AI to underpin Scottish tech sector growth plans, survey reveals

The Scottish tech sector remains optimistic in the face of financial struggles, a new survey has revealed.

Research carried out by ScotlandIS has shown that around three quarters of tech firms are optimistic about the coming year, with AI and machine learning (ML) expected to be the biggest areas of growth.

Almost 70 per cent have identified AI and ML as critical growth opportunities, a rise of around 25 per cent in two years. However, the survey indicated there is still some apprehension about the potential of the cutting-edge technology, with 14 per cent admitting they have either yet to begin exploring AI tools or have no plans to do so.

Karen Meechan, chief executive at ScotlandIS said: “There’s a lot to be excited about in the Scottish tech sector right now. For example, the UK Government’s increased focus on AI has driven huge growth for our industry in that area. This is reflected by some encouraging responses to our survey and it's great to see a strong sense of optimism continue as we progress further into 2025.

Earlier this year, Prime Minister Keir Starmer described AI as “the defining opportunity of our generation”, placing it at the heart of the UK Government’s plan for public sector reform and economic reform. Similarly, north of the border, First Minister John Swinney has also turned to AI to improve public services, with innovation expected to drive his plans to build an NHS fit for the future.

Meechan continued: “With the ongoing geopolitical and economic challenges, the fact we’ve seen some slight softening when compared directly with last year’s results is hardly surprising. Seeing the Scottish tech sector remain so positive, even in the middle of a very tough climate for businesses, is testament to how resilient our industry really is.”

However, optimism levels were five per cent lower compared to last year. Skills shortages and financial difficulties are top issues respondents identified as holding companies back.

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Financial shortcomings were a top concern for smaller business specifically, with 16 per cent indicating cash flow was substantially more difficult in 2024, a figure four times higher than the year prior. Around a quarter are also expecting a decrease in sales.

ScotlandIS plans to develop “closer ties” with policymakers and the Scottish Government to address growth and cash flow concerns.

AI and ML talent was a top requirement for 70 per cent of respondents, with more than a quarter being in ‘high’ need of these skills. Companies with a ‘high’ requirement for cybersecurity skills have also increased by six percent compared to last year, and although the demand for software and web development skills has declined, almost two thirds still require them.

To plug the talent gap, companies are preparing for a wave of recruitments, with 68 per cent planning to increase their headcount.  Around two thirds per cent plan to hire recent graduates within the next year and more than 40 per cent are likely to recruit individuals undergoing retraining.

Stephen Coleman, co-founder of CodeBase, said: “The global technology landscape is evolving at an increasingly rapid pace, with advances in AI and a shifting investment landscape creating both challenges and opportunities. As this report shows, these macro movements are being felt in Scotland.

“The issues are complex and multi-faceted but Scotland has assets, talent and infrastructure which can collectively create a strong tech economy.”