Technology has always reshaped economies and labour markets.
It was the advent of steam-powered machines and electricity in the 18th and 19th centuries that gave rise to the industrial revolution and the movement of people from agricultural jobs in the countryside to manufacturing jobs in the urban centres.
Back then, change happened over the course of a century.
When it comes to digital technology, the driver of our own industrial revolution, the speed of change is much more arresting.
Jobs, technologies, businesses and industries that only a decade ago were indispensable are now redundant.
Meanwhile, web developers, software engineers, computer scientists and the companies that employ them are writing their own salaries and pricing models because they’re so in demand.
This has become abundantly clear during the coronavirus pandemic, when the divergence between tech and non-tech companies has been profound.
In the first lockdown when most listed companies were suspending dividends and issuing profits warnings, tech companies were making billions off the back of people working from home and spending more time searching and scrolling.
You can see this when you compare the performance of the S&P500 index, which has Amazon, Apple, Alphabet, Facebook et al as constituents, with the FTSE100, which doesn’t.
To be sure, COVID-19 has accelerated the bifurcation between tech and the rest, but this trend goes back further than 2020.
In 2019, tech sector GVA grew nearly six times faster than the UK economy as a whole.
The UK is well positioned overall to benefit from the digital technology revolution, already boasting a diverse and advanced sector that is beginning to scale globally.
In fact, Britain was behind only the US and China in 2019 for tech investment, with a record £10.1 billion invested over the year.
The 2020 Tech Nation ‘UK tech for a changing world’ report found that the UK has 95 tech companies valued at between $250 and $800 million and 77 boasting unicorn status – the term for a privately held start-up valued at over $1 billion.
British unicorns are now greater in number than anywhere else in Europe and once again, behind only the US and China globally.
What does all of this mean for the North East?
Well, the regional tech sector already has some major assets but the key watchword here is potential.
North East tech companies attracted over £100 million in investment in 2019, with £22 million invested in emerging tech (2015-2019) and £896,000 invested in AI (2015-2019).
The performance was understandably not as strong in 2020 due to COVID-19, but the region still brought in just over £70 million over the year.
More promisingly, the number of pre-seed and seed investment rounds increased from 25 in 2019, to 36 in 2020 – a 44 per cent increase.
Companies like Sage, Partnerize, tombola, NBS, Annimersion, Zerolight, Hive HR, Atlas Cloud, Atom Bank and Visualsoft demonstrate that it is possible to grow a thriving tech business in the region.
The success of FTSE100-listed multi-billion pound Sage in particular shows just how high North East tech can reach.
But what’s generating the most excitement is the growing number of innovative local start-ups bringing new technology-driven products and services to market.
The likes of Bottlepay, Caspian, Kani Payments, honcho, paid, SoPost, Wordnerds, Bubo.AI, Kromek and Intelligence Fusion all have enormous growth potential, and these are just a fraction of the total number of tech start-ups in the region.
The big question now, is how the North East goes from tech promise to tech superpower.
We know that the potential is there, but how do we ensure that it is maximised and not squandered?
Compared to London, the South East and the North West, the North East as it stands is only attracting a fraction of the total tech investment coming into the UK year-on-year.
How are we going to change that?
This is the question North East Times will be asking in a new special report titled ‘Joining the tech revolution’.
We’ll be asking the region’s businesses, entrepreneurs, support organisations and academic institutions what their plans are for growing the North East tech sector and making it stand out on the national and international stage.
The North East led the first industrial revolution, developing some of the pivotal technologies that made it possible.
But now, 150 years later, the opportunity to reclaim that proud history for digital technology is one that it will take all of our collective efforts to grasp.