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THE DIGITAL SECTOR IN GREATER MANCHESTER: SECTOR PROFILE

NOVEMBER 2013

1 INTRODUCTIONThe UK’s digital content and Information Communication Technology (ICT) sector has a strong reputation for innovative technology and design. This is backed by strong research and science capability that ensures UK companies stay at the front of this highly versatile sector, contributing to over 7% of UK economic output. ICT is also at the heart of most modern products and processes and is often a driver of new innovation.1

For the purpose of this report, sectors included in the definition of the digital and ICT sector includes the following SIC codes:

Digital content: Printing of newspapers Pre-press & pre-media services Reproduction of recorded media Manufacture of computers & peripheral equipment Publishing of books, newspapers, journals & periodicals, and other publishing

activities Publishing of computer games and other software Motion picture, video & television programme production activities, post-

production activities, and distribution activities Motion picture projection activities Sound recording and music publishing activities Radio and television programming and broadcasting activities Advertising agencies Media representation Specialised design activities Photographic activities Motion picture, television and other theatrical casting

Information Communication Technology (ICT): Wired telecommunications activities Wireless telecommunications activities Satellite telecommunications activities Other telecommunications activities Computer programming activities Computer consultancy activities Computer facilities management activities Other information technology and computer service activities Data processing, hosting and related activities Web portals News agency activities Other information service activities

1 Industrial Strategy, BIS 2012

The relocation of the BBC into Greater Manchester and the associated development of MediaCity:UK is not only bringing employees from the sector up from the BBC in London but creating a number of new opportunities for Greater Manchester residents, and encouraging other businesses to locate and develop activities across Greater Manchester. The Sharp Project and its further developments are creating an additional hub of activity that is generating further growth and employment. This activity is additional to established centres of activity in Manchester city centre, such as the Northern Quarter. As a result of these and other developments Greater Manchester has developed as the UK’s biggest centre for the ICT and Digital industries outside the Greater Southeast.

2 EMPLOYMENT STRUCTURE & BUSINESS BASE IN THE DIGITAL AND ICT SECTOR

Digital Content & ICT industries account for 45,800 jobs in Greater Manchester (4% total Greater Manchester employment), and generate around £2bn p.a. of economic output (again, 4% of total Greater Manchester economic output).

Key sub-sectors of employmentThe Digital and ICT sector is diverse, with business and employees within the sector undertaking a vast range of activities.

Within the ICT sub-sector, computer programming, consultancy & related activities, account for over half of employment. Activities related to telecommunications are the next biggest employer.

The digital content sector is characterised by a larger number of activities, such as printing, publishing, music, motion picture, photography and television as well as other media and digital activities. This diversity is also reflected in the employment split across these sub-sectors, though advertising agencies employ over a third (35%) of those within the digital content industry. This is followed by film & TV activities, which employ around 2,700 individuals across Greater Manchester.

Figure 1 Employment in the ICT sector in Greater Manchester, 2011

17,36011,790

2,130 590

Computer programming, consultancy & related activities

Telecommunications

Information service activities

Manufacture of computers & peripheral equipment

Source: Business Register & Employment Survey, 2012

Figure 2 Employment in top 10 Digital Content subsectors in Greater Manchester, 2011

4,710

2,680

1,250

900

900

840

740

510460 320

Advertising agencies

Motion picture, video & TV programme production, post-production, distribution & projection activitiesTV programming & broadcasting activities

Pre-press & pre-media services

Specialised design activities

Publishing of newspapers, books, journals & periodicals

Media representation

Radio broadcasting

Photographic activities

Other publishing


Geographic distributionThe City of Manchester acts as the primary digital content & ICT hub for Greater Manchester – accounting for a third (14,840 individuals) of Greater Manchester’s employment in the sector. Trafford, Stockport, and Salford also have large concentrations of employment in the sector (6,830, 6,250, and 5,700 respectively). Even accounting for the fact that Manchester accounts for more employees than all other localities, Greater Manchester’s digital industries are especially concentrated within the city.

Clusters of sector employment include Manchester city centre and Salford Quays. Trafford Park, the area around the Airport in the south of Manchester, and Bury also feature strongly, whilst there are also notable concentrations of employment across Greater Manchester’s main town centres, and in areas such as Middlebrook in Bolton and Kingsway in Rochdale, highlighting the spread of the sector across the whole conurbation.

