What is the digital skills shortage?

4 minute read

The technology industry is undergoing a huge transformation – with sectors like data security, AI, cloud computing and robotics growing exponentially and the sudden shift to an online economy. In their Future of Jobs report, the World Economic Forum recognises that ‘the bounty of technological innovation which defines our current era can be leveraged to unleash human potential’. But we only have a ‘short window of opportunity’ to build proper infrastructures to support this digital future key to business development. Otherwise, as start-ups we risk having a workforce with a lack of technological digital skills – such as the ability to code and programme, and manage data security.

What is the digital skills shortage?

The digital skills shortage refers to the shortfall of talent in our current workforce with the appropriate skills and expertise in digital technology to supply demand from businesses. This gap was causing problems even before the pandemic, with a 2016 government report linking one in five of all vacancies to a shortage of digital skills. 

 You may have also heard people talking about the UK’s ‘digital skills gap’, which refers to the gap between digital skills being taught in our education system – which informs the knowledge of our workforce – compared with the skills that we as employers want. 69% of UK leaders surveyed by the Microsoft believe their organisation currently has a digital skills gap, and 70% expect to experience one over the next 12 months.

What are the risks of the digital skills shortage?

There is a toxic blend of both short term and long term risks associated with the digital skills shortage and gap.

The most immediate consequence is an economic bottleneck for business. Simply put, as demand outstrips supply, employers are struggling to find talent to fulfil their tech needs, which will have a knock-on impact on business growth and economic recovery as we move post-pandemic. Indeed, nearly half (44%) of UK leaders fear the current lack of digital skills within their organisation will have a fairly negative impact on their success in the next year.

 That takes us nicely to the topic of education. There is a very real risk that current and future graduates are failing to meet the emergent needs of the deep tech sector, and lack digital skills more widely. Research by Deloitte details that only 12% of executives believe that graduates have enough digital skills, which is a damning assessment.

 Moving into the mid to long term, the risk is that this gap is only going to get larger. Statistics show that the number of young people taking IT subjects at GCSE has fallen by 40% since 2015, meaning even fewer digitally-skilled resources entering the job market. 

The very real concern is that businesses will be unable to find the talent they need here in the UK, and relocate or set up shop in nations with better tech infrastructure. Research by the European Centre for Digital Competitiveness has labelled nations including France and China ‘digital risers’ thanks to their increasing investment in digital skills development. The UK government itself identified in 2016 that a digital skills shortage poses a ‘major risk to business growth, innovation and broader societal development’. 

What can do we about the digital skills shortage?

It is vital we take action now to ensure the future employability of the UK workforce. There are 3 key strands that need to form an integrated approach:


Both the private and public sectors need to better understand the digital skills shortage and identify key areas of action. There is little research that specifically looks at engineering and AI as a skills gap; 360WORK is sponsoring independent research by Techworks and the UK Electronics Skills Foundation (UKESF) into the the future demand for Digital/AI engineers in the deep tech industry. We aim to identify specific skills, needs and gaps, and understand the immediate and longer-term requirements for industry stakeholders operating in the deep tech environment. You can complete our survey here.

Targeted Outreach Programmes

Part of the battle around the digital skills shortage is making young people aware of opportunities in the sector. Lack of understanding around career paths and where tech can lead prevents students engaging with the industry. The private sector needs to play a pivotal role in working with state schools and universities in order to provide real life role models. 360WORK matches Student Teams – comprised of undergraduates and postgraduates – with leading-edge businesses to work on projects, aiming to develop students’ skills while they get paid. 

Representation also matters. There has long been a lack of diversity within tech which has the knock-on effect of putting off women, particularly women of colour, from entering the industry. There are barriers that need to be addressed through outreach and funding programmes, targeting girls far before university to improve on the unsurprising statistic that only 16% of Computer Science undergraduate students are women. This figure has remained largely stagnant for the past 5 years, and has been steadily declining from the peak of 37% in 1984.

Structural Change in Education

Raising awareness in education is important but means nothing without funding. To ensure stable economic growth, education at all levels needs to be realigned to changing industries. There is currently a gap between training and development opportunities, with 70% of young people expecting employers to invest in teaching them digital skills, while only 50% of employers have the capacity or ability to provide that training. The government therefore needs to step up and meet business in the middle, as only 24% of UK leaders currently believe that the government is doing enough to tackle the UK’s digital skills gap. Investment in upskilling and reskilling the UK workforce will need to come from both the public and private sector. 

To sum it all up

The digital skills shortage has been caused by a number of factors including a rapidly changing tech environment, lack of investment and adaptability in education, and a greater need for targeted outreach. 

360WORK matches vetted freelance experts with leading-edge businesses, and we often talk of the freelance revolution that is taking the economy by storm. However, the long-term success of flexible and remote working relies on our ability nationally and globally to manage digital skills shortages and gaps. If you are a business in the tech industry and want to strengthen the UK’s deep tech capabilities, join us and other forward-thinking organisations at Techworks and complete our survey on digital engineering skills in the age of digital and AI before the end of the month.

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