The tech sector employs nearly 1.5 million people and will continue to grow rapidly over the next few years. Our technology industry has become a global leader – with the UK possessing the largest internet-based economy in the G20 (measured by GDP).
But it’s not all good news. A growing tech skills shortage threatens the growth and future success of UK businesses. With technology capabilities essential to the majority of companies, organisations of all sizes and across all sectors face the challenge of a growing digital skills gap. According to new research by the Tech Partnership, two fifths of British businesses are already struggling to recruit suitable talent with the right digital skills. And with supply of tech talent struggling to keep pace with demand, there will be an increasingly fierce battle to attract a limited and diminishing supply of skilled tech workers. Action is needed now to defuse a digital skills time bomb that could have a serious impact on economic growth, productivity and social mobility.
According to Experian analysis of ONS and Tech Partnership data, the UK needs 134,000 new tech specialists every year. A key way to improve skill levels and meet this need is to invest in education and training, but digital will need to look beyond the graduate pool. However, Tech apprenticeships are increasingly being seen as an attractive way of developing exactly the skills and attributes employers need.
A key driver of new apprenticeships will be the Apprenticeships Levy, which will be introduced in April 2017. Under the Levy, three million new apprenticeships will be created by 2020, funded by a levy on only the largest UK employers with a payroll of above £3m. Less than 2% of companies will pay the levy.
The Government’s aspiration to increase the number of apprenticeships is welcome. However, it is also important that they are of high quality and genuinely supply the skills that employers need – and digital skills are a central requirement. There has been no better time for businesses to start apprenticeships and enhance skills in their industry.
Tech apprenticeships deliver major business benefits. They provide companies with staff with high quality tech skills to drive growth and productivity in an increasingly digital business environment. They also enable firms to demonstrate that they are responsible employers, helping to enhance reputation and drive recruitment and retention of talent.
So what steps do businesses need to consider before establishing an apprenticeship programme?
- Understand the Levy
The first step large companies paying the Levy will need to take is to research their opportunities and take advice on how the levy will work for them. Although the Government is yet to finalise its plans, the following key proposals are being considered:
- Employers who do not pay the Levy will still be able to access government support for apprenticeships.
- Levy-paying employers in England will be able to “get more out than they put in” through a top-up to their digital account, and can redeem their entitlement through a digital voucher.
- The Levy can only be used for apprenticeship training, otherwise a “significantly higher Levy rate” will be required.
- The government will establish the Institute for Apprenticeships in 2017 – a new employer-led body to set apprenticeship standards and ensure quality for England.
- The body will put in place transparent mechanisms for the approval of apprenticeship standards and assessment plans, and maintain clear quality criteria within the context of achieving three million starts by the end of 2020.
Small and medium-sized enterprises (SMEs) or those with a payroll under £3 million can ignore the Levy, and concentrate on steps two and three.
- Where to focus
The next step is to identify where you most need tech skills to grow your business. The answer will be different for each business. For some there may be a critical need to develop innovation capability and train staff with software programming skills. For others, building online sales and marketing capability will be the priority, so apprenticeships may focus on database development or digital marketing expertise. No one size fits all – each business will have different needs depending on your business objectives, strategy, existing skillset and future needs.
- Use accredited programmes
Training providers, particularly those accredited by Tech Industry Gold, can work with you to ensure you quickly experience return on investment for your new recruits. They will help you with everything from developing training programmes that are tailored to your business needs, to sourcing and recruiting high quality candidates. Aspiring tech specialists from the millennial generation are ‘digital natives’ with a close understanding of the social media tools that younger audiences are using. Using Instagram as a tool to increase awareness of your business is likely to come more naturally to those who have lived and breathed digital from a very young age. An apprenticeship is a quick way to bring sought-after skills into the business.
By Margaret Sambell, head of strategy, Tech Partnership