Table 1 Employment in the Digital Content & ICT sector across Greater Manchester, NW, & GB, 2011

LOCAL AUTHORITY No Employees% of

Greater Manchester

Manchester 14,840 32.4%Trafford 6,830 14.9%Stockport 6,250 13.7%Salford 5,701 12.5%Bury 2,885 6.3%Bolton 2,630 5.7%Rochdale 2,090 4.6%Wigan 1,620 3.5%Oldham 1,580 3.5%Tameside 1,350 2.9%Greater Manchester 45,776 100%NW 102,690 -GB 1,213,670 -


Figure 3 Spread of employment in digital content & ICT sector across Greater Manchester, 2011


Table 2 shows the distribution of employment in these sub-sectors across all local authorities within Greater Manchester. Manchester district has the biggest concentration of employment in seven of the ten sectors. However, Stockport has the largest employee base in computer programming, Bury in wireless telecommunications activities, Trafford in data processing, hosting and related activities, and Salford, unsurprisingly given MediaCityUK, in television programming and broadcasting.

Table 2 Employment in top 10 digital content & ICT subsectors across Greater Manchester districts, 2011

Top 10 subsectors Bolton Bury Manchester Oldham Rochdale Salford Stockport Tameside Trafford WiganGreater Manchester Total

Computer consultancy activities426 434 3,177 309 212 732 1,176 240 1,941 377 9,024

Other telecommunications activities462 501 3,402 266 269 1,715 801 396 718 331 8,861

Advertising agencies62 146 1,973 59 660 389 366 111 882 62 4,710

Computer programming activities327 134 1,163 166 38 167 1,314 83 802 196 4,390

Other information technology and computer service activities 545 171 1,221 185 214 472 477 136 299 206 3,926

Wireless telecommunications activities33 1,155 62 4 411 81 20 8 41 20 1,835

Motion picture, video and television programme production 16 18 1,429 8 6 62 63 9 84 9 1,704

Data processing, hosting and related activities91 30 185 22 5 44 281 12 939 6 1,615

Television programming and broadcasting activities 8 - 170 - 8 975 39 4 51 - 1,255

Specialised design activities57 36 220 34 26 128 166 68 96 67 898


Business BaseThe most up-to-date data obtained from Companies House and sourced from Bureau van Dijk’s FAME database gives a total of 7,377 businesses in the Digital Content & ICT sector in Greater Manchester. Similar to the distribution of employment, Manchester, Stockport, Trafford, and Salford have the largest numbers of firms in the sector located within their boundaries.

Table 3 Number of businesses in the digital content and ICT sector in each Greater Manchester district, 2012

LOCAL AUTHORITY No. of businesses

% of Greater

Manchester

Manchester 1,942 26Stockport 1,187 16Trafford 1,055 14Salford 620 8Bolton 605 8Bury 494 7Wigan 493 7Tameside 359 5Oldham 319 4Rochdale 303 4Total Greater Manchester 7,377

Source: FAME, 2012

GVA & Employment forecastGrowth forecasts for the (slightly more broadly defined) Creative & Digital industries in Greater Manchester are drawn from the Greater Manchester Forecasting Model (GMFM) produced by Oxford Economics. While the definition of this sector from the model employed varies slightly from the one used above, it gives an overview of the sector’s overall growth potential over the coming decade.

GMFM forecasts that in GVA terms the sector will grow by over 70% by 2025; the wider Greater Manchester economy is forecast to grow its economic output by only half as much. Employment is forecast to grow more modestly (though still at a healthy 16%) during the same period, implying a strong increase in worker productivity and associated need for more highly skilled workers.

3 SUPPLY & PROVISION OF DIGITAL AND ICT SKILLS

This section reviews data on the number of apprentices, further education and higher education students who live in Greater Manchester and who are studying Digital and ICT sector related courses. It aims to give an indication of the potential supply of skilled labour to the sector. However, when reviewing the following data the following caveats should be noted:

1. A person’s subject of study is not necessarily an indicator of their future employment occupation;

2. Many Greater Manchester learners are studying for academic qualifications (e.g. history, geography) which could make them suitable for employment in a range of sectors – these learners are not included in the analysis;

3. Across the relevant datasets up to 10% of learners have their study subject listed as unknown – these learners are not included in the analysis;

4. The latest available data on 16-19 year old and Higher Education students is less current (2011/12 vs. 2012/13) than the latest available data on 19+ and apprenticeship students; and

5. There is no official line on which subjects of study are directly relevant to which sectors of the economy, therefore New Economy has had to make a judgment on which subjects and apprenticeship frameworks map to which sectors – detail on this mapping exercise is provided in an appendix to this report.

