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How can UK tech SMEs tackle the digital skills shortage?

UK digital skills gap

A shortage, a gap, a crisis – much has been said about the difficulties employers across the UK are facing in hiring people with the necessary digital skills.

It is a complex issue and one that carries significant implications for businesses in almost every sector, but none more so than tech. After all, the digital skills gap refers not only to a shortage of highly skilled technology and IT professionals but also a lack of basic skills among employees on the whole, which prevents them from performing day-to-day tasks.

A government report shows that around 82% of all jobs in the UK list digital skills as a requirement. This involves the ability to effectively use business software, digital communication tools, project management platforms or programs like Word and Excel. Yet too few people meet these requirements.

According to Lloyds Bank’s Essential Digital Skills Report 2021, in which more than 4,000 UK adults were surveyed, 64% of the working population currently have “Essential Digital Skills for Work”. This means that around two-thirds of those in employment currently possess five key digital skills they need to thrive in the workplace: communicating, handling information and content, transacting, problem-solving, and being safe and legal online.

This is a longstanding issue – certainly one that predates Covid-19. In fact, the Open University’s 2019 Bridging the Digital Divide found that nine in 10 (88%) UK organisations admitted to facing a shortage of digital skills, which was already having a significant negative impact on productivity, efficiency and competitiveness.

The pandemic has accelerated this trend. On the one hand, it has made businesses more reliant on technology, whether in the delivery of their product or service, or for internal operations. On the other hand, it has prompted a sudden rise in remote working, meaning employees have been missing out on “learning by osmosis” in the office – for many people, their tech and IT training has suffered as a result of not being sat near skilled, experienced colleagues.

Meanwhile, the Learning & Work Institute says that the number of young people taking IT subjects at GCSE has dropped 40% since 2015. Just last month, the UK’s universities and colleges appealed for help in equipping young people with digital skills, admitting they lack the resources, knowledge and infrastructure to tackle the UK-wide tech talent shortage on their own.

To confront the problem, a collaborative approach will be required that spans both the public and private sectors and engages both employers and educators.

So, what action can, or should, be taken?

Government action

The UK government has identified the digital skills gap as a pertinent issue that it must address. And action has been taken in the past two years that, in the longer-term, could help to plug the shortage.

During the last Queen’s Speech, the government revealed that it would introduce a post-Covid skills overhaul. Key to this new initiative is the Lifetime Skills Guarantee, which will give every adult access to a flexible loan for higher-level education and training useable at any point in their lives.

In the recent Autumn Budget, the chancellor outlined a further £3bn investment to fuel the “skills revolution”. This includes funding for bootcamps, apprenticeships, traineeships and expanding free education for young people and those looking to upskill.

Businesses, though, will be aware that they cannot be passive observers in this matter, particularly those in the technology sector. State investment will have a role to play in ensuring more people are able to access the necessary education, training and support to develop digital skills. However, tech SMEs must forge their own plans to overcome the skills gap that could – if it hasn’t already – hinder their growth ambitions.

Here are some options available to them.

Hiring talent

As evidenced, finding talented professionals that can help a tech SME to grow is a challenge in the current climate. Naturally, with the imbalance between supply and demand when it comes to highly skilled tech roles, employers must carefully consider how they recruit, particularly from a financial perspective.

Salaries across the technology industry increased by 12% on average in 2020, outstripping average pay rises of 5%, according to one study. More broadly, a recent Lloyds Bank study found that workers with digital skills are paid on average £12,500 more per year than those without.

Fundamentally, tech SMEs will need to pay careful attention to their financial plans, ensuring the current uptick in salary expectation for those working in the tech sector – or with digital skills – is factored into their forecasts and growth model.

Salaries aside, tech SMEs must also consider how to attract and retain the best employees. The pandemic is said to have triggered the so-called “Great Resignation”; a survey of 6,000 UK workers by Randstad UK in October this year found that 24% were actively planning to change employers in the next six months.

“The pandemic has changed how some people think about life, work, and what they want out of both,” commented the firm’s CEO, Victoria Short.

Technology businesses must focus on policies that will engage employees as both sides adapt to the new normal. Flexibility in working arrangements, investment into professional development, a culture that encourages a healthy work-life balance – these are keen priorities for many employees and must be integral to the way tech companies hire and support staff.

Mentorship and training

A key part of addressing the digital skills gap will come from upskilling new and existing employees. If the right practices and support structures are in place, then a technology business can hire new people confident that it can resolve any unmet requirements within a role. Mentorship and training programmes are good examples of how to achieve this.

However, with employees typically spending less time in an office, this has now become more complicated for businesses. They must, then, adapt their practices for a hybrid or remote working setup.

Weekly workshops, seminars or training sessions in which either a senior team member or external consultant can teach employees digital skills is one such option. These can be executed on days when staff do commute to an office, or carried out via video calls.

Arranging mentors for less experienced staff is another way of improving digital skills and ensuring improvement over time. Similarly, investing in professional development courses – run by industry bodies, universities or other tech providers, for instance – can help upskill staff and tackle a digital skills shortage within the business.

By building programmes for new recruits or existing team members, businesses can tailor the digital skills training to their exact needs – employees can be taught the most relevant digital skills for their particular role, or for the business as a whole. If tech SMEs cannot find the right people with all the required skills, they should be open to hiring people with the core characteristics or experience they desire, and then deliver their own digital skills training to them.


Apprenticeships also have an integral role to play in helping tech SMEs to identify and train new members of staff, particularly younger people and those who have just left secondary school, equipping them with the digital skills they need to excel within the business. Further, apprenticeships can also provide a valuable means of upskilling existing employees and building greater loyalty within a workforce.

An apprentice can be anyone aged 16 or over and not in full-time education. As such, apprenticeship schemes are primarily designed for young people that look to gain skills and experience in a particular industry or type of job; however, they can equally be used by professionals to retrain or upskill.

An apprenticeship scheme will last a finite time – it can take anything from one to five years to complete an apprenticeship, depending on the organisation running it and the nature of the scheme, which can range from an A-level equivalent right through to a Masters degree. Crucially, it is a paid role, funded by the employer and UK Government, which will provide an individual with the skills and knowledge needed for their chosen career. It typically combines practical on the job training with mentoring and studying, including paid time off to study, enabling the apprentice to work towards a formal qualification.

An apprenticeship scheme, then, can be a mutually beneficial option for both those looking to gain a footing within the tech sector, as well as for employers, to ensure a constant flow of well-trained potential team members who have the precise skills and experience for the business.

How can Lloyds Bank help?

Lloyds Bank has established a number of its own means to assist in the challenges presented by the digital skills gap. Its Digital Academy, for instance, provides an online learning hub to enable businesses and their employees to learn new digital skills and improve their use of technology.

Lessons are available on developing effective digital marketing and social media; understanding customers through data analytics and market research; designing and improving websites; managing finances digitally; protecting a business from cyber threats; and working collaboratively and productively in a digital-first environment.

Lloyds Bank’s relationship managers are experienced in the tech sector and are keen to support further growth of this vibrant industry. Please get in touch today to discuss how we might help your business.

Darren Cable is the area director technology, media and creative at Lloyds Bank Commercial Banking. 

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For more information about how Lloyds Bank supports UK tech businesses, click here.