The Digital Powerhouse report, commissioned by Tech North, found that the digital sector is fuelling economic growth in the North.
Digital jobs in the region are increasing at 10 times the rate of jobs in non-digital sectors, and the productivity of digital workers is 53 per cent higher than that of non-digital workers. This has fed into higher earnings, with digital workers in the North enjoying a 60 per cent wage premium over their counterparts in the rest of the economy.
The report reveals that Northern cities are making particular headway in several subsectors of the digital economy. HealthTech has become a strong suit for Leeds, while Hull, which is home to the Centre for Digital Innovation co-working space (pictured), is building up its expertise in e-commerce.
Yet the North’s Digital Powerhouse is still some way from fulfilling its potential, says the report, which is published today by the RSA and Impact Hub.
Raising productivity to the national average for tech workers would result in a £5.7bn increase in GVA for the northern economy. And increasing the rate of digital self-employment in line with the national average would result in over 9,700 more tech founders.
In a bid to strengthen the North’s digital economy, the government and tech advocates have focused their efforts on improving talent, infrastructure, finance and culture.
However, The Digital Powerhouse argues that closer attention should now be paid to the availability of market opportunities.
It says that following successful efforts focused on getting tech startups up and running, now is the time to consider how they can subsequently win paying clients and grow.
Industries including retail, logistics and manufacturing constitute lucrative untapped markets for tech firms, as do the health, education and local government sectors.
The Digital Powerhouse suggests that the North’s tech companies can play a vital role in helping the region cope with an oncoming wave of ‘digitisation’.
The report highlights examples of local collaboration, including Keighley-based company Immedicare, which created a telecare service that links care homes in Airedale with clinicians in the nearby hospital.
Benedict Dellot, the report’s author and RSA associate director, said: “For many people, the tech industry conjures up images of billion dollar IPOs, celebrity founders and cult brand followings.
“Our report argues that the North’s tech clusters can pioneer a different way of doing tech. Rather than be isolated and inward-looking, tech businesses should be woven into the fabric of their local communities, supporting them as they seek to navigate their way through a new digital era that will bring tremendous challenges.
“Whether it is an EdTech company working with local schools to bring e-learning into the classroom, or a data analytics company helping manufacturers improve machine efficiency on the factory floor, the scope for win-win collaborations in the North is vast.”
James Bedford at Tech North, which is part of Tech City UK, added: “We hope this report not only reveals opportunities but also inspires tech companies to forge new paths to unlock new marketplaces.”
The Digital Powerhouse recommends introducing ‘tech taster’ vouchers that local SMEs can exchange for tech support.
It also recommends promoting the tech-cooperative model, which would see tech workers supporting one another in times of need and coming together to pitch for higher value public contracts.
How the North’s tech industry is a booming economy - in numbers
The North’s tech businesses produce £9.9bn in Gross Value Added (GVA), amounting to 5.2 per cent of the North’s total economic output.
Over 280,000 tech workers are employed either in tech businesses or traditional industries, the equivalent to one in 20 of the workforce.
Eighteen percent of the UK’s tech workers are based here, and the largest tech cluster outside of London is in Manchester with 51,901 employees.
In Leeds, digital businesses produce £671m in GVA. There are 23,734 tech workers employed in the city.
The industry in Sheffield and Rotherham produces £273m in GVA and employs 14,313 workers, while in Hull, tech businesses produce £189m in GVA and employ 6,070 people.