It is of no surprise that since the beginning of the pandemic, the increase in demand for tech from the UK public sector has soared - as lots of services moved online, there was a greater need for technology and digital systems. This was no different in the public healthcare sector, with many routine health appointments going virtual; procurement spending on IT increased by 55% to £0.8bn in the year from 2019 to 2020 (Tussell, 2022), while in 2022 the UK health software and IT services market was thought to be worth over £2.8bn, a 21% growth (TechMarketView via Health Tech World, 2023). The Department of Health and Social Care (the largest customer for health IT suppliers) alone spent £565m on IT between January 2021 to September 2021. 

Average contract price hasn’t driven this increase - the median contract value has increased slightly over the last 6 years, with a peak in 2020, but fluctuates every year. Instead, the number of IT contracts procured by public sector healthcare bodies is driving the increased demand, having almost tripled since 2019. This could lead to buyers competing for good suppliers, if there is not enough supply to meet the increasing demand. 

So, is there enough supply to meet this increased demand?

There has been a parallel increase in investment in the UK tech industry; the UK is 4th in the world for tech investment at $40.6bn  (£36.4bn), recording its greatest year of investment 2021, and representing an increase of nearly 20x since 2011 (Tech Nation, 2021). The health tech industry is second to only Fintech with regards to the amount of investment in it - this has been steeply increasing since 2017 to over $5bn (£4.5bn) in 2021. 

This is reflected in the increased number of suppliers. In 2021 there were over 3300 suppliers - 94% of which were SMEs - signed up to the Digital Outcomes Specialists 5 framework (Crown Commercial Service, 2021), which is where “public sector organisations [can find] suppliers who can design, build and deliver bespoke digital services using an agile approach” (Gov.UK). This is an increase of over 1000 suppliers who were signed up to DOS 2, and over double the number on DOS 1 (Digital Transform, 2017). So, why are there still not enough suppliers to fulfil demand? 

A lack of digital skills could hamper suppliers’ abilities to deliver 

On the surface, it seems as though supply has increased in parallel to demand. However, digging deeper reveals a skills shortage that could decrease the ability of suppliers to successfully meet demand, and leave buyers competing for good suppliers. Tech job vacancies have hit a 10 year high, with around 870,000 vacancies between January and May 2022, and an increase of 191% from 2020 to 2021 (techmonitor, 2022). 

Moreover, these vacancies are predominantly senior positions - there are 8 senior roles advertised for every ‘no experience’ role (Tech Nation, 2022), and it was suggested that 518,000 individuals would be needed to fill the vacant roles for the top 3 skilled occupational groups in the tech sector by 2022 (UK Tech Competitiveness Study, 2020). This means that suppliers may be stretched, and may not have enough of the right skills to meet the rising demand from public sector healthcare bodies. 

How can we tackle this issue?

Despite there being a huge number of job opportunities in the tech sector, 11.8m people in the UK still lack basic digital skills (FutureDotNow, 2022). Upskilling these individuals will enable us to reduce the shortage of skills in the IT sector and lead to corporate benefits to companies as they see their productivity increase. Cebr (2018) estimates that the financial benefits from upskilling these individuals and filling these vacancies will be £1.5bn by 2028. Providing digital skills and IT training to individuals will also enable them to access more job opportunities, with increased pay. 

Noting how the shortage of those with particular IT skills might impact our clients’ work, at The PSC we have designed a bespoke public sector ‘Digital and User-Centred Projects’ course. Through this training we support our clients to understand the key principles behind digital ways of working, and teach more specialist skills such as user research and prototyping, enabling our clients to more effectively manage and deliver their digital projects. 

Our dedicated, specialist and experienced digital team at The PSC focus on using digital practices to transform organisations for the better. If your organisation would like to increase its digital capabilities, we recommend browsing our digital page and getting in touch with us here.