis.com