UK software R&D boom branded a double-edged sword

More people are now employed in R&D in UK IT sector than in pharmaceuticals, but there are worries this could exacerbate skill shortage

Fresh warnings over a looming UK IT skills shortage have been sounded amid massive growth in R&D staff employed in the software industry.

According to fresh data from the Office for National Statistics, analysed by accounting firm SJD Accountancy, the number of UK-based IT professionals engaged in R&D activity has grown from 24,000 to 27,000 over the past year.

According to SJD, this means the UK software industry now has a larger R&D workforce than any other sector, eclipsing even the once-dominant pharmaceuticals industry, which employs 23,000 people in R&D .

Although it welcomed the growth as a sign that the UK software industry is ramping up investment, SJD sounded a note of caution about the possible impact on the UK's skills shortage.

"With tech businesses ramping up R&D spend and deploying more talent in product development, skills shortages are intensifying," said SJD chief executive Simon Curry.

"Ultimately, a shortage of talent will act as a brake on innovation and with the number of students starting ICT apprenticeships having fallen for the third consecutive year, this is a growing concern."

The demand for software development skills is pushing up pay, SJD said, which in turn is making it tougher for developers to fund innovation.

"Of the £2bn the UK software sector spent on R&D, over £1.2bn was directly related to staffing costs," Curry said. "Skills shortages, which lead to bidding wars for talent, therefore have a direct impact on the ability of the UK software industry to innovate and compete globally."

"The risk for the UK is that valuable R&D activity will increasingly be outsourced to low-cost overseas locations, such as Poland, if the right skills at the right price are not available in this country."