Edinburgh’s status as a European capital for the data and AI sectors is on the rise, but stiff competition from overseas hubs like Stockholm, Amsterdam, and Dublin requires a refreshed national response, according to new research from Accenture.

Driving this ambition to become a data capital for Europe was the Edinburgh and South-East City Region Deal, which has pulled significant government funding to bolster innovation and infrastructure.

To achieve their technology goals, in 2018, the UK and Scottish governments announced collaboration with six local authorities and the city region’s universities, colleges, and businesses and third sector, including a £661m Data-Driven Innovation (DDI) Programme to harness the area’s strengths in digital technology and enhance its data capabilities.

The data from Accenture shows that progress is well underway, with Edinburgh consistently rating highly on its data and AI capability, landing within the top five to ten cities in Europe, according to a range of criteria. The report looked at depth at the five pillars Accenture says are ‘essential’ in being a ‘data capital: business demand for data expertise, the economic environment, the talent pool, innovation, and clarity of purpose.

However, in the absence of a single, consistent set of international benchmarks, a definitive pathway toward becoming the ‘leading’ city is hard to define.

In Scotland, the research showed definite progress and potential. The digital technology sector is vast, with over 11,000 registered businesses falling under this category, making up 6.3% of the Scottish business base.

Furthermore, over 87,000 people are employed in the digital tech sector, making up 4.3% of the total private workforce in Scotland.

As well, this sector contributed 5.9bn to the Scottish economy in 2022, and saw a Gross Value Added (GVA) growth of 108% in ten years.

While Edinburgh has set the aspiration to become a ‘data capital,’ the research finds a need for clearer objectives that rally industry support and deliver the city’s true potential.

Edinburgh ranks 5th in the Most AI-ready cities in the UK, according to Accenture. It has seven universities offering AI courses, 13 undergraduate AI courses, 34 postgraduate programmes in the subject on offer, and 960 students annually studying AI at university level.

Still, when looking to the wider European landscape, Edinburgh has a lot of work to do.

Edinburgh is outside of the 20th rank in Tech investment, whereas Stockholm came in 4th, and Amsterdam landing 6th place.

The graduate retention rate is only 53%, and the average salary for a data scientist in Edinburgh is only £47,400, compared to £51,700 in Dublin, £62,600 in Amsterdam, and £84,000 in Stockholm.

With the tech talent shortage affecting the tech sector as a whole, Edinburgh may struggle to retain the talent it breeds at its universities if it cannot compete internationally.

Mark Byrne, Head of Applied Intelligence for Accenture in Scotland, said: “In an increasingly competitive talent market, the development of the right skills and their availability is, and will continue to be, a major factor for Edinburgh to fulfil its ambition.

“Our research highlighted a clear case for the business community to collaborate more closely with education providers. Taking a more active role in the development of data and AI skills, through participation in curriculum and courses development as well as providing business insight, coaching and work experience, will help to create a cohort of work ready university and college graduates who stay in Edinburgh and Scotland.”

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In response, Accenture’s study concludes that there is a need to elevate the ambition to deliver leading status by capitalising on Edinburgh’s connectivity with Scotland’s specialist hubs for life sciences, manufacturing, cybersecurity, and public sector innovation, which are all data driven.

Truly establishing a reciprocal, interconnected arrangement with the centres of excellence in Glasgow, Dundee, Aberdeen and St Andrews would create a unique environment to share and amplify knowledge and expertise – and create a ‘stand-out’ position for Edinburgh and Scotland on the international stage.

David Caskie, Joint Managing Director for Accenture in Scotland said: “One of Edinburgh’s strengths is that its data capabilities exist within a strong national strategy for promoting digital and tech, and alongside other centres striving for excellence where data is critical. To maintain and increase the levels of inward investment that support Edinburgh’s data aspirations, the city’s connectivity with these other specialist hubs should be emphasised.

“A way must be found to bring the separate hubs and their communities closer together in a meaningful way. Thereafter, Edinburgh should redouble the aspiration to become the data capital for Europe, with a clear set of benchmarks that can be loudly promoted to organisations worldwide.”

David Caskie continues: “For those living in Scotland and working in Edinburgh, to be a data capital for Europe is an aspiration within reach – a goal worth pursuing. The turmoil caused by the unforeseen global events of the past three years has undoubtedly hampered progress but the opportunity for Edinburgh and Scotland to take such a lead remains compelling.”