Tech's job market growing at fastest pace in two years - research

Output growth projections strongest for seven years according to KPMG

The tech sector is set to enjoy its strongest growth projections for nearly seven years, with the job market growing at its fastest pace since 2019.

Tech companies are more optimistic about near-term growth than any time since the second quarter of 2014, according to KPMG's quarterly index of UK tech sector performance.

The report indicates that the industry remains in "expansion mode" despite the COVID-19 pandemic, with the sector set to see the fastest rise in employment since Q2 2019..

But overall business activity fell in Q1 according to KPMG, with a third national lockdown combined with Brexit disruption causing a "substantial" drop in business activity during January despite recovery growth in February and March.

New order intakes saw a "slight reduction" due to stricter government stringency measures and disruption to clients' business operations which included the effect of Brexit uncertainty on European clients.

But orders recovered in March, with the vaccine rollout and roadmap for re-opening the economy providing businesses with an optimistic outlook for the future despite inflationary pressures also rising. A sharp increase in tech sector input prices for nearly four years recorded in Q1 resulted in an increase in the prices tech companies are charging.

"The move towards new remote and hybrid working arrangements, new spending priorities for businesses around IT infrastructure, automation and the huge shift to online retail are likely to provide a long-term boost to sales and investment in the tech sector," said KPMG's chair Bina Mehta.

"With the UK now in phase two of the government's roadmap to recovery and businesses starting to adjust to regulatory changes and supply chain issues post Brexit, the tech sector is fast-tracking plans to get back to growth.

"An acceleration in jobs growth to its fastest for almost two years provides a clear signal that tech companies are confident about future workloads and expect to receive a boost from improving UK economic prospects."

KPMG also found that the tech job market is now growing at its fastest pace since Q2 2019.

At 77.3 in Q1, the index measuring growth expectations rose from 74.7 in Q4 while the index measuring UK tech employment rose from 51.5 in Q4 2020 to 51.8 in Q1.

Optimism was stronger than in all other parts of the UK private sector, except for hotels and restaurants, with businesses hopeful of rapid economic growth as the UK starts on the road to recovery.