Workforce
Continued layoffs
Technology businesses around the world have continued to announce layoffs through 2024 and the UK is no exception. 74% of businesses we surveyed reported reductions to their workforce of between 5% and 25% over the past 12 months. Only 3% of businesses surveyed did not make any redundancies in the last 12 months, with Tech leaders under continued pressure to show investors they are focusing on cost discipline.
How many of your total staff have been made redundant in the last 12 months?
We have made less than 5% of our staff redundant
We have made 11-15% of our staff redundant
We have made 26-50% of our staff redundant
We have made 5-10% of our staff redundant
We have made 16-25% of our staff redundant
We have made more than 50% of our staff redundant
Quality recruitment remains challenging
Despite the backdrop of mass layoffs within the sector, there is still high demand and intense competition for top talent. 74% of our survey respondents found recruiting new staff somewhat or extremely difficult - the same percentage as last year’s survey results.
How challenging, if at all, has it been for you to recruit new staff for your business over the last 12 months?
Extremely challenging
Somewhat challenging
Not very challenging
Not challenging at all
Not sure
As technology continues to evolve, so too do the skills that technology professionals need to succeed in the workplace. As such, an inevitable skills gap has formed, where the skills job prospects have and the skills employers need are misaligned.
44% wanted to see more initiatives to address the skills gap in the workforce from the Labour government in the autumn budget. The government has responded to this by committing to invest an additional £300m into further education to ensure young people are developing the skills they need to succeed and transforming the Apprenticeship Levy into a Growth and Skills Levy through a £40m investment. However, the budget was lacking in commitments for direct investment into skills directly relevant to tech such as software engineering and other digital skills.
Our survey also highlighted that smaller businesses in particular are seeking support around training and upskilling their workforce. Therefore, it’s encouraging to see the announcement from the autumn budget that the SME Digital Adoption Taskforce will be extended and will produce an interim report in 2025, offering practical steps and recommendations to enhance SME adoption of digital technology.
Using share option schemes to incentivise employees
Share option schemes are an important part of workforce remuneration, with over 66% of our surveyed technology businesses using them to retain their workforce. Technology businesses are renowned for including generous share option awards as part of any employment packages, and we would have expected this percentage to be higher.
These schemes are particularly valuable for providing equity incentives to employees. Although the recent increase in Capital Gains Tax (CGT) rates may reduce the net benefits for employees, the UK’s tax-advantaged share schemes remain highly efficient for both employers and employees. They offer a more favourable tax regime compared to traditional cash remuneration, which is subject to higher income tax rates and National Insurance contributions (NICs).
This efficiency not only makes them a compelling long-term incentive for employees but also ensures that the UK’s rates remain competitive, staying below the headline rates in France, Italy and Germany.
Despite the increases in employers’ NIC and CGT announced at the budget, we still expect equity-based rewards to be an integral part of the landscape for tech businesses for the foreseeable future. All businesses should now take the opportunity to:
Review reward structures to ensure they remain effective and competitive.
Ensure that record-keeping and compliance are well-documented and up-to-date (especially if transaction volumes are increasing in the coming years, which will trigger reviews of underlying records).
Consider the extent to which any UK-centred plans are being offered overseas and to what extent they meet the business objectives in other jurisdictions.
"Tech businesses have been forced to deal with a great deal of change over recent years, and despite changes to underlying tax rates, we can still have confidence that share options and share plans more broadly will continue to have a part to play in the vast majority of cases. In a period where it will be more important than ever for UK businesses to get value for money, share plans represent a cost-effective means of recruiting, retaining and incentivising their teams."
Simon Adams
Employer Solutions Partner
What percentage of your workforce have share options?
0%
1-10%
11-25%
26-50%
Over 50%
Progress made in D&I, but still room for improvement
The technology sector is aware of the challenges of achieving diversity and inclusion (D&I) in its workforce and must tackle these head-on. Our survey shows signs of positivity, with 24% (up from 2% last year) of our respondents having more than 50% of its leadership belonging to an ethnic minority, while 17% (up from 0% last year) have more than 50% of their leadership identifying as female.
Additionally, 83% of businesses stated that they have policies in place to ensure that D&I are being discussed at a senior level, an uptick from 65% from last year’s survey results.
What proportion of your leadership team identifies as belonging to an ethnic minority?
None
25-50%
1-10%
51-75%
11-24%
76-100%
What proportion of your leadership team identifies as female?
None
25-50%
1-10%
51-75%
11-24%
76-100%
While these figures are a step forward, there is still clear room for improvement. Global mobility and skilled immigration could further improve these figures.
Indeed, 23% of our survey respondents stated they would like simplified rules around skilled immigration for technology workers.
Maintaining healthy levels of skilled immigration not only fills critical skill gaps by tapping into a wider talent pool but also injects fresh, diverse ideas. This diversity is vital for a sector that thrives on innovation and constantly pushing the envelope.
These attributes are also particularly beneficial for businesses planning to expand into regions with significant cultural differences from the UK. For instance, 43% of our respondents are planning to expand within Europe, 33% in North America and 28% in South America.
Looking ahead, if technology businesses manage to embrace these opportunities, we can expect D&I trends to not only continue improving but to drive innovation and growth across the sector.
Gavin Phillips
Tax Director and Tech Sector Lead for the Bristol & South West region