The demand for digital skills has clearly outstripped supply. Against the backdrop of political and economic uncertainty, London Tech Week is the ideal time to remind our thriving city how to fight to retain the title of Europe’s biggest technology hub.
Across Europe, we are witnessing a shortfall in the number of people with the skills required for the application economy, with an estimated 756,000 ICT jobs going unfilled by 2020. European cities are fighting to attract and retain digital talent. Compare this with the situation in Asia. Here, STEM students (those studying science, technology, engineering or maths) can account for up to 20% of the student population, whereas in Europe, this percentage is only around 2%*.
Make no mistake: these tech clusters in cities are thriving. London’s Tech City, for example, recently celebrated its fifth anniversary and a string of achievements, not least a tenfold increase in the volume of venture capital coming into London and the fact that London is now ranked as the number one digital city by the European Digital City Index.
However, many companies are currently being pushed to relocate and build their businesses beyond these tech clusters. The fundamental barrier to their growth remains the lack of school children learning the skills which are vital for the digital economy. There simply isn’t enough STEM talent coming through to deliver the next generation of digital innovators and inventors.
A report by the British Government House of Lords, for example, has warned that the country is not adequately addressing its significant digital skills shortage. In its report, the Lords recommend (among other initiatives) making digital literacy a core subject at school.
Some progress is being made in this field, and many businesses are also working with schools to support STEM initiatives. Investment into dedicated programs, such as CA’s Create Tomorrow, is important to tackle a talent shortfall that will have a real impact us in a few short years. We are all concerned by the low number of young people opting to study STEM subjects, for they are truly the lifeblood of our digital future.
Spiraling property costs are also squeezing many organizations out of these tech clusters. In London, a quarter of tech firms have considered a move away from the capital entirely, while more than two in five lack confidence in the city’s ability to provide space that will meet their needs over the next five years as they grow.
A similar pattern is occurring in that tech heartland: Silicon Valley. While the Bay Area isn’t so short of digital skills, the property costs and competition to attract talent are forcing many tech companies to leave California and set up in lower-cost cities such as Seattle or Vancouver.
These tech hubs need to take action to sustain their positions. For example, here in Europe, we’re proudly producing tech 'unicorns' at an accelerated rate – 13 of at least $1bn in value last year alone. However, if we want to continue to have this sort of success, we need more pressure placed on politicians and leaders to address these barriers to growth—most notably the lack of schoolchildren learning STEM skills and the property costs in major cities like London and Berlin. Protecting digital infrastructure should be on the top of every government agenda.