While the effects of the pandemic have been difficult for many businesses, tech companies that focus on software have been doing well
Unlike most other sectors, the software industry has weathered the COVID-19 storm reasonably well. While stay-at-home restrictions and business closures have devastated industries that rely on physical services and in-person customers (namely hospitality, arts and tourism), tech businesses appear to be emerging from the crisis relatively unscathed. In fact, with the coronavirus increasing our daily screen time by a third, and speeding up businesses adoption of digital technologies by several years, the events of the pandemic have led some facets of the software industry to perform better than they were previously. But why and how has this been made possible?
As the vaccination programme continues to be rolled out throughout the UK and new post-COVID dawn appears somewhere on the horizon, we believe now is an excellent time to reflect on how the unique circumstances of the past year have contributed to the boom in software development. From the switch to remote working to a greater need for innovative, digitally-driven solutions, in this article, we'll explore five different ways that COVID-19 has accelerated software development, before taking a look at what might be next for the software industry. But first, what is digital transformation, and why are businesses turning to it in their time of need?
COVID-19 and digital transformation
As defined by The Enterprisers Project, digital transformation is "the integration of digital technology into all areas of a business", which fundamentally changes the way businesses operate and deliver value to their customers. The four primary areas of digital transformation include technology, data, process, and organisational change, with each domain relying on the other to help businesses establish themselves within the digital economy.
By scaling back manual practices and recognising the strategic importance of technology, businesses owners are better able to streamline their operations and respond to issues more effectively. While this shift has been taking place since the late 1990s, the events of the coronavirus pandemic have rapidly sped up its adoption, with a survey by Software AG revealing that almost all businesses worldwide have undergone some type of digital transformation project in the last year. Stay-at-home measures have only reinforced the importance of technical infrastructure, and as we move into the future, it's likely that businesses will only depend on these tools more.
So, with digital transformation fundamentally changing the way that business is being done, and providing SMEs with immeasurable opportunities for growth, it's essential to look at what industries it depends upon. Additionally, while many tech-focused industries support the rise of digital mediation, it's safe to say that it couldn't be made possible without one vital activity - software development.
What is software development?
For those who are unfamiliar with the concept, software development refers to a set of computer science activities dedicated to the process of designing, creating, and deploying software. The industry's standard functions include testing and debugging software, developing databases, developing applications, and developing software systems.
From its humble beginnings in the 1960s, software development is now one of the UK's highest-grossing industries. It's estimated to contribute over £17 billion to the national economy annually, and its market revenue has shown continual growth year-on-year since 2016. While no industry is exempt from the impact of Covid-19, the software market showed remarkable resilience, and, in some cases, even growth. So, here are five reasons why the unique circumstances of the pandemic accelerated software development in the UK.
Why has Covid-19 accelerated software development?
1. Increased productivity from remote working
2020 saw most of the UK workforce trade in their morning commutes for a remote, stay-at-home workday, and the software industry was no exception. While the switch to working from home hindered communication and limited collaborative working for many businesses, the change of environment did appear to come with a silver lining - increased productivity.
As data from an ASG Technologies report reveals, more than half of respondents surveyed said that the COVID-19 conditions increased their focus on DevOps initiatives (a set of practices that combine software development and IT operations). In contrast, 52.3% reported that it increased their progress on cloud migration (the process of moving data to a cloud computing environment). These results chime with the broader shift towards increased productivity in other sectors, with general output understood to be up by 47% while CRM activity is up 176% and phone calls by 230%.
But why is this likely to have happened in the IT and software sector? Well, with software development typically being a solo activity, remote working seems to work in line with the practice by preventing coders from wasting too much time in group meetings. Not to mention, when it comes to connecting with the team, the abundance of video conference and social platforms available, such as Slack, Skype, and Telegram, enables the workforce to remain in touch without employees investing too much time on in-person water cooler chit chat. Additionally, with the flexible workday structure of remote work, software developers are able to adjust their schedule to their preferences, so many have reported that they can generate more output in an eight hour day then they could during a longer in-house office stint.
However, the data on increased productivity during COVID-19 does seem to come with some caveats. While general trends show that output was on the up, the ASG Technologies report did reveal that 39% of respondents struggled to manage distractions - while 28% reported that their output slowed down as a result of the lockdown. So, with remote working conditions clearly not benefiting all software employees, a hybrid working model may offer valuable variation and additional support to IT workers as we head into a 'new normal'.
2. Greater demand for services
Despite demand dropping for most key service providers throughout 2020, data and software developer roles have continued to grow. According to a report by Randstad, a recruitment and employment agency, data and software development positions increased by 1% and 8% respectively throughout the first few months of the pandemic. More specifically, data engineering roles have increased by 6% since lockdown restrictions were announced. However, the most notable spike occurred before the news of the coronavirus was commonly known - with demand for IT jobs surging by 93% in January 2020 when compared to December of the previous year.
