Just how big is the UK’s Digital Skills Gap?

Digital Strategy Article
20 mins

Businesses in the UK are facing a digital skills crisis. Our venerable education system is struggling to produce enough skilled tech specialists to meet demand, and understandably so – between 2010 and 2014 turnover growth in the digital sector outstripped the rest of the economy by 32%, sparking unprecedented levels of job creation.

Embattled HR departments have cast their nets far and wide to find the right talent to fill the new roles, many of which are related to digital marketing and e-commerce. According to Tech City UK, 19.3% of businesses are hiring digital specialists from other parts of the EU, whilst 15.6% are hiring from non-EU countries.

The UK’s EU exit and any tightening of immigration rules could make the complex option of international recruitment harder still for hirers to pursue. This is especially true of smaller SMEs, who do not benefit from the immigration loopholes that allow larger tech companies to hire 16% of their talent from outside the EU.

If they are to navigate the digital skills crisis and maximise growth, SMEs will need to fully understand the situation and some of the strategies to surmount it. We’ve made this article to help them do exactly that.

The statistics used are sourced from two landmark studies: the Tech Nation 2016 report by Tech City UK, and the Science and Technology Committee’s Digital Skills Crisis report (June 2016)

The UK’s digital skills crisis: the facts you need to know

Digital is booming

The UK’s tech sector is worth a staggering £87 billion a year. Digital jobs were created 2.8 times faster than jobs in the rest of the economy between 2011 and 2014, and the UK is now home to a staggering 1.56 million digital jobs and 58,000 digital businesses. And while London accounts for over 328,000 of these digital jobs, the rewards are being shared by ‘digital clusters’ – accumulations of digital businesses – throughout the country. Over 80% of these clusters, from Brighton to Dundee, are reporting growth in turnover, jobs and salaries.

These roles tend to be extremely well paid, with an average advertised salary of just under £50,000 – 36% higher than the national advertised average. This gives a strong indication of the hunger for digital skills, and of their profitability.

Demand for digital skills is not exclusive to tech companies

Your mental image of a tech worker might well be an IT company employee, a digital agency worker, a software developer or similar – but data from the Annual Population Survey (2014) tells us that in fact, 41% of jobs within the digital tech economy exist within traditionally non-digital businesses, encompassing roles such as e-commerce manager, data analyst, in-house digital marketer and so on. Workers performing digital roles in traditional industries – sometimes categorised as ‘transformers’ – number around 648,000 in the UK.

Digital growth is being held back by a skills shortage

According to the Tech Nation 2016 report, 43% of digital tech businesses say a shortage of skilled job candidates is limiting their growth. That’s almost 25,000 under-performing businesses. 19.3% of employers are recruiting talent from other countries in the EU to plug the gap, and 15.6% are looking yet further afield. Insufficient access to talent was the #1 challenge to business growth for the digital entrepreneurs surveyed for the Tech Nation 2016 report, ahead of access to finance, digital infrastructure and the economic climate.

The Science and Technology Committee’s Digital Skills Crisis report (June 2016) paints an even graver picture of the digital skills gap and its impact. It claims that 93% of tech companies find that the digital skills gap affects their commercial operations, and that the shortage carries a cost of £63 billion per year in lost earnings to the national economy.
Marketing-related businesses account for a big share of the sector

Of the country’s 58,000 digital tech businesses, 8.2% specialise in digital marketing and advertising, 7.7% in ecommerce and marketplace, 11.7% in data management and analytics, and 1.3% in social networking. 44.7% of marketing, PR and design businesses are now mainly digital. The digital marketing sector was worth £3.9bn in 2015 – an increase of 13.4% on the previous year.

Unlike some other disciplines including web and app development, digital marketing for English-speaking markets will usually require a high standard of spoken and written English. This presents an obstacle to the otherwise prevalent digital hiring strategy of sourcing talent from other countries.

Companies are looking to a variety of sources for skills development

Here are the sources for skills development that tech companies regard as important, along with the percentage of companies that value each source:

  • 66.5% Self-taught programming
  • 60.1% In-house training
  • 43.7% Mentoring
  • 38.6% Online training
  • 26.8% Local universities
  • 15.6% External training
  • 15.4% UK Universities

Let’s take a closer look at some of these options and how they can be implemented.

