Scottish tech businesses are planning a major employment drive as increased exports drive sales, according to new research from tech trade body ScotlandIS.

However, Scotland’s skills shortage could threaten the growth of the sector.

ScotlandIS has released its annual Scottish Technology Industry Survey, which reveals a steadying financial position and increasingly international outlook from Scotland’s tech businesses.

Despite the slowdown in the economy, the sector remains optimistic about its future, with 62% of businesses having a positive outlook for 2023 and 67% expecting to increase their sales.

There is, however, an increasing need for skilled personnel.

In the coming year, 83% of companies surveyed expect to increase their headcounts — a 7% increase on last year.

No firms surveyed anticipated cutting jobs, while 63% of the new jobs created are expected to be sourced in Scotland.

The technology sector already employs over 80,000 people in Scotland, and 15,600 new digital technology jobs are created annually.

Scotland’s tech companies report seeing the greatest opportunities for their business over the next 12 months in cyber security (46%), followed by data analytics (45%), and artificial intelligence (43%).

While the top three opportunity areas have remained the same, their weighting has changed — cyber security has risen by over 15% compared to last year, while artificial intelligence has increased marginally (1%) and data analytics has decreased marginally (1%) compared to last year.

“One of the factors driving the jobs boost is demand for services internationally,” said Scotland IS.

“The ScotlandIS survey found that the number of tech companies planning to or already exporting is at its highest level (87%) since the Covid-19 pandemic.

“This reverses a decline in exports from last year. North America and Europe remain the top two export markets for Scotland’s tech businesses outside of the rest of the UK.”

ScotlandIS CEO Karen Meechan said: “The skills shortage has long been a challenge for the Scottish tech sector, but it is now mission critical.

“If we cannot fill vacancies and source talented people, the potential for growth will be stymied.

“The Scottish economy can ill afford to let growth and opportunity slip through its hands, when so many other sectors are struggling.”

According to ScotlandIS, the number of tech companies in Scotland having consolidated their growth has risen sharply.

The proportion of businesses recording turnover over £1 million has increased from 22% in 2022 to 37% in 2023.

Meechan added: “A very positive outcome from this year’s survey is the way in which our tech sector has stabilised.

“Huge change was needed to cope with the ebbs and flows of the pandemic era, and that has now settled into more predictable and sustainable growth.

“Not only are more companies recording seven-figure turnovers, but more and more are also seeking to export their services outside of Scotland. The tech sector needs to export to grow so this is an encouraging sign for the future.”