UK tech firms predict brighter outlook by 2025 despite hurdles
Research by TechMarketView, a tech analyst and advisory firm, has highlighted that the majority (60%) of UK technology companies are anticipating improved conditions by 2025, despite 56% currently experiencing what they describe as poor or neutral business environments.
The research, which surveyed a range of business leaders such as CEOs, VPs, MDs, and heads of sales and finance, is set to inform the newly inaugurated Tech Confidence Index, to be published bi-annually.
Concerns regarding the future of the tech industry in the UK are prevalent among business leaders. The survey revealed significant apprehension about government policy, which 54% of respondents cited as a primary concern. Additionally, falling demand or sales (48%) and labour and skills shortages (43%) were also highlighted as pressing issues. While over half (54%) believe the new government will either have a negligible or adverse impact on the technology sector, 43% remain optimistic about positive governmental influence.
Examining the current business landscape, 56% of respondents painted a picture of neutral or poor conditions, with only 38% reporting favourable circumstances and a mere 5% describing the environment as very good. The short-term outlook, however, carries more optimism: 43% of leaders indicated that conditions remained unchanged over the last quarter, while 31% noted an improvement. Notably, 60% predict better conditions over the next year, contrasting with the 13% who foresee a decline.
In terms of future prospects, a positive trend has emerged, with 57% of firms rating their business outlook at 7/10 or higher. This optimism is encapsulated in the Autumn 2024 Tech Confidence Index score of 6.5/10, reaching 7.4/10 among medium-sized businesses. This index will be a regular feature, providing insight into the tech sector's confidence levels bi-annually.
Regarding strategic investments, a significant portion of UK tech firms plan to channel funds into burgeoning technologies. Seventy-one percent are expected to invest in AI and GenAI, underscoring its perceived importance as a business driver. Additionally, investments in sales and marketing (44%) and business/digital transformation (43%) are anticipated. The most critical technologies, as identified by respondents, include AI/GenAI (78%), data analytics (60%), automation (46%), cybersecurity (37%), and IT consultancy (36%).
Interestingly, although GenAI was acknowledged as somewhat overhyped by 65% of leaders, 71% still plan to invest in it within the coming year, and 46% have already integrated it into workplace practices. Despite this scepticism, customer demand for GenAI solutions is noted by 40% of respondents. "One of the most telling results of the survey is that 71% of respondents are planning to invest in GenAI over the next 12 months, but only 43% say they will be investing in business or digital transformation. This also supports TechMarketView's wider research, which suggests that GenAI is not currently viewed as the tool that will most readily transform businesses," remarked Georgina O'Toole, Chief Analyst at TechMarketView.
Skills shortages present a significant challenge, with 57% of those surveyed stating that this isn't a current issue for their business, while 43% identify it as a constraint. Notably, larger companies report skill shortages at a rate of 54%, compared to just 22% of smaller firms with fewer than 50 employees. The demand for technical skills is apparent, with 69% of respondents highlighting its importance, particularly in software development (19%), data and analytics (17%), and AI (13%). Business and management skills are also sought after, particularly in sales and marketing (15%), as indicated by 28% of respondents.
