The North East’s tech scene has been ‘one to watch’ for a number of years, as Paul Armstrong, Managing Associate at Womble Bond Dickinson, reports.

 

Newcastle recently placed 8th on a list of leading tech cities outside of London.

With all the makings of a tech hub including a high concentration of talented graduates, and a rich history of innovation, what are the barriers stopping the North East from reaching its full tech potential?

Firstly, North East tech firms are facing a recruitment challenge. Since 2020, UK businesses have undergone a cultural shift, leading to the rise in flexible and home working, not least in the tech sector. 91% of UK tech firms offer some form of hybrid working compared to just over three-quarters of UK businesses.

Hybrid working has been shown to increase productivity and employee satisfaction. However this shift has meant North East tech firms are competing with more competitive salaries from other parts of the UK, affecting their ability to recruit and retain top talent. Increasing wages may appear the obvious answer, but this is not always feasible for start-ups and SMEs. Firms need to look at innovative, non-monetary ways to create a desirable working culture such as enhanced pension offering, salary sacrifice schemes or health insurance.

The Northern Echo: There is a need for more tech clustersThere is a need for more tech clusters (Image: Press release)

Investment has also been identified as a key barrier to growth, with the North East cities trailing behind high growth areas. Newcastle, Sunderland and Middlesborough ranked 10th, 24th and 30th on Tech Nation’s 2021 report of 32 cities with the latter only attracting £1m of investment. The sentiment was echoed at a recent CyberFest22 roundtable, with North East tech firms voicing their frustration at the lack of investment, particularly within start-ups.

This was also stressed by trade organisation Tech UK who has called on the Government to introduce R&D tax credits, tech-growth incentives and digital training schemes to help expand the UK's tech sector.

A final observation is the need for more tech clusters, which are groups of individuals, businesses, and educational networks. Discussion at a recent roundtable also suggested there's scope for the region's existing clusters to interact and work together more frequently.

One North East cluster that has yielded success is CyberNorth, which works to position the region as an attractive prospect for cyber security businesses and to grow highly skilled, well paid, and interesting jobs within the industry. This work is key to the growth of the tech sector as the risk to businesses from cyber security threats cannot be underestimated and not having easy access to cyber security expertise could hold the NE tech sector back.

There is no doubt that the North East tech sector has much to offer, despite there being some obstacles. Increased clusters, competitive employment packages and a focus on attracting investment are key to supporting the sector to meet its full potential.