Thus the figures presented are indicative of the pool of labour from which the sector could recruit.

16–19: Further education (FE) and school sixth formsAnalysis of Education Funding Agency (EFA) supported provision (i.e. for Greater Manchester residents aged under 19) shows that in 2011/12 the EFA funded just over 9,800 ICT and digital industries related course starts. This represents 5% of all EFA-funded starts in that year.

Since 2009 the number of EFA-funded ICT and digital industries related course starts has been broadly stable; over the same period the total number of EFA funded Greater Manchester starts across all sectors has risen by 12%.

EFA funded provision in Greater Manchester for the digital content & ICT sector is particularly focused upon Level 3 qualifications for ICT practitioners and in Media & Communications subjects.

A higher proportion of males (64%) have started an EFA-funded Greater Manchester ICT and digital industries related course in 2011/12, compared to 51% of all sector starts.

The five largest EFA-funded providers to the sector by numbers of Greater Manchester starts are:

Salford City College Manchester College Loreto College Bury College; and Cheadle and Marple Sixth Form College

Adult (19+) Skills Funding Agency (SFA) funded provision (excluding apprenticeships)

During the 2012/13 academic year, there was a total of 47,000 starts in SFA-funded digital and creative industries related courses in Greater Manchester (NOTE: this figure is based on a sector subject area definition that includes arts, crafts and creative arts). This represents a decrease of 3% from the 2008/09 academic year. Over the same period the total number of all sector SFA-funded starts in Greater Manchester decreased by 8%.

Starts at Level 3 and above were slightly lower (36%) in 2012/13, compared to 41% across all sectors in Greater Manchester.

Table 4 - Level of study by Greater Manchester residents of SFA funded Digital & Creative courses, 2012/13

Level

Digital and creative

industriesAll sectors

Level 1 & Entry 3% 10%Level 2 19% 20%Level 3 13% 20%Level 4+ 23% 21%Other 42% 29%

Source: SFA, 2012/13

Unlike EFA-funded provision, there doesn’t seem to be a gender imbalance in SFA-funded starts, with 57% being made by females, compared to 53% across all sectors.

The five largest SFA-funded providers to the sector by numbers of Greater Manchester starts are:

Manchester College; Oldham College; Manchester City Council; and Bolton Council.

Apprenticeships

During the 2012/13 academic year, there were 670 starts on digital and creative apprenticeships in Greater Manchester. This represents an increase of 188% from the 2008/09 academic year, compared to a 124% increase across all apprenticeship starts in Greater Manchester.

35% of these apprenticeship starts were at Level 2 (intermediate level). Each year the sector accounts for a large number of Greater Manchester’s Advanced Apprenticeship starts. For instance, in 2012/13 there were over 300 IT, Software, Web & Telecoms Professional advanced apprenticeship starts.

Similarly to EFA-funded provision, there is also a big gender imbalance, with the majority (74%) of relevant apprenticeship starts being made by males, compared to 46% across all sectors in Greater Manchester.

Apprenticeships are mainly started by younger people, with two thirds being under 25 years (66% in 2012/13 - with 39% between 16 and 18 years, and 27% 19 to 24 years). There is also a considerable proportion of 31 to 49 year olds (20%) taking up an apprenticeship – a larger proportion compared to other key sectors of Greater Manchester. This has been a fairly consistent trend in the sector since 2008/09.

The five largest apprenticeship providers to the sector by numbers of Greater Manchester starts are:

Bury College; Economic Solutions; Manchester College; and BT.

Age GroupsApprenticeship starts 2012 / 2013 (total number)

Under 19 262

19-24 181

25-30 57

31-49 131

50-64 39

65+ 0

Total Number 670

Higher Education

Greater Manchester is home to five universities (the University of Manchester, Manchester Metropolitan University, University of Salford, University of Bolton and the Royal Northern College of Music) who collectively have more than 100,000 students and almost 30,000 graduates each year.

Table 4 shows that the four largest HE institutions offer courses related to the digital content & ICT sector, though not all subjects grouped in the categories presented here will be of direct relevance. However, we can estimate that around 20,000 students were studying digital and creative industries related subjects in Greater Manchester.