When asked why this could be possible, Adam Nicoll, marketing director of Randstad UK, said: "The economic slowdown brought about by the pandemic has forced companies to focus on what jobs and skills are truly essential, and how these roles can be carried out safely. It's become clear that technology plays a critical part in ensuring a remote workforce is as efficient and productive as possible."
In addition to the growth in demand for software services in the UK, low-code development technologies are also becoming increasingly sought after. Also known as no-code development technologies, low code enables businesses to customise and deploy services using little to no coding. While low-code technologies are nothing new, increased popularity in automation and the rise of composable businesses has led to it's rising demand, with Gartner's recent forecast estimating that the global low-code market will increase by 23.2% in 2021 from 2020.
So, while there's fear that these easy-to-navigate software platforms may drive down demand for software engineers, it's possible that these technologies actually make the work of traditional developers more valuable. Low-code tools automate some of the developer's work, but this is usually the work that human employees don't want to deal with anyway. Whether it's reading and writing data, sorting out data storage, or dealing with hosting or logins, low-code technologies can carry out the basic legwork while leaving developers to their more specialist activities. So, with demand for low-code tools and traditional software developers increasing over the pandemic, this can only be a good thing for the software industry going forward.
3. Increased digital spending
Unsurprisingly, overall business spending fell in response to the pandemic. However, research indicates that companies have maintained, and in some cases even increased, digital transformation budgets throughout Covid-19.
According to a recent study by the Institute of Financial Studies (IFS), in the past year, 70% of businesses in the UK chose to ramp up or sustain investments in digital technologies, while only 19% planned on cutting tech budgets. The growth in spending appears to accompany fears of economic conditions disrupting the business, with the report also detailing that 52% of companies admitted to increasing digital spends due to the macro-economic disruption caused by COVID-19. Given what a disruptive force the pandemic is proving to be on UK businesses, it's no surprise that companies are harnessing digital systems to work from home, facilitate automation, and virtually assist customers.
As the findings of the IFS study show, investments in digital transformation projects often pay off. Out of the businesses who responded to the survey, most said that past digital transformation projects were successful using a range of different assessment measures. However, those who experienced failures also experienced complete shutdowns of critical business departments, and this fear was shown to potentially impact faith in future projects.
So, for the majority of UK businesses that did choose to invest in digital technologies throughout the past year, which services did they allocate more spending to? According to findings from the International Data Corporation (IDC), 19.9% was spent on fintech projects, while 18.6% of spending was directed to distribution and services, and 14.8% was allocated to digital infrastructure. When it comes to software services, a survey by Statistica details that, while overall software spending was slightly down, 40% of companies planned on increasing their software budget. Additionally, while the overall investment dropped, some software solutions, specifically those which facilitated remote work solutions, witnessed a spending increase.
4. Evolving consumer demands
It's no surprise that Covid-19 radically disrupted consumer behaviour. From ordering groceries online, to relying on eCommerce sites and click-and-collect services, for many people, the days of leisurely in-person browsing are nothing but a distant memory. As a result, businesses in the UK and across the globe were forced to adapt accordingly. If retailers and service providers wanted their products and services to reach their customer base, they were required to produce sleek online platforms or apps that advertised their business and made remote purchasing possible.
The same logic applies to manufacturers and agricultural companies. With supply chains suffering from continual disruptions, especially during the first few months of the pandemic, useful apps and digital services were needed to make supply chains more transparent while facilitating b2b communication between suppliers and sellers. Furthermore, as businesses prepare to reopen, retailers are relying on technology that supports no-contact shopping and social distancing measures to help customers feel more at ease.
Fortunately, as consumers and manufacturers became increasingly reliant on technology throughout the pandemic, new opportunities for software developers emerged. To respond to these demands, software experts delivered quick and efficient solutions to help businesses adapt to the challenges posed by the pandemic. This was evidenced in a survey by the Accelerated Strategy Group (ACG) on the impact of COVID-19 on software teams, which revealed that, in the US, 60% of the businesses questioned relied on digital technologies to create COVID-secure contactless services.
On this side of the pond, the same appears to be true. According to Computer Weekly, before the coronavirus, a surprisingly low amount of businesses had the necessary technology to deal with the challenging circumstances of the pandemic. Therefore, 2020 was a busy year for software developers who were able to develop eCommerce platforms, logistical technology for suppliers, and no-touch solutions for retailers.
A prominent example of this technology was the 'Lush Lens' app, which was developed for the popular British skincare retailer. The app allows shoppers to scan products inside the store to glean further information and the price, without having to pick the product up. Additionally, the video-based technology supplier Go Instore, which brings the shopping experience to customers digitally, saw an 800% growth in demand since the beginning of lockdown, with leading retailers like Currys PC World and Ernest Jones using the software to engage with online shoppers.
So, with these digital platforms proving to be successful in the UK's retail and manufacturing industries, as businesses in the UK eventually begin opening up again, it's likely that software solutions will be at the forefront of many companies' lockdown exit plan.
