Scotland’s technology industry has “bounced back” from the Covid-19 pandemic, despite a drop in exports amid geopolitical tensions, according to new research.

In its annual polling of Scottish tech businesses, trade body ScotlandIS found that 72 per cent of companies experienced an increase in sales in 2021 – marking a return to pre-pandemic levels of sales growth reported in 2019, after a significant drop in 2020 (44 per cent). 

Its Scottish Technology Industry Survey also shows that digital firms are expecting to “reap rewards” from growth in data analytics, artificial intelligence, and the Internet of Things, but the largest increase in potential growth opportunities has been seen in cybersecurity. 

A third (31 per cent) of Scotland’s tech businesses are now seeing it as an opportunity in the year to come.

But whilst the sector is on a “positive trajectory”, exports are in decline. Last year saw a four per cent reduction in exports to 56 per cent, and one in five Scottish tech businesses have no plans to export this year.

Of those planning to export, key markets are Europe (68 per cent), rest of the UK (77 per cent) and North America (60 per cent).

It also reports that the skills gap is becoming “increasingly challenging” for industry to manage, with talent continuing to stay in high demand across the sector.

Efforts to support businesses on the talent shortage will continue to be a “priority” for ScotlandIS over the coming months, as it remains one of the top “barriers” – alongside pandemic recovery – to achieving ambitions in the year ahead.

Karen Meechan, chief executive of ScotlandIS, said: “Data gathered from this year’s survey gives clear signals that the tech sector is back in growth mode after weathering initial impacts of the pandemic.

“As it comes to the end of the academic year for many Scottish students, we are pleased to see how many organisations across the sector are planning to recruit graduates, but the year ahead will require continued collaboration across industry, academia, and our education system to build a pipeline of talent within Scotland. We’ll continue to do as much as we can to support that.”

Finance secretary Kate Forbes said: “It is encouraging to see more technology businesses in Scotland reporting increased sales, in line with the return to pre-pandemic retail sales levels more generally.

“We want to establish Scotland as one of Europe’s leading start-up economies – that is why the Scottish Government is committed to the most radical reforms of the Scottish entrepreneurial system since devolution.

“A key ambition in our strategy to transform the economy is to establish Scotland as a world-class entrepreneurial country, founded on a culture that encourages, promotes and celebrates entrepreneurial activity.”

The annual Scottish Technology Industry Survey provides in-depth insight into the sector, tracking key trends and providing projections for the future.  A link to read the full report can be found here.