Table 5 All HE students of Greater Manchester HE institutions in digital and creative industries related subjects, 2009/10

SUBJECT BOLTON MMU MANCHESTER SALFORDGreater

Manchester TOTAL

% OF TOTAL

Computer science 335 1,400 1,125 965 3,825 16.9%Engineering & technology 1,600 2,855 4,725 1,470 10,650 47.0%

Mass comm. & documentation 100 500 100 860 1,560 6.9%

Creative arts & design 710 2,655 575 2,705 6,645 29.3%

Total 2,745 7,410 6,525 6,000 22,680 100%Source: HESA (2011)

4 SECTOR SKILLS ISSUES

Summary of literatureSkillset, the Sector Skills Council for Creative Media, produced its latest Sector Skills Assessment in January 2011, outlining the crucial issues for the sector. The key skills challenges facing the sector identified include:

The predominance of small and medium businesses, with a large – and growing – number of people in the sector working freelance, make engagement difficult.

While employees and freelancers have high levels of desire for training and education, employers do not currently meet this demand.

Employers report a large number of hard-to-fill vacancies. Sales, marketing, and technical development are particularly difficult areas to fill for companies in this sector.

There is a significant issue with mismatch of applicants’ abilities to the needs of the job. However, improvements in training and education are felt to be helping to rectify this issue.

Innovation is crucial to the industry and new developments in digital technology demands constant redevelopment of business plans and employee skills.

Key skills gaps identified include: multi-skilling, including understanding of different technology platforms; multiplatform skills; management, leadership, business and entrepreneurial skills; IP and monetisation of multiplatform content; broadcast engineering; sales and marketing; and diagonal thinking, meaning the ability to create new, innovative ideas and stories then monetise them using a variety of media on several platforms.

E-Skills, who cover skills issues within the ICT sector, describe the following skills environment as well as the key issues for the digital economy going forward:

Despite the pressure of the recession, businesses are still likely to find a shortage of applicants for positions. Posts involving programming, technical support and technology management roles tend to be the most difficult to fill.

The sector is also suffering from skills gaps among the current workforce as a result of globalisation and convergence.

The main skills gaps are in senior positions and relate to IT programme management, supplier management, and service management and delivery.

Digital content companies have an oversupply of applicants, but a general lack of skills in several crucial areas when recruiting. In particular there is a need for more skills in management and leadership, monetisation of content, production of multiplatform content, broadcast engineering, and visual effects. Multi-skilling is an important aspect for content companies to ensure efficiency and productivity.

There is a perception that the education system is not adequately preparing young people for the digital economy. The number of UK applicants for computing degrees is dropping, while there is a lack of teaching skills and adequate information to allow students to pursue careers in IT. Moreover, there is still a massive gender imbalance, with men making up over 90% of workers in IT.

Digital skills are now important for businesses in all sectors, with exploitation of technology a key aspect in maintaining competitiveness in the face of globalisation. However, smaller companies and older leaders are less likely to recognise the full importance of technology.

In the future, demand for IT skills is likely to see a significant increase across the board, with a 1.2% yearly growth in the number of employees in the sector forecast nationally to 2019. Over half of these professionals are likely to come from other professions, with only a fifth provided by the skills and education system.

Skills shortages are most often reported by firms seeking to recruit software engineers, IT & telecoms management, systems developers or internet professionals, though a larger number of networking vacancies were actually proving difficult to fill due to related skills shortages.

Business skills, higher level technical skills and sector knowledge/experience are often considered lacking amongst applicants.

In the future, strongest growth will be in high-skill areas, particularly software professionals along with ICT managers and IT strategy & planning Professionals.

The changing nature of skills in the UK will continue to be primarily in high-value roles such as project management; systems architecture; business process management; change management; security; risk management; analytics; and web/internet development.

More generally, there will continue to be an increasing need for customer, consumer and business-oriented skills as well as sophisticated technical competencies.

Key findings from the Greater Manchester Business SurveyThe 2012 Greater Manchester Business Survey (GMBS) was developed to deliver a Greater Manchester -wide representative business survey providing data on current and future economic performance and identifying the opportunities and barriers to growth across a range of themes. Ten percent of respondents were businesses operating in the Digital Content & ICT industries as defined in this paper.

Training plansThe GMBS 2012 shows that around 4-in-10 (39%) digital content businesses have a training plan and just under a third (29%) has a training budget. This leaves at least three-fifths of digital content businesses without either a training plan or a training budget. Two-fifths (42%) of businesses had provided no training at all in the last 12 months, whereas nearly half (47%) had provided some form of internal training, and 38% external training in the past 12 months. This is roughly in line with results obtained for all businesses in Greater Manchester.

