Outside of the Central Belt, Aberdeen and the Northeast ranks as the strongest economy in Scotland. Not only is its GDP behind only Glasgow and Edinburgh, it also boasts the second highest GPD per capita, testament to the skilled workers its economy is built on.

Driven by oil, gas and agriculture, the region supports a diverse array of companies. It is in this ecosystem that a range of tech startups and larger companies have found fertile ground to grow.

With over 200 existing digital companies currently settled in the area, along with larger businesses like Sword IT and Inoapps, the Northeast has a thriving tech community.

This comes against a background of a UK economy in a state of transition, both towards digital tech and away from fossil fuels in favour of renewable energy. With the Scottish Government pushing ambitious net-zero policies, companies that can help work within this transition are in demand.

This means the Northeast is well placed to take advantage of these trends, offering a litany of resources to its companies.

Opportunity North East (ONE) is a private sector catalyst helping support diversification within the Northeast of Scotland’s economy. DIGIT spoke with ONE Director for Digital Tech, Karen O’Hanlon, to learn more about the opportunities the Northeast of Scotland offers to tech companies.

Moving Forward

ONE works to further several goals to improve the economy of the Northeast. Among these are doubling the number of companies in Aberdeen’s life sciences cluster by 2027 and growing the number of digital companies with a turnover of around £20 million and international aspirations from ten to twenty by 2028.

“We’re very much on track to deliver those transformational projects,” O’Hanlon says.

“ONE’s been fundamental in securing funding and driving the delivery of these big projects, which are going to really inspire and act as the catalyst for all these key sectors across the region,” she adds.

With around 200 businesses currently engaged with ONE in the region, 80 of those are participating in tech startup and business growth programmes.

“We’re also looking to increase the number of businesses, year on year, that go through our support programmes.

“The point is so we can have more profitable businesses in the region, able to create and be sustainable and profitable going forward, so we’ve got those high value quality jobs.”

ONE Tech Hub

To drive its aspirations for digital tech companies, ONE has created ONE Tech Hub. The £1.5 million venture provides a space for digital tech companies to grow, providing them with a range of resources, including office space, connections, and mentoring.

“ONE Tech Hub has really been the anchor point for digital activity in the Northeast,” O’Hanlon notes. “It’s a space for founders and entrepreneurs to connect with people who’ve got the know-how and practical experience, where people come for expert advice, relative to the stage at which they are in terms of their company growth.”

Beyond the hub, Aberdeen and the Northeast has a strong ecosystem for tech companies either looking to start or migrate.

According to a review by Aberdeen City Council, the Aberdeen Region’s GVA remained some 41.9% and 29.1% above the Scottish and UK averages, respectively. In addition, its employment rate outpaces the UK and Scottish average, and its average earnings of £32,915 are over 9% higher than the Scottish average, a testament to its skill base.

It has several established further education institutions, such as Aberdeen University and Robert Gordon University. It has an established economy built around oil and gas, providing high quality, highly skilled jobs.

Perhaps the greatest strength oil and gas offers to companies is a ready-made source of revenue for new and digital companies. With so many established entities in the area, innovative companies with new offerings can easily mix with the major players, getting their first customers and tailoring their products.

“A lot of the companies we work with develop their initial products in oil and gas and have now transitioned to software-as-a-service offerings that are applicable across wider sectors,” O’Hanlon explains.

In Transition

Energy still dominates in Aberdeen – it accounts for 13.3% of employment, with engineering at 13.4%. Information and communications technology and digital comes in at 1.5%, and life sciences at 0.3%.

Despite the economy looking to transition away from fossil fuels in the long term, many of the digital companies that support them can transfer their products towards renewables.

“Because of all the strengths and experience, digital tech organisations that have been vital to the success of oil and gas are going to be vital to the success of the transition to a low carbon economy,” O’Hanlon says.

However, science and technology professionals are the largest sector at 9.9% of all people employed in the city, spread across a variety of sectors. As such, it has a large base of skilled employees for tech businesses to utilise.

“Companies that originally had strengths in oil and gas have really effectively managed to transition into being service providers across a range of sectors. So, the companies providing the software and the digital services are actually providing those for wider sectors rather than just oil and gas alone.

“And what we’re doing at ONE Tech Hub is supporting organisations with the right networks, introducing them to the right people, whether it’s people on our board or whether it’s people we’ve worked with in the past. There are some very large organisations that provide mentoring that we can call on to work with these businesses to help them make that transformation.”

Challenges

However, there are still challenges for the Northeast to overcome and manage this transition.

First among these is the skills gap. This is not just a problem facing the Northeast, but the whole of Scotland and the UK as a whole.

“Our businesses tell us that they really struggle to attract talent,” O’Hanlon explains.

However, a Skills Development Scotland report predicts that the professional, scientific and technical sector will see the greatest growth in the city between 2024 and 2031, adding 2,400 people.

But that still leaves the challenge of promoting entrepreneurial activity. The Logan Report called on Scotland to grow its funnel of early-stage startups. The aim is that the more companies start, the more companies grow, with the ultimate goal being the creation of new Scottish unicorns.

“How do we get more entrepreneurs to relocate here in the Northeast? And how do we get more of that entrepreneurial mindset that we need to start off new businesses and new ideas and new products?” O’Hanlon notes.

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At present, the Northeast’s tech ecosystem is largely dominated by startups and small growth businesses.

“We have to scale, we’ve got to work with more and more businesses, we’ve got to increase their reach, because the ones we do work with is very successful.

“So that means we’ve got to work more effectively with Partners to complement what we’re doing with each other, not replicate, not duplicate, but work smarter together, to grow the economy jointly.”

In doing so, this creates a more attractive ecosystem, attracting new talent and retaining existing skills within the region.

“The more successful you are, the more attractive you are to businesses and people to get them to come and relocate and live here.”

Despite these challenges, the region has numerous strengths to help tech companies develop.

“The Northeast is a great place for any organisation that’s looking to start up, to grow and develop in any of our key sectors,” O’Hanlon notes.

“We’ve got the right ingredients to help businesses to grow and to flourish in the Northeast, great connections with universities, and the city and shire councils.

“It’s the place to be as we move towards repositioning the sector in terms of renewables, carbon neutral tech, and future energy.”

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