Bullish UK technology sector worth over £180 billion

05 June 2018 Consultancy.uk

The UK technology sector has boomed to a value of more than £180 billion. The explosive growth outpaced the sluggish UK economy as a whole, and will undoubtedly add to the emphasis placed on the tech sector in order to achieve a successful Brexit. However, the sector is not without its problems, and the challenge of a growing talent shortage could hamper Britain’s technology scene in the near future.

With the deadline for Brexit negotiations rapidly approaching, businesses, politicians and citizens alike are still surrounded by uncertainties regarding the UK’s economic and geopolitical future. One aspect of Britain’s withdrawal from the EU that has consistently been talked up as a key pillar of post-Union life is technology.

During the snap general election of 2017, a variety of promises were made by the rival parties vying for power to boost the technological prowess of the UK. Meanwhile the Management Consultancies Association (MCA) published a ‘manifesto’ calling on whoever formed the next government to help the nation to prepare for an ‘educational arms race’, as they contended a successful economy after the completion of Brexit is dependent on a tech-savvy workforce.

The world's top tech ecosystems

Leading firms across the business landscape are also looking to technology to soften the blow restrictions on freedom of movement could have on their access to talent. In the future, Artificial Intelligence may be key to taking up slack, while a new generation of professionals are trained to replace a potential exodus of EU nationals. In line with this, the UK Government’s autumn budget set aside £75 million for the development of AI – as well as funding of 200 new PhD positions in the field. The budget also saw a further £76 million pledged to boost skills in the digital and construction industries. The developments followed recent criticism that most UK secondary schools did not offer a Computer Sciences GCSE.

Encouragingly, the technology sector in the UK appears to be booming at precisely the right time to facilitate this. According to a new report from Tech Nation, in collaboration with EY’s UK and Ireland wing, the UK’s technology sector is now worth nearly £184 billion – up from £170 billion in 2016. Employment in the sector is also high, while new tech hubs are opening across the nation, the 2018 analysis finds.

Talent dynamics of the top 20 global tech startup ecosystems

The UK’s digital technology sector actually grew 2.6 times quicker than the rest of the economy between 2016 and 2017. While UK GDP expansion staggered at around 1.8%, digital tech companies’ turnover grew by 4.5% over the same period. Digital also outperformed the non-digital sector for the fourth consecutive year of the Tech Nation study, something which will make it an increasingly important prop the UK prosperity as a whole, with national growth now at its lowest since 2012.

Commenting on the findings, UK Prime Minister Theresa May said, “As Prime Minister, I am proud of the strengths of the UK tech sector and ambitious for what it can achieve in the future. That is why the government has made tech a core component of our modern industrial strategy, and we will continue to invest in the best innovations and ideas, in the brightest and best talent, and in revolutionary digital infrastructure.”

Talent shortage

London is not surprisingly at the forefront of this bullish performance in the technology sector. The UK’s capital city is ranked as the third top technological ecosystem, behind the famous Silicon Valley and New York. What is notable between these competitors when viewed side by side is that London has a disproportionately large market reach compared to its performance and funding – even while those factors are on the high-side, suggesting that further expansion of the UK’s tech market internationally is more than possible, despite the UK’s declining global influence.

The problem the sector is presently facing is the major obstacle of sourcing talent. Of the other top competitors for the crown of the world’s technology hub, only Tel Aviv has a lower intensity of access to top talent. If London and the UK are to move forward then, this issue is one which cannot be avoided, particularly as the UK faces an ageing population, and a decline in the amount of high-skilled workers arriving from the continent after Brexit – a paradoxical conundrum considering tech firms are also being spoken about as a means for other sectors to offset this issue.

Capital invested

However, the key to tackling this issue may well be that most firms are dangerously lacking in gender diversity, leaving a stunning amount of untapped potential still available for employment in the UK. While the stats were roughly proportional for ethnic minority workers (15 in every hundred tech workers are from this background, compared to 11% of the total workforce) and for staff younger than 35 (28 in 100, while across all UK jobs, 29% are under 35), women were unlikely to be working in the sector.

For every 100 people working in a digital tech job in 2017, just 19 were women despite 49% of the UK workforce being female. By working more concertedly to engage with prospective female workers, technology companies might significantly boost their flagging talent pools, strengthening their position against competitors from across the world. This would not only boost London and the UK to an unassailable advantage over rival economies, but boost the economy as a whole in the process. According to a recent study by PwC, every year the gender pay gap costs the national GDP some £6,300, while business performance on an individual basis could also be boosted by as much as 30% by improving diversity in a traditionally male-dominated sphere.

Gerard Grech, Chief Executive, and Eileen Burbidge, Chair of Tech Nation, commented on the findings of the report, “The UK’s digital economy has seen astonishing growth over recent years. But it has also experienced challenges, some shared by the economy more broadly. Amongst these, of course, is the UK’s changing relationship with the EU. Like the Tech Nation team itself, however, the tech communities we surveyed this year remain resolutely optimistic about the resilience of the UK’s digital ecosystem.”

