The State of the UK Digital Tech Sector in 2020: Resilience and Striving Towards National Economic Recovery

Jenga topple block stack outside placed on a wooden barrel photograph.

Digital tech companies have historically come out of global recessions generally better off | Nathan Dumlao — Unsplash

The impact of the COVID-19 pandemic on the UK digital tech industry

The pandemic has certainly caused disruption for digital tech scale-ups and the wider tech industry. Many are finding that their sales pipelines have taken a severe blow. Deals that seemed certain to go ahead before the crisis have dried up as customers have become more risk-averse.

Founders have had to adapt to new ways of working with their teams, with some implementing working from home policies for the first time. Thankfully, however, tech hasn’t been impacted as much as other sectors and — by carefully planning their moves in the next three to twelve months — companies in the sector have an opportunity to fully recover and even find new opportunities.

Regional trends across the UK

Digital tech scale-ups across the country are facing similar issues – from hiring and onboarding new workers remotely to having to draw up new investment plans. We are finding that revenue-companies who are (or have been) generating revenue for some time are managing to cope better than those who are not.

Tech ecosystems across the UK have spoken of a desire for increased collaboration. We heard at our recent Tech Nation Talks northeast event that stakeholders, founders and business leaders in our region are making great strides when it comes to coordinating their various activities, which is really promising.

Digital tech resilience: the entrepreneurial spirit

Nobody knows how to adapt to challenging circumstances quite like an entrepreneur. They know what they are signing up for – that’s why they aren’t doing a so-called ‘normal’ job – and they inevitably develop a certain resilience that is called upon on a daily basis.

Digital tech companies have a knack for pivoting their product or service to better suit changing marketing conditions, and we are seeing this in action right now. For example Wordnerds, the northeast-based artificial intelligence specialist company, has pivoted to offer coronavirus-specific services ever since the pandemic hit.

Digital tech challenges on the road to recovery

There are all sorts of challenges that businesses need to overcome in order to recover. Sales pipelines will need to be replenished for a start. This will involve businesses reevaluating their customers from pre-pandemic and assessing whether they will be the same customers once we emerge out of the other side. Naturally, there is a chance that their requirements will have changed. Business-to-business companies face a particular challenge if their customers – those in the travel and leisure sector, for example – are no longer operating.

Fundraising is always a challenge for digital tech companies, and that will certainly remain. On the other hand, there is an opportunity for companies to do business further afield; through video conferencing solutions, companies can quickly call on one another at opposite ends of the country or even internationally. One founder noted at our recent Tech Nation Talks event that they think internationally expanding will be “massively easier” for them post-crisis.



Person holding a white iPhone 5S/SE with blank screen next to a frothy coffee on white table birds eye photograph

We now do everything online and remotely: from work to groceries and even opening bank accounts | Marianne Krohn — Unsplash

Looking to the positive: seeing opportunity amid the crisis

The sudden and, arguably, fundamental shift towards online working and the adoption of digital technologies such as video conferencing presents a significant opportunity for the digital tech sector. Digital tech companies have suddenly found themselves able to hire from much further afield than their local region, which allows them to potentially hire candidates that better possess their required skill set.

A founder from further afield who wasn’t previously considering working for a northeast digital tech company, for example, may be tempted to do so if it means they only have to travel into the office once a week. Companies are also using video conferencing technologies to interview and eventually hire new candidates.

There is also the chance that video technology could redress the balance when it comes to companies in the northeast and other UK regional tech clusters attracting investment from venture capitalists based in financial hubs including London. Ultimately, there will no longer be the need to make the 200-mile journey south-to-north when a simple video call will suffice.



Digital tech to aid UK economic recovery efforts

Digital tech companies will play a massive role in the broader efforts to heal national economic woes. The crisis has seen many people across the world discover new digital technologies for the first time. We now do everything online: from opening new bank accounts to checking out entertainment online, and from ordering groceries and clothes to paying for our utilities through smartphone apps.

If we are optimistic (which we at Tech Nation definitely are), you could even compare the pandemic to the global financial crisis of 2008, when US digital tech giants such as Facebook, Amazon, Netflix, and Google emerged stronger than ever before due to the demand for digital tech services. I am obviously hopeful that northeast customers will welcome this change with open arms and seize the opportunity it presents.



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