Proportion of the workforce qualified to degree levelOver a third (36%) of creative/digital businesses had 70%–100% of their staff qualified to degree level, with three-in-ten (28%) having 30%–70% of their staff qualified to degree level, and nearly a fifth (19%) having 10%–30% of staff educated to degree level. Only 15% of digital businesses had no degree-level staff, compared to 38% for all Greater Manchester businesses, highlighting the strong skills levels within the sector.

Employment of apprenticesAround a fifth of digital businesses employ an apprentice. Of all digital businesses, 5% employ an apprentice aged 16–18, 10% employ a 19–24 year old apprentice, and 4% employ an apprentice aged 25+. Over a third said that they were likely to do so in the future (32%, 43% and 40% for 16-19, 19-24, and 25+ apprentices respectively). This, however, leaves two-thirds of sector business that are not likely to employ apprentices.

Recruitment methodsA third of businesses claimed to use recruitment firms and websites (35%) or word of mouth (35%) as their most prominent recruitment method. About a sixth (16%) mentioned Job Centre Plus. Only 4% used educational establishments as a way to recruit staff, which suggests there might be a disconnection between bodies offering qualifications for the sector and the industry itself, which is perhaps surprising given the high levels of graduates within the sector.

Figure 4 Recruitment methods of digital businesses

3%

3%

4%

6%

8%

16%

35%

35%

Online/internet/website

Direct applications

From educational establishments

Place adverts in publications

Other

Job Centre

Word of mouth

Recruitment f irm/websites

Source: Greater Manchester Business Survey, 2012

Current vacancies & recruitment difficulties Around one-in-six (13%) businesses said they currently have vacancies, of which two thirds (61%) were hard-to-fill. Though the base sample that corresponds to businesses with hard-to-fill vacancies is small (21), half of these claimed that the reason for the recruitment difficulties were due low numbers of applicants with the required skills, a third because of a lack of qualifications the company demands, another third because of a lack of relevant work experience, and 6 because of a low number of applicants with the desired attitude, motivation or personality (see Figure 7).

Figure 5 Proportion of digital businesses with vacancies

No87%

Not hard to

fill

Hard to fill

Yes13%


Figure 6 Reasons for hard-to-fill vacancies (number of responses)

1

1

1

1

1

6

7

7

10

Not enough people interested in doing this type of job

Low number of applicants generally

Poor career progression / lack of prospects

Poor working conditions (inc. poor wage/unsociable hours )

Other

Low number of applicants with the required attitude, motivation or personality

Lack of work experience the company demands

Lack of qualifications the company demands

Low number of applicants with the required skills

Base sample: 21Source: Greater Manchester Business Survey, 2012

Expected changes in the structure of the workforce in the next 12 monthsNearly two-fifths (39%) of digital content & ICT businesses claimed they were likely or very likely to recruit additional staff in the next 12 months. However, nearly half (45%) thought they were unlikely or very unlikely to recruit anybody in that period, and around a fifth (16%) showed uncertainty.

Figure 7 Digital businesses likely to recruit additional staff in the next 12 months

1.2%

13.1%

14.7%

16.3%

25.7%

29.0%

Don't know

Likely

Neither likely nor unlikely

Unlikely

Very likely

Very unlikely


Those that claimed their business was likely or very likely to recruit additional staff in the next 12 months were asked within what occupations the recruitment would take place. Almost a quarter (23%) wanted to recruit skilled staff, and 12% needed professional & managerial staff. The rest needed lower skilled staff, with 13% wanting to recruit semiskilled personnel and 9% needing clerical staff.

Figure 8 Occupations most likely to be recruited

0.8%

9.4%

11.8%

12.7%

22.9%

Don't know

Clerical (Administrative and secretarial occupations)

Professional & managerial (Managers, Directors and Senior

Of f icials)

Semi-skilled

Skilled


The majority of digital businesses (71%) said they did not think they were going to lose staff in the next 12 months. However, between 9%–10% said they thought they would lose staff within the professional & managerial group, admin & secretarial and skilled occupations, and 6% thought they would lose semiskilled staff.

Appendix A: Definitions used to produce this report

Tier 2 subject areas Arts, Media and Publishing

Crafts, Creative Arts and Design

ICT for Users

ICT Practitioners

Information and Communication Technology

Apprenticeship Frameworks Communications Technologies (Telecoms) Creative and Digital Media Creative Design Fashion and Textiles IT & Telecoms Professional IT Application Specialist IT Professional IT Services And Development IT User IT, Software, Web & Telecoms Print And Printed Packaging TV Production

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