ScotlandIS chief Polly Purvis on what lies in store for the tech industry
It’s mid-afternoon at Edinburgh’s Sheraton Grand Hotel and Polly Purvis is taking a short breather. In the next room, chief technology officers as well as key figures from the private and public sectors are touring exhibitors at the annual ScotSoft conference.
“I think predominately very buoyant,” says the head of trade body ScotlandIS on the current mood within the digital tech industry. “Lots of companies are doing really well. We’ve seen year-on-year growth across the industry over the last five years of 10 per cent per annum so that’s really positive.
“I think there is a lot more ambition and I think that internationally famous companies like Skyscanner and FanDuel are really putting Scotland on the map. There is a real buzz around the tech sector in Scotland at the moment.”
Skyscanner, Scotland’s first $1bn web company, and Edinburgh-founded fantasy sports site FanDuel, which this summer reportedly joined the billion-dollar tech start-up scene with the closure of a $275m funding round, are of course at one end of a spectrum. Other promising players are in the pipeline, though Purvis acknowledges there are two key areas where attentions ought to be focused.
“We need to be thinking global, much more from the point companies start out,” she tells Connect. “I think a lot of the newer companies coming through do have that more international view of their market – they’re not building just for the local market, they are building for an international market, so I think that’s very positive.
“And we are seeing a whole range of companies already in the export sector beginning to open up new markets [and] people who haven’t been exporting beginning to open up export markets. I think people recognise that there are huge opportunities there, but it’s also very challenging to do and lots of companies have their fingers burned trying to move into new geographies and found it more difficult than anticipated.
“It’s not necessarily desperately easy but I think it is where we need to move; to selling our products and services not just in the UK but overseas. The UK has been a very buoyant IT market for a very long time, but actually there are bigger opportunities out there if you can get out into international markets.”
Though the US market is clearly lucrative if it can be cracked, suggestions that US streets are “paved with gold” aren’t true, argues the ScotlandIS chief executive. China offers a huge opportunity – “but also quite a threat because the Chinese don’t really recognise intellectual property” – while Australasia, parts of the Middle East and of course Europe are important.
According to this year’s ScotlandIS Technology Survey, 57 per cent of businesses are already exporting, with more than a quarter reporting they do not at present nor have any plans to do so. Of course, attempting to access export markets often requires access to capital, which brings Purvis - who would later that day collect the Outstanding Achievement award at the ScotSoft awards - on to her second point.
“For most companies who are trying to raise serious money beyond the £1m level, you probably have to go, certainly to London, maybe to the States,” she adds. “There is very little venture capital money in Scotland. That’s a challenge and I think we need to try and find some solutions to it.
“It’s partly just a factor of the size of the marketplace; you can understand why you’d find lots of venture capitalists in the Valley and in London [when] London is a population twice the size of Scotland but, in terms of investment opportunities in the tech sector, probably ten times the size of Scotland.”
Work has been done to encourage angel investors to invest in small companies within and outwith tech, points out Purvis, while the Scottish Co-Investment Fund – run by Scottish Enterprise – can match fund up to £1.5m. There is another level above that, though, where she believes an untapped opportunity exists if the right incentives can be found.
“We sit here in Edinburgh with a huge amount of money under fund management, the asset managers, the investment companies and the insurance companies and they should be investing just a small percentage of what they’re investing into the local tech community, in my view,” she tells Connect.
“They should be investing it into the local start-up community, whether it’s tech or not, and I think there are some tax breaks the Scottish Government might over time be able to engineer once they get more fiscal autonomy that would help with that.
“I think that’s one of our issues: where is there a source of longer-term investment at the right level to help build companies of scale? Actually it’s sitting on our doorsteps in Charlotte Square and Princess Street.”
Then there is the matter of skills. “Doesn’t ever go away,” interjects Purvis at the mere mention of the word. After all, in the space of five years as chief executive some issues are bound to crop up repeatedly. Given forecasts suggest Scotland’s digital sector needs 11,000 new entrants a year, it’s unlikely to go away anytime soon.
A Skills Investment Plan for the ICT and digital technologies sector, which outlines efforts to encourage more youngsters to consider such a career, is at least a step in the right direction, with rollout now getting underway. As far as Purvis is concerned, delivery of the blueprint is “biggest achievement” in her five years leading the trade body.
“The challenge has been if you go back to the 1990s when computing was seen as an exciting industry to be in, lots of young people chose that as a career and then we had the dot.com collapse,” she explains. “Lots of jobs were lost in the electronics end of the sector and I think lots of people, particularly those people who influence young people’s choices, said ‘well you don’t want to go in that industry because actually we see people like Motorola and NEC moving out of Scotland, those jobs are all going’.
“Those jobs have in fact been replaced by lots and lots of jobs in small companies and the small companies aren’t very visible so people haven’t been aware of how many jobs there are in the tech sector. We just have to get that awareness up and explain where the opportunities are.”
There is similarly a job to do dispelling a somewhat “geeky” image that has built up around technology and IT. Progress getting more women into the sector has been “far too slow”, admits Purvis, with participation rates of females in the workforce declining in the ten years to 2011 from 30 per cent to 17 per cent according to e-Skills UK. However, she insists that a number of companies have developed working environments to encourage it.
“One of the challenges we have with the statistics around women in our industry is that we split out people who are known as IT and telecoms professionals, so if you’ve done computing science you’re in that category,” she adds.
“But actually there are lots of women who work in the industry who have got other skillsets and they’re not counted into the technology workforce, so this figure on women looks starker than it is. But I wouldn’t want to be complacent – there is still a long way to go. If you go to Vietnam and India, 50 per cent of their technology workforce is female so there is no reason why women shouldn’t be in our industry.”
Events are taking place throughout this week as part of National Coding Week to try and redress the gender imbalance, including BBC Three talent show Girls Can Code. On the coding front more broadly, ScotlandIS has been a key player in the formation of Scotland’s first dedicated software skills academy, CodeClan, which earlier this week announced the appointment of Harvey Wheaton as chief executive.
“I think it is going to have a great impact on the sector,” starts Purvis. “However we need to be realistic… The proposal is that three years out of us being set up now that the Academy will be turning out around 600 people per annum.
“We’ve got a skills gap of around 5,000 people per annum, so it will help to reduce that skills gap but it’s not going to solve it on its own. That’s why I think we need to keep on revisiting this issue and look for innovative ways [as to] how do we bridge that gap. I don’t think anyone knows all the answers to that one.”
There is perhaps one more radical answer, suggests Purvis, though the likelihood of it happening, she readily admits, is slim. “The one thing that would really make a difference at the moment for the industry would be if we could double the number of places at university and college for software and computing science,” she tells Connect.
“Because, although it’s a slow burn – it takes three to four years to get people through these courses – actually what we need to be doing on a regular basis is increasing those numbers coming through. In the current environment it’s very difficult to see where that funding would come from, but that’s what I’d love to see happen.”