29 March 2012
Press ReleasesA survey of over 2,000 technology businesses shows a sector that has concerns about the future availability of UK-based high quality staff and the impact it will have on their international competitiveness.
The poll by accountants and business advisers James Cowper Kreston and their colleagues in the Kreston International Network of accountancy firms included the earliest stage pre-revenue spin outs to larger businesses employing over 100 people, with revenues in excess of £20 million.
Across the board innovation was flagged as fundamental. Interesting too is the reaction of the respondents to overseas markets and competition and the need for continued prioritisation by the Government of technology based skills.
Sue Staunton, partner and head of James Cowper Kreston’s Technology practice said: “The vast majority of technology based businesses are working in a global market. This is not just about accessing global markets and the threat from overseas competition, but about accessing support on R&D from overseas. Most competition is coming from the rest of Europe, closely followed by the US and the Far East.”
Expressing concerns about the future availability of high quality staff, respondents queried whether the sector will have to increasingly look elsewhere to source technological skills.
Sue Staunton said: “Despite the current strength of the UK’s academic base, some 46% of respondents to the survey are already accessing overseas resources to support the development of their technology. Most are obtaining support from the US and mainland Europe, although some 24% are turning to the Far East.
“There is a perception that students are moving away from the sciences and if the UK does not continue the development of its own skills base by encouraging more students to take science and technology focused degrees, increasing numbers of businesses will seek their talent abroad.”
One of the most important impacts of the recession for respondents is the lack of equity funding. Although new investments are being made, in many instances where third parties are investing it has been to protect earlier investments.
Sue explained: “Funding is perennially a concern; focussed more on the lack of equity funding as a result of the recession than debt funding. Such measures as improvements in tax reliefs for investors are, therefore, welcomed if they can provide the stimulus to free up much needed capital investment.”
“Whilst banks are seen as important to the funding of technology based businesses, there is scepticism as to whether they will be able to step to the plate and concern that they have become too risk averse. It was also said that banks should have a role to provide secured debt facilities for working capital but generally don’t provide these early enough as a young company develops.”
The importance of centres of excellence or clusters is reported time and again as businesses stress their reasons for locating where they are.
“We were keen to understand what drives technology companies to locate where they do and it’s clear that the clustering concept is having an increasing impact,” said Sue. “Responses stressed the importance of access to relevant networks; access to employees with experience in your field and communications.”
Sue concluded: “The survey portrays a sector broadly optimistic about its future but respondents are keenly looking forward to seeing how Government strategies to drive growth in the technology industry will assist them and their successor businesses in driving the economy forward.”
Copies of the Kreston Technology Survey 2011 is available here.
Sue Staunton, Head of Technology & Partner, James Cowper Kreston LLP, Tel +44 (0)1865 200500 or email sstaunton@jamescowper.co.uk
