The audit, tax and consulting firm found 97% of tech businesses had made layoffs in the past year. Yet in spite of this employee-shedding activity, three quarters (75%) have found recruiting new staff challenging.

The information was gathered in an RSM UK survey of 301 technology businesses, with a turnover of over £2m conducted between 13-20 August 2024. Technology businesses included: software and AI businesses operating across a broad range of sectors including IT, telecoms and finance or a mix of sectors.

A freedom of information request to UK Visas & Immigration showed the number of skilled migrants coming to the UK to work in tech fell last year from nearly 54,000 in 2022 to 41,661 in 2023, suggesting businesses increasingly struggle to recruit people with the right skillset to meet business demand.

Ben Bilsland, partner and head of technology sector at RSM UK, said: “The data points to a lack of the right tech skills here in the UK, so businesses may need to cast their net wider to find the right recruits. Despite many mentions of technology in the Chancellor’s Budget speech, there was little concrete support offered for the sector, which urgently needs investment in training home grown tech talent, as well as measures to make the UK more accessible to attract skilled overseas workers.”

Following record growth in 2023, the number of new tech incorporations is now in decline, dropping 11% in Q2 from 13,802 to 12,318, while Q3 data showed a further 8% decline to 11,368.

Bilsland added: “After the pandemic there was a boom in tech sector growth, with many companies recruiting rapidly to cope with a sudden increase in demand. Now we’re seeing declining demand, coupled with rapid tech innovation, which has led to many tech companies finding they have too many people, yet still lack the right skills.”

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