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Firms Brace for COVID-19 Impact Despite 2019 Tech Sector Growth

Ross Kelly


Scottish fintech cluster Modulr PayPal

The COVID-19 outbreak has dampened optimism for 2020, but Scottish businesses believe opportunities will increase. 

Scotland’s tech sector saw continued growth in 2019 with an increase in sales and profit margins, according to the annual ScotlandIS industry survey.

While COVID-19 has been highly disruptive, many firms have identified opportunities for growth over the next nine months, with one-third of survey respondents believing business opportunities will rise due to increased – or new – demands related to the pandemic.

These demands will be prevalent across a range of areas, the survey suggested, spanning cloud services, digital connectivity, remote working technology and digital health solutions.

Crucially, only one-in-ten respondents indicated that avoiding insolvency was among their top three challenges. However, as is the case with other industries, respondents said the most common challenges they expect to face this year will be cash flow and income management, staff health and wellbeing and also securing new business.

In another indication of business optimism, nearly three-quarters (71%)  of respondents expect their employee numbers to stay the same or to increase their headcount by the end of 2020 – with 27% forecasting an increase in headcount.

In December and January that increase was expected to be significantly higher at 80%.

Commenting on the survey results, ScotlandIS Chief Executive Jane Morrison-Ross said: “The industry has demonstrated strong growth over the past decade and optimism had risen in 2019 prior to COVID-19. Naturally, the pandemic has impacted the outlook for the rest of the year for many, but there is still clear determination across the sector to adapt and respond to several new challenges.

“Digital connectivity has never been more important for businesses and individuals across Scotland, and it is heartening to see the support Scotland’s tech sector is offering to try and make sure no person, and no business, is left behind due to a lack of digital resource.”

Around one-third of survey respondents confirmed they had furloughed staff due to the COVID-19 outbreak, ScotlandIS revealed. Additionally, 30% said they planned to do so in the coming weeks.

However, 29% have already hired new people or are planning to hire additional staff in the near future. Similarly, demand for talent continues to remain steady despite COVID-19 disruption. Demand for university graduates has increased, with 81% of businesses stating that they are “definitely or quite likely” to recruit graduates within the next 12-months.

This marks an increase on figures seen over the past five years, ScotlandIS confirmed.


Reacting to the survey findings, Cortex CEO Peter Proud, said: “The marketplace has changed significantly due to coronavirus but it’s important to remember that digital does underpin the economy. I have no doubt that as a company and as a sector, we will come out the other side of this. Rapid digital transformation is taking place not just across Scotland and the UK, but across the globe.

“As a business, Cortex leads with digital delivery and so had a solid and robust business continuity plan in place from the beginning.  Our staff have been working from home for longer than most, having closed the physical office a week before lockdown was announced.  They have the same access to the tools, files and everything else they need to do their job regardless of location and from a client’s perspective there has been no difference or interruption in service.”

Proud added: “With solid planning, resilience and agility at its core, and an ingrained entrepreneurial mindset I believe that Cortex has the opportunity to grow and thrive, despite the challenges currently facing us.”

Ross Kelly

Staff Writer

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