As we enter a new year, the prospects for UK tech firms look good. The industry has been incredibly resilient considering all that is going on and experienced considerable growth.
Some of the most significant investments in the UK have been made into this sector and the number of new startups entering the market is very exciting.
Nevertheless, there are certain challenges and barriers that may stand in the way of further growth in the year ahead, which tech entrepreneurs should be prepared for.
Labour shortages
The tech industry hasn’t escaped the current labour shortage in the UK and people with the right skills are in high demand, not only by the tech industry but by other sectors as well.
A recent Government report revealed that around 82 per cent of all jobs in the UK list digital skills as a requirement.
However, Lloyds Bank’s Essential Digital Skills Report 2021 show that only 64 per cent of the working population currently have “Essential Digital Skills for Work”.
With such a shortage of people with the right skills many employers are having to push up wages and offer other benefits or ways of working that is likely to have an impact on the effectiveness and profitability of their business.
Chip shortages
The world is experiencing a significant shortage of computer chips. This is primarily affecting the hardware industry, rather than software, but it is preventing consumers from being able to access devices that software is loaded into.
A recent report by the BBC found that demand has simply outstripped supply and companies may have to wait until the final quarter of 2022 for production to increase to the levels required.
Long term, the world needs more chip factories, but with an average cost of £20 million to set up and a construction time of around three to four years, this problem may not be resolved as quickly as many hope.
In the meantime, tech manufacturers face delays and an increased cost of components needed to produce the products they sell.
Tougher regulation
The new online safety bill will include new criminal sanctions for tech executives that do not prevent online harm on their platforms.
The legislation, which is currently being scrutinised by a joint committee of MPs and peers, is being accelerated to create criminal liability for senior managers of tech firms.
The Secretary of State for Digital, Culture, Media and Sport, Nadine Dorries, said that tech firms should not be given a two-year grace period before criminal accountability is introduced and instead, would be liable within three to six months of the bill becoming law.
The new measures to prevent harm online created by tech platforms have been described by Twitter’s director of public policy strategy, Nick Pickles, as hostage laws” because they could be used to influence companies by threatening staff with criminal action.
Changing consumer needs
Consumer attitudes and requirements for tech are constantly changing and this is only being accelerated by the pandemic which has forced a greater reliance on technology for work, shopping and entertainment.
Much has changed in the last two years and tastes are changing rapidly. Platforms and sites that were once widely used are being overtaken by new developments and competitors.
Tech firms need to continue to adapt and innovate if they are to keep up with the pace of change. This is going to require additional investment in R&D and machinery.
Thankfully the UK has a generous system of tax reliefs in place that support creativity and innovation.
Get ready for 2022
If your business is affected by any of these issues or needs advice on its future direction, why not speak to our team? We have a long history of supporting the tech sector, so get in touch.