I was privileged to attend the recent launch of "Developing The Future", the second annual report concerning the outlook for the UK’s IT economy sponsored by Microsoft and written, this year, with the British Computing Society; City University, London and intellect. Appropriately enough, the event was held in the splendid and hallowed halls of the British Library (which, I’m mildly ashamed to confess, I have never before visited) and in the proximity of the world’s accumulated knowledge, we debated the current state and future of the UK’s Knowledge – or more specifically – Software Economy. It’s a complex issue fogged by misperceptions and not one which favours sound-bite headlines. It is, though, definitely worth the investment in time to read the full report and the speakers’ slides which are all available on the website.
Fairly new to this subject, my summary is this. Firstly, death is not imminent. The UK has a strong, respected and growing Knowledge Economy which, it is anticipated, will soon grow to represent 50% of GDP (currently 40%). This includes the pure software economy as well as every other area of "knowledge" work which software in all its forms necessarily underpins: the creative industries of film, music etc, financial services and so on. In fact, the UK is a world leader in this knowledge economy with a 3.3% trade surplus compared to the US’s 0.5%. Globalisation is not destroying civilisation as we know it – globalisation and free trade are good. However… the Emerging Economies, most notably China and India but also Eastern Europe and the rest of South East Asia, are emerging very quickly. The UK produces around 16,000 IT graduates a year, India produces 450,000 engineering graduates and China, 300,000 science grads (apologies for the slightly incomparable data, but you get the point). And yes, people talk about the fitness of those graduates to be productive employees but those countries recognise that and are investing in that too. Not only that, but Ariadne Capital’s Julie Meyer made a great point: these people sense the opportunity, they can see the light through the window of opportunity and if it means working 18 hours a day for ten years then that is what they will do in order to climb through. Thomas Friedman’s excellent book, The World Is Flat does an excellent job of exploring the implications for the mature, developed economies (not a light read, however). The end of civilisation as we know it is not here… but it may not be far away. The UK needs to ensure it is best placed to capitalise on its expertise, to play to its advantage and ensure it continues to lead as an advanced knowledge economy.
And here’s the rub. The UK is faced with a severe skills gap. According to the report, the nation produces around 16,000 IT graduates per year against a demand of between 156,000 and 179,000. Government, academia and industry all need to work together to fix a complex problem. Computing and IT has an image problem. It is seen as geeky, un-cool and male-dominated (only 17% of IT under-graduates are female). There is a perception that this is a dying industry – everyone was made redundant after the Year 2000 / Dot-com boom/bust and any remaining jobs have all gone to India. Oh, and it’s deeply boring too. The problems start early and multiply through-out education. In primary schools, we do not excite children with IT but teach them (and repeatedly teach them) how to use computer applications which they already know and which are not very cool anyway. Where is the spark to kindle their excitement? In Secondary school, the curriculum is confused, outdated and irrelevant. Roger Distill, who is neither grumpy nor particularly old, is particularly eloquent on this point. Should any student be thick-skinned or far-sighted enough to survive all that, then further education is accused of teaching the wrong things anyway, producing graduates for jobs which truly have gone off-shore (or been replaced by IT) and none of the raw research or business-minded talent which is needed to add real value to employers and the economy at large.
If all of that is not depressing enough, then listen to Julie Meyer and others talking about the challenges of incubating innovation: the need for more a entrepreneurial (less feudal) mind-set; the need to ease the burden of red-tape and taxation on small business and the absence of venture funding at that low, seeding level.
It is a huge challenge, with no easy answers but we have fair warning. The time is now for all the stakeholders to work together to solve these problems. And right, now I’m wondering if Image is the toughest or the easiest of these to resolve. When I think about the hugely successful role-models like Bill Gates, Larry Page & Sergey Brin etc and the truly cool work which is being done, it shouldn’t, really be that hard, should it?