5. Tech-led healthcare solutions
Another unexpected consequence of the COVID-19 pandemic was the increased role of digital technologies in healthcare. From hospitals harnessing software to provide patients with contact-free healthcare services to private companies creating AI applications to help relieve some of the healthcare burdens, digital solutions have helped to support the healthcare system in immeasurable ways.
One prominent example of a tech-led healthcare solution is the coronavirus chatbot Corona-Help.uk. The automatic digital platform, designed by the tech giant Amazon, and launched by the UK government, was designed to help users by providing them with answers to their COVID-19 related concerns. The AI platform intends to relieve pressure from the NHS by reducing patient queries and supporting social distancing. According to Dr Amy Molten, director of medicine at AI company Buoy Health, health-oriented chatbots are critical to the advancement of efficient and accurate patient assessments. So, it seems that after the coronavirus is behind us, these technologies will still be used to provide support to patients who don't require in-person healthcare or medical assessments.
In addition to this, the UK has followed countless other countries in developing COVID-19 tracking technology to control the transmission rates of the coronavirus. The government's app, Test and Trace, alerts people about their exposure to people infected with the virus and provides them with a local risk-level alert tool and a function to book a test in their area. Despite its various pitfalls, including erroneous data skewing the amount of daily COVID cases displayed, and Bluetooth bugs leading to inaccurate measurements, the app is a clear example of how cutting edge technology can be used to facilitate healthcare solutions on a national scale.
However, Test and Trace isn't the only digital healthcare platform designed to mitigate the challenges of the coronavirus pandemic. The Covid Symptom Tracker app, developed collaboratively by King's College London, Guy's and St Thomas' hospitals, and healthcare data science company ZOE, has also helped millions of UK citizens stay safe. The software relies on self-reporting to build a nationwide database of COVID symptoms, and Tim Spector, the app's designer, said the purpose of the app was to give more control to the user. When speaking to the Evening Standard, Spector commented, "The feedback I've got is that it changes people's feelings of powerlessness", before adding, "People are upset that if their symptoms don't need them to go to a hospital, they feel nobody's listening to them."
What's next for the software industry?
So, looking to the future, what lasting impact is the coronavirus likely to have on the UK's burgeoning software sector?
With the past year massively changing the way we work, as we return to post-pandemic normality, remote work is likely to remain in place for many companies in the future. According to a Citrix poll of 3,700 IT leaders, nearly three-quarters of IT decision-makers believe that employees will not want to return to the office full time once the pandemic is over. The poll correlates with the results of a study for the International Facility Management Association (IFMA), which revealed that 81% of SMEs expect more than a quarter of employees to work from home after the pandemic is over, especially within the tech industry.
But why do hybrid working models seem to be so popular within the tech sector? Well, since the work carried out by the tech sector is usually able to be carried out remotely, it makes the industry much more suitable for hybrid working than other sectors that require in-person labour. The hybrid model enables software developers to work from home when they're working on solo projects, but it also gives teams opportunities to collaborate, brainstorm, and socialise in larger groups. This balance is vital when it comes to the productivity of a workforce, as well as improving mental health and wellbeing within the workforce. So, with a healthy mix of office and home-based work providing businesses with a secret recipe for success, it's no surprise that the practice is set to be adopted so widely within the software and broader tech industry.
As part of the government's March Budget, Chancellor Rishi Sunak has announced a number of measures aimed at supporting the nation's technology sector. Due to the key role the tech industry has played throughout the pandemic, experts believe that the sector will be vital for the country's post-Covid economic recovery. So, by implementing a range of exciting tech-focused initiatives, the government plans to prioritise tech-led growth throughout the whole of the UK.
One measure designed to support the sector is the Help to Grow Scheme. The initiative, which is worth a total of £520 million, will seek to aid SMEs by helping them to implement digital technologies into their business practices. According to the Treasury, the scheme will offer free advice on how technology can boost the SMEs performance through an online platform to help them to save "time, reduce costs, and to reach more customers". Aside from helping small and medium-sized businesses to streamline their operations, the initiative is likely to be a big win for the software industry, as more business owners incorporate software into their business models.
Another government-led measure that is likely to benefit the tech sector is the Future Fund: Breakthrough scheme. The fund, which is worth £375 million, is designed to encourage investment into high-growth innovative firms. For every contribution offered by a private investor, the scheme promises to match this; and while the fund is open to businesses from a range of industries, the Treasury is keen to target startups and scale-ups with a focus on cleantech, life sciences, and quantum technology.
So, with a clear government emphasis on tech-led growth as we enter a post-COVID world, and a shift towards more flexible hybrid working models, the future of software development in the UK is looking bright. However, with all areas of the tech industry being disrupted so heavily by the events of the pandemic, the software sector is still likely to be feeling the repercussions of the coronavirus for some time to come.
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