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Boom and bust nature of NW tech sector

Competition for skilled developers is putting firms under pressure and could potentially stifle the growth of the North West technology sector.

Research by insolvency and restructuring trade body R3 in conjunction with Manchester Digital, the trade association for digital business in the North West, suggests the skills shortage is creating wage inflation. In some case firms have had to close because they were unable to replace key staff members, while others are outsourcing work overseas.

R3 figures show the North West technology sector has the highest risk of failure of any major sectors it monitors, except transport. Almost one in three IT and tech firms in the region is considered at above-average risk of failure over the next 12 months, equivalent to 5,867 firms. The sector is also one of the fastest growing, with the number of active businesses increasing by 12 percent in the last six months to reach 18,280.

 

Katie Gallagher, managing director of Manchester Digital, says that bigger companies have resorted to offering higher salaries to attract skilled developers. She added 'We know of cases where small firms have shut down because they have lost a key member of staff and are unable to replace them. They can't afford to match what the bigger firms can offer. The public sector has been slow to respond to the skills shortage. As a result, 26 percent of our members said they outsourced work overseas last year and that, compounded with the uncertainty over Brexit means that we could lose some companies as they choose to relocate outside the UK altogether.

 

Originally published Wigan Evening Post, 14th June 2017.