Businesses are being “damaged” by the tech skills shortage, according to a digital business expert.

It is widely agreed that there is a dearth of talent as the majority of businesses gain an online presence.

Retailers are turning to e-commerce while technology is driving growth in a whole host of sectors.

Katie Gallagher, managing director at Manchester Digital - an independent trade association for digital business in the North West which has just launched an apprenticeship scheme - told a BusinessCloud tech education roundtable that many businesses have gone under as a result of the changing landscape.

“We are at a point where we are seeing the skills shortage damage businesses now,” she said.

“Every one of our 500 members is worried – except for those that have gone under in the last month because they can’t compete.”

Martin Ross, employability consultant at the University of Manchester, said that graduates are not equipped by the education system with the necessary tools to immediately make a difference to a business.

“Companies are interested in hiring them and want to take them on as work-ready people who know everything, but it just doesn’t work like that,” he said.

“They need support after they’ve left university to develop their knowledge within a business format.”

Martin Ross, University of Manchester

He added: “There just aren’t enough graduates to go around.”

Manchester’s average advertised digital salary is now £45,205, according to the Tech Nation 2016 report.

An expert in Yorkshire told BusinessCloud recently that challenging workers to show creativity is one way of retaining your tech workforce.

Gallagher said that the lack of talent is seeing salaries spiral.

“We’ve seen 36 per cent wage inflation in last 12 months in dev (developer) salaries,” she said.

“A £10k pay rise to move from one company to another is fairly common. We even heard about a graduate intern earning £60k!”

Ross said a joined-up approach between universities and business is the best way to ensure access to skilled tech workers.

“The companies that want to engage with the universities do it very well – offering work experience opportunities, the placement years, the summer internships.

“And it’s usually those companies that recruit the graduates, because they get in there first.”

Sage CTO Stuart Lynn

In a separate interview, Sage CTO Stuart Lynn told BusinessCloud about the North East accountancy software giant’s approach.

“We’ve got five great universities within a stone’s throw – Northumbria, Newcastle, Sunderland, Teesside, Durham – and all of the sixth-form colleges for people who don’t want to go into pure academia, studying computing and IT-related disciplines,” he said.

“We’re trying to respond to the skills shortage. Apprenticeships are coming back as alternatives to a pure academic route.

“We’ve got choices now for people who are not privileged enough to go to university. And not everyone wants to go to university – but they want to learn, and they want to get into industry.”

He added: “Getting students into businesses gives them the flavour of whether they have made the right choice. How many people, with hindsight, might have chosen a different path?”