Written by: Keith Tully
Published: 1st June 2017
A relative lack of suitably skilled professionals is hindering the progress and even threatening the sustainability of thousands of IT and tech sector businesses in the North West of England.
That’s according to new research led by the insolvency trade body R3, which suggests that some 32 per cent of the North West’s IT and tech companies are at “above average risk of failure” during the next year.
The issue of there being very high levels of competition for employees who have particularly in-demand skillsets is believed to be causing real problems for tech firms across the region and the consequences for some are proving very seriously damaging.
Among the concerns for companies in the industry is that the region-wide competition for skills is driving up wages and leaving businesses struggling to retain or to replace key members of their workforces.
“We know of cases where small firms have shut down because they have lost a key member of staff and are unable to replace them,” explains Katie Gallagher from Manchester Digital, which worked with R3 on investigating the issue of skills shortages within the North West’s tech sector.
“They can’t afford to match what the bigger firms can offer,” Ms Gallagher said.
The research by R3 and Manchester Digital found that the technology sector in the North West currently incorporates more companies at an above average risk of failure than any comparable sector with the exception of transport.
As many as 6,000 IT and tech businesses are believed to fall into this bracket and be at risk of failure.
Skills shortages are understood to impact the tech sector more than their counterparts in other industries because their work often depends so much on innovation and the capacity of individual staff members to come up with new ideas.
“It is clear that the skills shortage is threatening many businesses by creating wage inflation and pushing up costs,” said Paul Barber, who chairs the R3 trade body and is a partner at Begbies Traynor.
“Companies will need to ensure they have sufficient margins to maintain profitability or enough investment to bring development projects to completion.
“Either way, they need to keep strict control of budgets and seek professional help at an early stage if problems arise.”
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