Concluding, they stated, “As we power into that future, we must support founders, investors, international talent and our homegrown digital workforce. We should continue helping them to connect, learn and share – to ensure the UK remains the best place to start and scale world-class digital businesses.”

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Project management industry adds £156 billion of value to UK economy

15 April 2019 Consultancy.uk

Project management has grown into one of UK’s largest areas of business over the past decade, amid the increasing ‘projectification’ of work. With the gross value added to the UK economy by project management estimated to be £156 billion, this trend is likely to continue in the coming era.

Despite the huge success of project management in recent years, until now there has been relatively little data available on the size of project activity. As a result, there has been a great deal of debate on things like the number of people involved in the sector, the number of projects, and how it contributes to economic output. Due to this need for clarity, APM, the UK’s professional body for project management (the largest organisation of its kind in Europe, with 28,000 individual members) commissioned economists from PwC to shed light on the industry's economic impact.

The research concluded that the profession makes a more significant contribution to the UK economy than the financial services sector. 2.13 million full-time equivalent workers (FTEs) were employed in the UK project management sector, generating £156.5 billion of annual gross value added (GVA). In comparison, the financial services sector contributes £115 billion, and the construction industry adds £113 billion.

Gross value added to UK economy

Commenting on the discovery, Debbie Dore, Chief Executive of APM said, “Project management runs as a ‘golden thread’ through businesses, helping to develop new services, driving strategic change and sector-wide reform.”

Who is a ‘project manager’?

To reach these estimates, PwC’s researchers used detailed models to map out the value of project management activity. They ultimately defined relevant ‘projects’ as “temporary, non-routine endeavours or rolling programmes of change designed to produce a distinct product, service or end result… [with] a defined beginning and end, a specific scope, a ring-fenced budget, [and] an identified and potentially dedicated team with a project manager in charge.”

Building on this, they then went on to define what the act of project management actually is. The job consists of applying “processes, methods, knowledge, skills and experience” so that clients can meet their objectives and bring about planned outputs or outcomes. The analysts added that this includes “initiating the project, planning, executing, controlling, quality assuring and closing the work of an identified and dedicated team according to a specified budget and timeframe.”

Importantly, it should be noted that the profession is not exclusive to only roles explicitly labelled as ‘project manager’, but to any role where specialist project management skills are used. This means that across sectors these roles can have very different titles, from the self-explanatory contract managers of procurement, or the campaign managers of advertising, to the likes of festival co-ordinators in the events sector, and many more. The roles in question also span all strategic levels of the profession, from strategic to tactical and operational positions.

Gross value added of project management profession

From a sector perspective, the financial and professional services, construction and healthcare industries make up almost two-thirds of the total project management GVA. At the same time, understandably, the UK Government has a huge project portfolio, which further drives the size of the GVA the sector contributes, thanks to megaprojects like HS2 and Crossrail.

Commenting on this to the report’s authors, Oliver Dowden, Minister for Implementation remarked, “Project delivery is at the heart of all Government activity, whether it’s building roads and rail, strengthening our armed forces, modernising IT or transforming the way government provides public services to citizens. Getting these projects right is essential if we are to ensure that we build a country that works for everyone.”

Throughout 2019, 26 major government projects were delivered, representing a fifth of the overall Government Major Projects Portfolio (GMPP) of 133 projects. According to the IPA annual report 2017-18, these represented a whole life cost of £423 billion. In addition to this were a plethora of smaller scale projects, and those in early development.

Elsewhere, with the increasing digitalisation of the economy impacting entities of all shapes and sizes, IT and digital transformations tended to dominate the projects of the UK scene alongside new product development projects, with a respective 55% and 46% of organisations in the research sample having undertaken these types of project in the past year. At the same time, this varied across sectors, and unsurprisingly, in the construction and local government sectors, fixed capital projects were the main project type undertaken.


Looking to the future, 40% of business leaders expect project management will grow in the coming years due to the increased use of projects – or the ‘projectification’ of the UK. In a trend that has been witnessed elsewhere, organisations have to rapidly and continuously change in the digital age of business, driving the need for project management.

Outlook for project management services

An increased focus on value over cost – especially in the construction sector – and a forecast increase in the number of international projects are predicted to be key drivers of growth, according to the expert contributors. However, this will not happen in the absence of challenges; more than half of organisations expressed concern over the perceived impact of political uncertainty in the UK. Skills and capability shortages were also cited as a potential barrier by a third of organisations.

With regard to budgets, meanwhile, a third of those surveyed by PwC said they expect the size of project budgets will increase in the coming three years, while 40% anticipate a growth in project size. As the profession continues to mature, and as the recognition of the importance of good project management grows, it is expected that a greater proportion of project work will gain more distinct attribution to the profession itself, giving more recognition and appreciation to the role of the project manager.

Speaking on the findings of the study, Sandie Grimshaw, a Partner at PwC, concluded, “The project management profession is relatively new compared to some other professions, such as lawyers, teachers and doctors. However, as project management is a core competence vital to organisations in the UK, the profession is critical and will continue to grow in stature.”