The report by technology analyst Innovation Observatory highlights the region’s growing reputation as a digital hotspot, with the local digital economy growing by 5.5 per cent in 2014, compared to growth in the total UK economy of 2.6 per cent.
It found that companies that are more active in the digital economy have grown faster than the average, and expect to continue growing faster.
The report, commissioned by communications provider KC, also found smaller companies have a higher percentage of staff working mostly on digital economy activities.
Gary Young, managing director at KC and chair of the Humber Local Enterprise Partnership (LEP) digital sector group, said the research underlined the credentials and advantages of the region as a digital centre of excellence.
He added: “Digital is a major opportunity for the region as a whole and for businesses across all sectors within it.”
The digital economy accounts for 24 per cent, £6.93bn per annum, of the total local economy and 22 per cent – 57,000 people – of total employment in the region.
The research defined organisations as contributing to the digital economy if they use the internet and/or connected technologies to interact or trade with consumers or businesses. It then measured the proportion of activity within organisations that could be defined as digital. Researchers surveyed 271 local organisations of various different sizes and sectors in Hull and East Yorkshire.
Growth in the region’s digital economy has been underpinned by good connectivity, with respondents of the survey describing fast broadband, such as KC’s Lightstream fibre broadband network, as “critical”.
Jonathan Leafe, managing director of Hull-based marketing agency Strawberry, said digital activity within his business had doubled every year for the past ten years and now accounted for up to 80 per cent of its output. Over the past year Strawberry has also moved 95 per cent of its business systems into the cloud.
Richard Tuplin, sales and operations director of consultancy insurance business Jelf Insurance Partnership, said the business had “moved rapidly into the digital age”. Changes that have contributed to the company’s dynamic growth over the past five years.
Mr Leafe said: “Fundamentally every business is a digital business or will have to be a digital business. If they aren’t, they won’t stay in business.
“The companies that have excellent infrastructure that just works, that just happens, that always connects, all the time, will be the winners.”
Earlier this year Tech City UK’s Tech Nation report featured Hull, East Riding and Northern Lincolnshire as one of the top 16 UK digital clusters.
Hull has also joined other Northern cities to form the TechNorth alliance to support significant public and private sector investment in digital businesses.
Despite the growth in the digital economy the report by Innovation Observatory identifies barriers that must be overcome if further growth is to be driven in the sector.
The report found that not everyone was happy with the extent of the availability of fibreoptic broadband and view the lack of access as a real barrier.
Gary Young said: “The importance of fast, reliable connectivity to businesses has been highlighted by the demand we have seen for our Lightstream fibre broadband service since we started deploying it three years ago.
“On the back of this demand, we took the decision earlier this year to double the rate of our roll-out over the next two years. During that period we’ll make the service available to a further 60,0000 homes and businesses in Hull and East Yorkshire.”
Another barrier to growth identified by the report is a skills deficit, with some employers saying it was increasingly difficult to find the right people.
There are also concerns about a brain drain, the lack of grassroots nurturing of the skills base, and a lack of expertise and opportunities for those that do emerge from local education with the appropriate skills. Mr Young said: “It’s important that decision-makers focus on these issues to ensure the region’s digital potential is fully developed.”
Superfast broadband key factor in enabling technology growth
The wider digital economy in Hull and East Yorkshire accounts for £6.93bn per annum, 24 per cent of the total local economy.
It employs 57,600 people, 22 per cent of total employment locally.
The region’s wider digital economy grew by 5.5 per cent in 2014, compared to growth in the total UK economy of 2.6 per cent.
Gary Young, managing director at KC, said: “This research shows for the first time the huge impact of digital activity on the local economy.”
A key factor in the growth of the region’s digital economy was superfast broadband.
Survey respondents described superfast broadband as “absolutely integral” and a “massive enabler”. Another said that superfast broadband was “absolutely key foundation on which the whole digital economy proposition depends”.