How to develop digital specialists and where to find them

Hiring university graduates

“Digital businesses make considerable use of local universities to recruit talent, but entrepreneurs highlight that graduates sometimes lack, either the business skills, or the most up-to-date technical skills, needed to go straight into work.” – Tech Nation 2016

British universities are getting better at teaching digital subjects with every passing year, but serious questions remain over whether a degree alone can provide a candidate with the grounding to step into a digital job. It speaks volumes that 13% of computer science students are unemployed six months after graduating, in spite of exceptional demand for tech specialists.

In Target Internet’s experience, a good number of fine digital marketing specialists are trickling out of certain universities (our founder and CEO Daniel Rowles found as much whilst working as a tutor at Imperial College, London). We recommend hiring graduates with some vocational experience – in most cases learned skills and theory will only really ‘click’ for the budding marketer after they have used them in the field.

Upskilling your staff

According to research recently carried out by Barclays, around 40% of businesses are choosing to hire younger, more tech-savvy employees to address the digital skills gap, rather than training up their existing mid-level employees. This approach is problematic both in terms of its efficiency and from an ethical standpoint. Yes, it’s important to create jobs for young people, but that shouldn’t come at the expense of other people’s developmental prospects.

Businesses that rely heavily on recruiting fresh employees to meet emerging requirements should really be asking themselves: at what point do we start up-skilling our staff? Just like the older workers they so often replace, new graduates will need to upskill over the course of their careers, which could span fifty years or more. You’re going to have to start catering for the continuing professional development of your staff somewhere down the line, so why not do it from the outset? This is more than just a way to do right by your experienced staff; it’s how you’ll get the best out of them.

There are several ways to upskill your staff, including mentoring, in-house training, online training and external training. Deemed important by over 60% of tech businesses in the UK, in-house training is the most popular approach. This type of training can take all sorts of forms, from company-wide conferences to targeted tuition for individual staff members.

We would strongly recommend using a combination of personalised and corporate training, to foster a culture of united progress whilst paying attention to each member of staff’s ongoing development. In-house training may be delivered by specialists within the company, or by third party training providers. External training is carried out by third party trainers outside of the work environment, e.g. at a university.

The benefits of online training

One method of upskilling that we’re particularly familiar with here at Target Internet is online learning, also known as e-learning. It’s striking that 38.6% of tech companies believe this to be an important source of skills development, whereas only 26.8% think the same of local universities. This turns the pro-university bias you’ll find in many other high-skill industries on its head.

There’s a very good reason for this break with tradition, namely that the compatibility of e-learning with digital subjects is extremely high. Learning digital skills through a digital platform is intuitive, e-learning is generally far cheaper than in-person training or a degree, and crucially, digital course content can be adapted faster than a degree programme.

Upskilling your staff is an investment, but the cost pales in comparison to that of recruiting for and paying a specialist to fill a new role.

Evaluate before you upskill

If you’re going to take the upskilling of your team into your own hands, we urge you to start off by evaluating each team member’s current ability levels. This information will empower you to provide targeted training according to the needs of your organisation and staff. For example, if the team is sorely in need of social media expertise, you can further develop the most skilled members of staff in that area.

Target Internet is currently working on a ‘Digital Marketing Benchmark’ product that will assess and report on individual and company-wide abilities across the most important digital marketing skill areas – more on that in a future post! For now, there are several ways to independently assess your team’s abilities. You can look at ROI for different digital marketing channels to infer where improvement is needed; you can survey staff to find out which areas they feel they could improve upon; you could quiz your staff members on different digital marketing topics; or better still, you could use a combination of these and other methods.

Hiring self-taught staff

The figures don’t lie. A stunning 66.5% of tech companies say self-taught programming is an important source of upskilling within their workforce, which places independent learning as the most widely valued up-skilling method in the digital sector.

In our experience, what goes for coding goes for other digital specialisms too, including the various skills of digital marketing. The ability to self-improve is attractive to digital hirers, as those employees who possess it will place less of a demand on training resources than others who require more guidance.

If you’re an employer looking to hire a self-taught digital worker, do pay close attention to each candidate’s portfolio and references, to ensure they have a good work ethic as well as the skillset you require.

To all the digital marketing workers reading this article, remember: the internet is your friend. There’s an abundance of training materials out there waiting to be consumed, from tutorial videos on YouTube to advanced e-learning courses. Whether you’re a freelancer or you work for a company and wish to improve your position, you can only progress by constantly developing your skills.

The country is in the midst of a serious digital skills crisis. For ambitious digital marketers with a thirst for self-improvement, this represents a golden opportunity for success.

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